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Lending Landscape: Three Growth Opportunities for Credit Unions

Three Growth Opportunities for Credit Unions

According to a TransUnion analysis, data on new account volumes shows that Canadian consumers clearly see credit unions as a viable alternative to the big 5 banks for everything but credit cards. Credit unions also have a greater proportion of high-quality credit customers (prime plus and above) than the banks.
Existing credit union members offer an attractive growth opportunity, yet credit unions don’t have as large a market share as they could. Tom Galimanas, Senior Solutions Consultant at TransUnion Canada, looks at why—and how this could change.

Market penetration of credit unions and banks

When it comes to opening mortgages, installment loans and lines of credit, it’s clear that consumers see credit unions as a viable alternative to banks. Between November 2016 and November 2017, credit unions outperformed the big 5 banks in new account growth rates in each of these three portfolios according to an analysis by TransUnion Canada. Despite this growth, banks are still the preferred choice for credit cards and the market penetration of credit unions in the credit card market continues to lag that of their banking counterparts.

The table below gives a breakdown of market penetration in these different portfolios:


New account growth1

Market penetration


Credit unions

Big 5 banks

Credit unions

Big 5 banks



↑ 1.3%

↓ 0.2%



Installment loans


↑ 0.8%

↑ 0.3%



Lines of credit


↑ 0.9%

↓ 0.9%



Credit cards


↓ 0.7%

↑ 0.9%



1 New account growth rate between Nov 2016 and Nov 2017
Source: TransUnion consumer credit data

Credit unions need to catch up

While new account growth figures are encouraging, overall market penetration is marginal. And this is despite the fact that credit unions have a greater proportion of prime plus (and higher) customers than the big 5 banks—again, in all portfolios but credit cards. Here’s how the figures stack up:

Outstanding balance ratios by product

Product line

Credit unions : Banks


$1 : $6

Installment loans

$1 : $5

Lines of credit

$1 : $9

Credit cards

$1 : $13

Source: TransUnion Canada analysis of consumer credit data
Note: ratios should be read as “for every $1 of outstanding mortgage balances that credit unions hold, the major banks hold $6”.

The total value of outstanding credit balances for consumers who have credit with both credit unions and banks is $335 billion—and credit unions have only one-third of that pie. Average outstanding balances for credit unions are 40% to 70% lower than those of the big 5 banks (depending on the portfolio). This is an indication that credit unions could be doing more to serve their members more effectively and grow their portfolios organically.

Opportunities for organic growth

Looking at the data, we suggest three ways in which credit unions can pursue opportunities for growing their market share organically:

  • Improving their service to members in order to increase follow-up business
  • Adjusting their risk policies to cater to a broader group of customers
  • Offering compelling products and product features to their members

Enhance acquisition and account management
One area to look at is customer acquisition: a TransUnion Canada analysis concluded that lenders with longer turnaround times tend to experience a decrease in client loyalty. On average, credit unions take longer to originate accounts for members than banks do, which means less follow-up business. Members who have credit with banks as well as credit unions are less likely to approach the credit union when they’re looking to apply for second and third products.

Data-driven marketing tools that provide accurate risk scores and a comprehensive view of consumer behaviour can help to speed up the process for assessing credit applications. They can also assist in improving decisioning on members who are close to credit score cutoffs. Smarter, faster decisioning means better turnaround times, which in turn increases customer loyalty and the likelihood of follow-up business.

Review and adjust risk policies
Credit union risk policies tend to be more conservative than those of the big 5 banks, which accounts for the higher proportion of prime plus (and above) customers held by credit unions. However, by safely expanding their risk tolerances, credit unions can serve their communities better and become more profitable.

In addition, higher limits drive higher balances for high-quality consumers. By proactively increasing limits, credit unions can provide members with a competitive offering.

TransUnion’s data analytics that show credit usage and payment behaviours over time can give credit unions the edge they need in identifying members who meet their risk objectives, and onboarding customers with profitable terms and expectations.

Go to market with compelling offerings
Credit unions can further enhance portfolio growth by offering existing members new products, such as auto loans, driving higher use of credit cards, and engaging members with compelling mortgage offers.

By improving turnaround times for opening accounts, offering new products, and tailoring new offers to their members, credit unions can generate organic growth without a significant increase in risk. Doing this successfully requires insight into members’ credit behaviour in order to identify opportunities, develop the right offerings, and market those offerings to the right members. For credit unions looking to target members with tailored product offers, TransUnion DecisionEdge® offers a number of solutions that can assist with identifying acquisition and cross-sell opportunities while improving time-to-market. Our CreditVision® suite of solutions can help provide a more comprehensive view of consumers, enabling you to safely expand your borrower universe while minimizing risk.

For information on how these solutions can assist your decisioning and marketing efforts, visit and

If you’re a consumer with questions or issues related to your personal credit report, disputes, fraud, identity theft or credit monitoring services, please visit our

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