Assiniboine credit Union hopes to be part of a solution to help some inner-city Winnipeggers conquer their addiction to costly cheque-cashing and payday loan companies.

Assiniboine, the second-largest co-operative financial institution in Manitoba, is one of the founding partners of the Community Financial Services Centre.

NEW DEBIT CARD

Assiniboine president and CEO Al Morin says the CFSC will offer banking services and financial education to low-income residents and help them make the transition to mainstream banking. Its new debit card will be the first for a large percentage of the target market.

The CFSC will help clients overcome their biggest initial obstacle — the lack of proper identification and credit to qualify for a bank account — by accepting people referred by four local community agencies: the North End Community Renewal Corp., the North End Women’s Resource Centre, the Elizabeth Fry Society and the Mount Carmel Clinic.

“Our goal is to improve their financial wellness and get them out of the vicious cash cycle that’s draining so much of the very little money they have,” says Morin. “Hopefully, we’ll see them develop some good banking habits, share those with their children and break the cycle their entire family might be in.”

CFSC manager Debra Joyal says there is a significant need to turn cheques into cash in Winnipeg’s core, hence the proliferation of cheque-cashing organizations that have sprung up.

Indeed, the area has been abandoned by traditional financial services institutions over the past 15 years. It is estimated that up to 10 bank branches closed their doors in the area during that period. Only a Carpathia Credit Union branch remains on the northern edge of the neighbourhood. Payday loan companies, rent-to-own outlets and cheque-cashing stores have moved in, alongside numerous pawnshops.

After three years of research, the CFSC’s founding partners believe that they have created the first such financial services centre of its kind in Canada, Joyal says. The CFSC will offer pre-approved cheque-cashing and deposit services, chequing and savings accounts, telephone and Internet banking, and “micro” loans for as little as $20.

There will be no exchange of cash at the CFSC; all transactions will be paper or electronic. The centre launched with four clients in November and has the capacity to add 16 new customers each month.

Morin says that Assiniboine’s involvement with the CFSC is by no means a venture into a high-margin business. “Unless you follow a cheque-cashing model, there is no money to be made in those transactional services,” he says. “The normal banking services include a full range of products, such as insurance and wealth management, which generate a higher level of profit for the organization. Those services aren’t the ones that are needed in this case.”

EDUCATION CRUCIAL

Arguably, the most important role the CFSC will play is an educational one, he says. Many potential clients don’t have even the most basic money-management skills. It is all too common to see them earning cheques of $500 and then spending 10% on a cheque-cashing fee.

“Fifty dollars goes a long way when you’re working on $500,” Morin says, noting that Assiniboine will waive its $5 membership fee if it should prove to be a barrier for some potential clients. And once they become full-fledged members, customers will receive the same benefits as all Assiniboine clients, he says.

Involvement of the partner organizations ensures that the responsibilities of the CFSC are shared among all of them, Morin adds.

The CFSC is temporarily located at the Mount Carmel Clinic, a community-based health organization located two kilometres north of Portage and Main. The CFSC will move into a larger space next door — a former CIBC branch — when renovations are completed in the spring.

Garth Manness, CEO of Credit Union Central of Manitoba, says Assiniboine has had a very clear economic development objective for the past 15 years. One of the areas of support that is needed within communities is finding ways to serve the underserved, he says, and Assiniboine is prepared to help, while recognizing that it will not make much money on its efforts.

“There is a group of people we know who are not readily able to get financial services. As a result, they use fringe banking services at fairly high costs,” he says. “The challenge for traditional financial services organizations is to find ways of providing services to those people that are cost-effective for the individual and for the financial institution.”

@page_break@Assiniboine’s merger with Vantis Credit Union and Astra Credit Union — making it the second-largest credit union in the province, behind Steinbach Credit Union —closed Jan. 1. IE