B.C.'s Central 1 Credit Union, which offers services to other credit unions, plans to transfer its digital-banking operations to Chennai, India-based software giant Intellect Design Arena, the companies announced today.
The move was not unexpected.
Central 1 said in October that it was seeking "strategic alternatives" for that money-losing area of business.
A Vancity representative told BIV in October that B.C.’s largest credit union was aware of looming changes at Central 1 and that it had started the process to shift digital-banking needs to Intellect.
“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.
Intellect bills itself as a “cloud-native, future-ready, multi-product financial technology company.”
The agreement, which has yet to close, would see Central 1’s Forge, MemberDirect, public website and mobile applications, along with digital-banking engineering and service teams, transfer to Intellect. Central 1 will continue to provide the technology infrastructure and related services under the agreement.
Staff who worked in that division are being offered jobs at Intellect to operate the digital-banking software and support clients.
“We are confident that Intellect and the transferring Central 1 team members will provide a strong and stable path for our clients as they transition to new digital banking platforms," Central 1 CEO Sheila Vokey said in a statement.
"Our discussions and work with the Intellect team through this process have demonstrated their deep care for clients and their commitment to serving our members and clients long into the future. We look forward to continued collaboration with the Intellect Design team in the months ahead."
Not all large B.C. credit unions were using Central 1's digital-banking services.
Coast Capital Credit Union spokeswoman Erin McKinley told BIV in an October 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 has been losing money
Central 1 divides its business into three segments, two of which lost money in the last full year for which financial statements are available: 2023.
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.
Vokey told BIV last year that Central 1 has between 750 and 800 employees, and that it is hiring.
She was honoured in October at a BIV C-Suite awards luncheon as being one of five winners in the BC CEO Award category.
