Vancouver’s Central 1 Credit Union is narrowing its operations.
The organization helps credit unions and other financial institutions process payments and offer treasury services, such as liquidity, borrowing and investing.
Gone soon will be its involvement helping those institutions with digital-banking services, such as online and mobile-banking apps, it announced Oct 22.
It said “no firm date has been set,” for when it will fully stop providing digital-banking services.
Central 1 conducted a comprehensive strategic review of its business and concluded that the investment and innovation required to meet the needs of its clients and sustain the company’s digital-banking platform was not sustainable long-term, its CEO Sheila Vokey said.
“The Central 1 team reviewed several strategic alternatives with deep consideration for our clients’, stakeholders’ and Central 1’s interests,” Vokey said.
“This is not the outcome we were striving for.”
She said her team will help clients to ensure a smooth transition to other digital banking solutions.
Some of those clients took steps earlier this year to plan ahead for Central 1’s move.
A Vancity representative told BIV that B.C.’s largest credit union is aware of changes at Central 1 and has started the process to shift digital-banking needs to Intellect Design Arena Ltd., which bills itself as a “cloud-native, future-ready, multi-product financial technology company.”
“With over 570,000 members and $35.5 billion in assets under administration, Vancity is set to redefine the digital landscape for its retail, SME (small and medium-sized enterprise) and commercial members through this collaboration,” Vancity said in a June news release it jointly issued with Intellect Design.
Coast Capital Credit Union spokeswoman Erin McKinley told BIV in an email that Central 1's move "does not impact our business," because Coast Capital was not using Central 1's online or digital-banking platforms.
Central 1 divides its business into three segments, two of which lost money last year.
Its payments and digital-banking platforms and experiences segment lost $21.2 million in 2023.
Its division broadly known as “system affiliates and other” lost 9.5 million.
The only profitable division was its treasury component, which generated a $56.1 million.
Combined, the institution generated a $25.4-million profit in 2023.
The plan going forward is for Central 1 to keep the payments part of its payments and digital-bank platforms division separate from the other divisions so that the institution will still have three distinct silos for financial-reporting purposes.
Last year was substantially better than 2022 for Central 1.
In 2022, its payments, digital-banking platforms and experiences business lost $13.7 million, and its system affiliates and other business division lost 6.5 million.
Its treasury business, however, lost a whopping $49.4 million because of unrealized losses related to Central 1’s fixed income securities portfolio.
“Credit spreads have widened reflective of rising interest rates, persistent inflationary pressure and geopolitical tensions which reduced the fair value of the treasury fixed income portfolio,” Central 1 said in its 2022 year-end report.
Combined that added up to a $69.6-million loss in 2022, according to Central 1.
She was honoured yesterday at a BIV C-Suite awards luncheon as being one of five winners in the BC CEO Award category.
