It’s a move that will continue to alter the face of personal banking in Canada: Meridian credit union is not only looking to open a federally chartered bank but also to go entirely digital - with all of its services available online. This essentially could wipe out the need to visit a branch in person.
Bill Maurin, CEO of Meridian tells the Toronto Star that he believes Canadians are hungry for something different than the current big five: BMO, TD, CIBC, Scotiabank and Royal Bank., citing the evolving nature of online and digital services – an enabler that he says breaks down size barriers.
Launched in 2005, Meridian credit union currently has about 270,000 members. It has 81 brick-and-mortar locations in Ontario. Although the plan would not require these outlets to close, no new branches would be opened. This means lower overhead costs – helping to offer banking customers the same experience that credit union members currently have.
Some of the new digital services Meridian plans to offer include personal chequing and savings accounts, mortgages and other loans including consumer loans. Meridian Bank will become a wholly-owned subsidiary of the credit union. Shares will remain in the hands of credit union members with no public trading. Unlike most Canadian banks, it will not be responsible for reporting to shareholders every quarter.
Part of the Fintech Trend
Digital banking, or fintech, is part of a growing trend that has consumers pushing to do all of their banking and shopping online, while dealing with customer service on their own terms. But it’s about more than just the convenience of having a mobile app – it’s about the entire online experience. Meridian is using this technology so they can offer banking customers as much as possible while meeting their everyday needs.
The plan is to begin providing these services in the second half of 2018. After some time, Meridian will add wealth management and corporate services to the digital banking menu.
Robert Vokes, managing director of financial services for Accenture in Canada, tells the Star that the company is already in a better position than other smaller fintech firms because they have already established a good track record with customers.
However, Meridian is more local than national-focused at the current time, so Vokes can’t predict how things will unfold once the greater expansion takes place.
Taking on the Big Five
About a year ago, Meridian submitted an application to the Office of the Superintendent of Financial Institutions to become a federal Schedule I bank. The company is currently in the second phase of the process. Rather than applying for federal credit union status, it says the rules and regulations for banks are more established and clear. In Canada, banks also tend to be better understood than credit unions among the general public.
How will this change the Canadian banking landscape? We’ll have to wait a while to find out, but as customers of the big five banks get more and more vocal about having to pay bank fees and more and more businesses shift entirely into the online space, Meridian has a good shot of helping to make fintech mainstream and will challenge the familiar.