The last year has presented some exceptional challenges to the Canadian economy, and the cooperative sector has not been spared. But while U.S. President Donald Trump’s tariffs have battered many of the industries in which co-ops operate, from agriculture to groceries to softwood lumber, the tsunami of U.S. protectionism has also fostered a surge of Canadian patriotism and a shift toward greater economic self-reliance from which the sector stands to benefit.
“Co-ops are by their very nature Canadian-owned and deeply grounded in their communities,” says Fiona Duguid, an expert in community economic development who teaches in the co-operative management program at Saint Mary’s University and the MBA program at Cape Breton University. “The current moment is ripe.”
Financial cooperatives represent one sector in which the tariff threat has served to accelerate an established trend of consolidation and growth. Over the last 30 years, the universe of Canadian credit unions has seen a rash of mergers and acquisitions that have enabled institutions to pool resources and invest in the technologies required to compete with the bigger banks.
Because of the digital transformation, there are enormous centralization tendencies.
– Rafael Ziegler, Associate Professor, HEC Montréal
In this period, the total number of credit unions in Canada has contracted considerably, shrinking from 1,421 in 1989 to only 184 last year. Meanwhile, the volume of assets they manage has increased tenfold, reaching roughly $315 billion in 2024.
Now, as the federal government works to break down interprovincial trade barriers, the Canadian Credit Union Association is lobbying to facilitate these mergers and acquisitions, particularly between unions in different provinces. As matters currently stand, credit unions that are provincially incorporated have trouble retaining members who move to or do business in other provinces.
Being able to operate interprovincially, or to join forces with federal credit unions, would vastly expand the appeal and reach of many credit unions. In the last year, Conexus has announced a merger with two other Saskatchewan credit unions, which will take effect in January, and Van City has entered merger discussions with fellow B.C. credit union First Union.
Extending the local edge
A traditional strength of credit unions like Desjardins is that they have a lot of local branches and are very present in their home regions, says Rafael Ziegler, director of the Institut international des coopératives Alphonse-et-Dorimène-Desjardins at HEC Montréal. “They have a competitive advantage due to proximity,” he says. “The idea is that [credit unions] know their customers better because they’re there, which creates a kind of reciprocity that other financial institutions don’t have to the same extent.”
But this advantage deteriorates as more banking moves online. “Because of the digital transformation, there are enormous centralization tendencies,” Ziegler observes.
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Local presence remains a differentiator for credit unions, even as they seek to grow inter-provincially. In addition to expanding their footprints, credit unions are stepping into the vacuums that banks leave behind as they reduce their brick-and-mortar presence in an increasingly cashless world.
Such was the case on Newfoundland’s Fogo Island, where, in 2022, islanders were left with no banking option after Scotiabank closed its doors after 150 years. The municipality rallied and successfully persuaded Atlantic Edge Credit Union to open a branch there.
“This is a happy space for them,” Duguid says, adding that credit unions often serve an older, rural clientele that may otherwise be left behind by the big banks.
With additional files by Mark Mann
Naomi Buck is a writer based in Toronto.
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