Newsmaker: Taking on the future, building on the past

Desjardins’ workforce is significantly larger than other financial services institutions of Desjardins’ size: the co-operative has assets of about $260 billion, up from $144 billion in 2008, and 48,000 employees; Bank of Montreal, in comparison, has double the assets and 46,000 employees. And with 5.6 million financial co-operative members and 335 caisses in Quebec and Ontario, Cormier says, he wants Desjardins to remain “first in the hearts of Quebecers.”

Desjardins opened its doors for the first time in 1900, with the savings of retail members and small and medium-sized businesses looking for better access to credit than was then available for many Quebecers. Now, Desjardins has grown to become one of the strongest deposit-taking institutions in the world, according to recent global rankings by Bloomberg LP. Cormier notes that Desjardins now commands about 40% of the market in Quebec for financial services, from wealth management and retail savings accounts to commercial lending. “We are the No. 1 partner for small and medium-size businesses here in Quebec,” he says.

Although Desjardins owes much of its size and stability to its unique history, the company’s rapid growth over most of the past decade is due to a change in direction initiated and steered by Monique Leroux, who headed Desjardins from 2008 to 2016, the maximum term permitted. Under her direction, Desjardins’ capital recovered from the substantial hit it took during the financial crisis of 2008-09 while the company’s heavy overhead was reduced by closing branches and reducing staff.

Leroux also expanded Desjardins’ operations outside Quebec, particularly in the insurance industry, a line of business in which Desjardins has the advantage of being able to compete without the restrictions on insurance sales that apply to banks. Desjardins now is the third- largest property insurance company in Canada, and the fifth-largest in the life insurance industry.

A key area for expansion in the future will be the wealth-management business. Desjardins has about $26 billion in assets under management (AUM) and a stable of 80 in-house mutual funds, as well as offering other funds sponsored by rival banks and mutual fund providers. This puts Desjardins 13th in Canada for mutual funds, sixth in segregated funds and second for Canadian market-linked guaranteed products. Cormier and his management team plan to launch new Desjardins-branded investment products created specifically for its non-Desjardins networks, such as State Farm Canada, which Desjardins acquired in 2014.

Indeed, Desjardins has been boosting its wealth-management business outside Quebec over the past two years and now states it has a Canada-wide presence, with an emphasis on Toronto and Calgary. That includes Desjardins Financial Security Independent Network and Desjardins Financial Security Investments Inc., which collectively have a roster of 926 advisors and 370 advisors who work for State Farm.

“In Quebec, wealth management clearly remains a huge vector of development for us,” Cormier says. “It is the same thing outside Quebec. When I look at the needs of the population, the population is aging [and] people need a hand with their finances.”

Some of those services are likely to be delivered via enhanced technology, and Desjardins is conducting a full review of its operations on that platform. “A lot of our members tell us they want to do business with their smartphones,” Cormier says, by way of example. Indeed, in the mobile space, Desjardins introduced its own app for the Apple watch last year and now offers the Apple Pay option.

However, Cormier is firm that offering more services through new technology will not mean that Desjardins loses its human face. He recalls that in 1995, when he was a young manager in the co-operative’s branch network, some of his colleagues were predicting that in two or three years there would be no more tellers or cashiers in any financial services institutions. “Today, 21 years later, there still are cashiers in many institutions,” he says, adding that Desjardins is particularly strong in this regard: “We have more ATMs and more service points than any of our competitors.”

Cormier, who obtained a bachelor’s degree and an MBA from l’École des hautes études commerciales in Montreal, has spent his entire career at Desjardins. After coming on board in 1992, he gradually worked his way up through the organization. By 2009, he had joined the senior management team and was senior vice president, co-operative network and personal services, before being elected to the top post.

Cormier, after becoming CEO, embarked on a series of shifts designed to streamline Desjardins’ structure further. That meant reducing the senior management team from 11 to 10, replacing six of those positions in the process. He also cut 28 vice presidents and 83 directors, with a view to flattening the hierarchy and boosting the reach of lower-level managers.

Cormier, who says that productivity is one of the issues he wants to address, makes no apologies for the reductions: “Yes, we are cutting. When I arrived at the presidency of the Desjardins movement, I said I would realign Desjardins with its raison d’être. I want to ensure that we have room to manoeuvre in our operations to permit the investments we need, especially in digital. Above all, I want to ensure that the Desjardins movement is an important actor in Canada.”

Going forward, Cormier is preparing for more change. Although Leroux was the only woman at the executive level when she joined Desjardins, Cormier’s 10-member executive committee now includes three women. Overall, 30%-35% of the management ranks are made up of women.

And, Cormier says, he is determined to add more young people and women and to increase the diversity of Desjardins employees. “[Doing that] brings more points of view,” Cormier says. “That allows us to make better decisions.”

Cormier, in walking the talk, has launched a new initiative at Desjardins: a youth committee. As of November, a 12-member youth committee, composed of four people ages 18 to 35 who conduct business with Desjardins, four Desjardins employees and four managers from the caisse network, will report their views on a range of issues, including, for example, the appeal and usefulness of a new app that may be under development.

One thing Cormier says is not going to change is Desjardins’ base in Lévis, 250 kilometres from Montreal. The firm recently invested $125 million in a new, 15-storey office tower in Lévis, where activities include back-office operations for its interests outside Quebec. “Desjardins is an enterprise with its roots in Quebec, with its head office in Lévis. That is clear for me and that it is non-negotiable,” Cormier says.

At the same time, Cormier concludes, “We have to continue our development across Canada. I want the Desjardins movement to grow, always aware that we were created to serve the members.”

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