BCFSA’s CEO speaks at the Canadian Credit Union Association’s National Conference on Growing Responsibly

• Industry Communications

13 May 2025

Speech | Tolga Yalkin — Virtual, May 13, 2025

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Growing Responsibly: Enabling Provincial Credit Unions to Serve Beyond Provincial Borders

Good afternoon,

At BCFSA, our role is to contribute to the thriving of financial services in British Columbia by building and maintaining confidence in the financial system. This is not only about overseeing regulatory processes; it’s about fostering a financial environment that can adapt to change, manage risk, and remain resilient as it serves the needs of both institutions and consumers.

Today, I would like to discuss the opportunities and challenges that come with enabling provincial credit unions to expand across provincial borders. This is not just about growth — it is about balancing that growth with the responsible management of risks. The challenge lies in creating pathways for expansion that don’t compromise consumer protection or the integrity of our financial system. 

Why Provincial Credit Unions Need to Operate Across Provincial Borders

Provincial credit unions have been essential to the financial ecosystem in Canada. They are community-based, trusted institutions that cater to the specific needs of their members, particularly in underserved and rural areas where access to financial services can be limited. These credit unions are uniquely positioned to offer personalized services to communities that larger institutions often overlook.

However, the current system, which confines them to their home provinces, presents certain limitations. When members move across provincial lines for reasons such as work, family, or new opportunities, credit unions are unable to serve them — and that creates a gap. As Canadians become more mobile, the need for credit unions to offer seamless services regardless of where their members are located has become more pronounced. Financial services today are increasingly interconnected, and the ability for credit unions to follow their members has become more important than ever.

If credit unions are unable to expand beyond provincial borders, they may face growth constraints that challenge their ability to compete and adapt to the shifting dynamics of the financial landscape. They could miss out on opportunities to diversify their offerings and serve a broader range of members. This isn’t just about credit unions wanting to grow; it’s about enhancing competition and innovation in the Canadian financial sector to the benefit of all Canadians.

The challenge, however, is clear: how do we enable credit unions to grow, while ensuring that appropriate risks are carefully managed? How do we ensure that the stability and integrity of the financial system are maintained, while credit unions serve their members across provincial lines?

How This Can Happen

The two primary routes available are federal continuance and extra-provincial operations.

Federal continuance allows credit unions to convert to federal status and operate across Canada. While this is a well-established path, it can be a complex, resource-intensive, and disruptive process. Transitioning to federal status requires significant restructuring of governance, operations, and compliance frameworks.

Many credit unions, especially those deeply integrated into their local communities, may find this shift challenging and time-consuming. The process can take years, requiring credit unions to divert valuable resources and focus away from their core mission of serving their members, at a time when macroeconomic challenges already demand their attention. For credit unions that focus on serving local or regional communities and have no immediate plans for national expansion, this transition may not align with their core values or priorities. For these credit unions, the transition may not provide sufficient benefits, especially when weighed against the loss of local governance, community engagement, and the ability to maintain a personalized, member-focused approach.

In contrast, extra-provincial operations could offer a more flexible and less disruptive alternative. This model would allow credit unions to expand their services beyond provincial borders while still operating under provincial oversight. It provides the flexibility for credit unions to meet the evolving needs of their members — whether they are relocating for work or pursuing other opportunities — while maintaining local control and the community-driven model that has made them so valuable. Unlike federal conversion, extra-provincial operations would enable credit unions to expand and diversify without sacrificing their autonomy or close member relationships. Enabling extra-provincial operations may also help avoid unnecessary departures from the provincial system, reinforcing its stability and reaffirming the value it offers.

The question, however, remains: how can we create a framework that allows credit unions to grow and expand without compromising consumer protection or financial system stability?

Exploring Cross-Border Operations

Let’s look at how this model has worked in other regions.

In the United States, state-chartered credit unions have been operating across state lines for years, facilitated by Cooperative Interstate Agreements and supervisory cooperation between state regulators. These agreements have allowed credit unions to expand into multiple states, while remaining under the supervision of their home-state regulator. The success of this model relies heavily on regulatory cooperation and shared responsibility — it’s about fostering growth while maintaining a stable regulatory environment.

Similarly, in the European Union (“EU”), the single market has allowed financial institutions to operate across national borders, supported by a passport system. This system ensures harmonized regulations on key areas such as capital adequacy, consumer protection, and deposit insurance. The EU’s approach ensures that institutions can expand into other member states while still adhering to consistent regulatory standards.

These examples demonstrate the importance of regulatory cooperation and harmonization — allowing credit unions to operate across borders while still ensuring local oversight and risk management.

Key Areas to Sort Out to Make Extra Provincial Work

For extra-provincial operations to work in Canada, there are several key areas that must be carefully addressed to ensure that growth is balanced with effective risk management:

• Regulatory alignment: Provinces would need to align regulations on critical issues such as capital adequacy, liquidity, and deposit insurance. This will help ensure regulatory consistency across jurisdictions, making it easier for credit unions to operate without creating regulatory confusion.
• Deposit insurance: Since each province has its own deposit insurance system, these systems will need to be either harmonized, or a cooperative framework must be developed to ensure consistent protection for members, regardless of where they are located.
• Cooperative Oversight: Provincial regulators will need to collaborate to establish a cooperative oversight framework. This collaboration will help maintain local accountability while ensuring credit unions can serve their members across provincial lines without regulatory gaps or conflicts.
• Operational Flexibility: Credit unions must have the ability to adapt their services to meet the unique needs of members in each province, while still complying with a shared regulatory framework. This ensures that they can remain responsive to local conditions, without undermining the stability of the broader financial system.

Why This Matters for Thriving Financial Services

Allowing credit unions to expand across provincial lines, while maintaining their local autonomy and community-driven values, could play an important role in fostering a thriving financial services ecosystem. The diversity within our financial institutions — whether in regional presence, institutional size, or governance models — may offer significant benefits, provided the risks associated with such diversity are effectively managed.

Canada’s history has shown that diversity — both in our people and in the way we manage financial services — can be a source of strength. Regional differences can help create more tailored solutions and ensure that services reflect the unique needs of local communities. Additionally, diversity can foster greater competition, offering consumers a broader range of choices and options. By supporting various models of financial services, we may encourage innovation and ensure that consumers have access to a wider selection of financial products that meet their needs, ultimately benefiting the broader economy. However, for this to work in a way that supports systemic stability, it’s important to establish a shared regulatory framework that balances flexibility with robust risk management and consumer protection.

In the context of the current global climate, where national solidarity is becoming increasingly important amid shifting trade dynamics and economic challenges, allowing credit unions to serve members across provincial borders may offer social and economic benefits. Moreover, if approached appropriately, doing so could contribute to the stability of the financial system while maintaining the confidence that consumers have in the system’s ability to serve their needs, no matter where they are located.

Conclusion

This is not an easy task, but it may well be a necessary one. Extra-provincial operations could provide a flexible and scalable solution to help credit unions grow, without necessarily compromising their local governance or consumer protection. However, this will require significant effort, collaboration, and patience, as well as a shared commitment to ensuring that growth happens in a way that is prudent and carefully managed.

By working together, we can build a regulatory framework that allows credit unions to expand, while preserving the core values that have made them an essential part of our financial ecosystem. This could be a journey worth taking — one that may benefit credit unions, their members, and the financial system as a whole, while still ensuring stability and consumer confidence.

Thank you.