Credit unions are up in the air about data hosting

The Voice of Canadian Credit Unions
NOVEMBER 2012
JUNIOR BOARDS
Bringin'g new energy
to the table
STAYING AFLOAT
Baby boomers face
a shadow of debt
Credit unions are up in the air about data hosting
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Enterprise
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Enterprise is published by
Central 1 Credit Union
Editor
Natal ie Bruckner-Menchelli
Art Director
CENTRAL 1 CREDI T UNION
Rick Thibert
Board of Directors
Consulting Editor
Chairperson
Terry Enns
Allison Murray
Contributing Writers
Jeff Bateman
Vice-Chairperson
Johanne Charbonneau
Carol Crenna
Adam Currie
H.L. McGee
Nick Rocke I
Keith Brain
Daniel Burns
Rick Hoevenaa rs
Sean Jackson
Scott Kennedy
Douglas Lang
Emmet McGrath
Philip Moore
Pat rice Pratt
Tracy Re dies
Dave Sitaram
Doug Stoddart
Tama ra Vrooman
Jack Whittaker
Tiffany Sloan
Guy Wilson-Roberts
Contributing Artists
Martin Barraud/Getty
Vincent Besnault/Getty
Evaan Kheraj
istock
Luc Latulippe
Luis Montemayor/Getty
Darrell Noakes
Kudrin Ruslan/Veer
Jesus Sanz/veer
Production Manager
Suzy Williamson
Studio Manager
Kristina Borys
The opinions expressed in articles in Enterprise are
the authors· and not necessarily those of Enterprise
or Central i Credit Union. In addition, the inclusion
of an advertisement does not imp ly an endorsement
of the product or service by Enterprise or Central 1
Credit Union. Enterprise will not knowingly carry
false or misleading advertising. Enterprise reserves
the right to refuse any advertisement. Both
Enterprise and Central 1 Credit Union disclaim
any and all warranties, whether expressed or
implied, includ ing (without limitation) any im pl ied
wa rran ties of merc hantabi lity or fitness for a
particular purpose and ne ithe r Enterprise nor
Central l Credit Un ion will accept any responsibi lity
for the reader's use of the information and/or
opinions presented in Enterprise or any loss arising
therefrom.
Assistant Studio Manager
Mandy Lau
Production Coordinator
Elaine Linsao
Production Systems Manager
Kim Mclane
Advertising Production
Allison Griffioen
Mandy Lau
Chris Sherwood
Electronic Imaging
Debbie Lynn Craig
Bernhard Holzmann
November
2012
::
Volume
72,
Number 6
FEATURES
Laura Michaels
The contents of Enterprise are covered by copyright
and al l rights are reserved. No material in this
publicatio n may be re produ ce d in any form without
permissio n.
Fo r info rmation concerning
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To advertise in Enterprise, contact:
Peter Legge
"Nearly one in two Canadians are
uncomfortable with basic
arithmetic calculations. And if
people have a natural fear of
numeracy, then it's going to be
very difficult for them to deal
realistically with their finances
no matter how young or old
they are."
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13 Debt And The Silver Tsunami
Baby boomers try to stay financially
afloat as they dive into retirement.
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COFFEE BREAI(
18
Flocking To The Cloud
A technology trend is taking the
computer world by storm, but credit
unions are treading very carefully.
24
TACT
Climbing the corporate ladder might
mean leaving friends behind.
H.L. McGee
Rise And Fall Of Green Mortgages
HEALTH
Natalie Bruckner-Menchelli
29 Junior Boards
Some of credit unions' youngest members
get ready to step up .
Tiffany Sloan
6 Editorial
35 View From The Top
Nick Rocket
Lifting the lid on what it means to
encourage sustainable behaviour.
DEPARTMENTS
36 Facts On Fluids
Uncovering the facts about coconut
water, while keeping hydrated during
the cooler winter months .
Guy Wilson-Roberts
8 Small Talk
10 Person of Interest
Healthy Growth
A passionate teenager's dream led her
on a journey of the human body.
Carol Crenna
38 Marketing Maven
Standing Out From The Crowd
Enterprise speaks to the experts about
the top fiv e marketing strategies for
2013 .
Adam Currie
NOVEMBER 2012 · ENTERPRISE
5
Editorial
Have a
better trip
with the CUMIS Travel
Insurance Program
YOUR TURN
Drop us a line and let us know how
your credit union is responding to
these upcoming Enterprise features:
Person of Interest: Do you know
someone who is connected to a
credit union and has built his or her
own business, pursued a dream, or
has an unusual hobby or career?
We would love to hear about them.
Do your members
travel more than
twice a year?
Offer the affordable and
convenient 8-day multi-trip plan .
Un iq uely designed to meet the
needs of credit unio n members.
For mo re information call
1-800-465-4279
cLm1s·
6
ENTERPRISE· NOVEMBER 2012
Troubled members? While the onus
may be on the individual to seek help
when they find themselves on the
edge of a financial tailspin, is there
something credit unions can do to
help flag these members before it is
too late? Are there measures in place
to avoid sending someone down the
foreclosure route? Is there more that
can be done? We would love to hear
from you.
IT NEVER FAILS TO AMAZE ME how interesting
people can be. When it comes to the individuals working
in the credit union system, this statement has never
been more true. In my short time in this sector I have
encountered so many people who are willing to go above
and beyond the call of duty to support the communities
where they live and work.
Take this month's Person of Interest. Lovie
Wesolowski-Spicer had a dream and at the age of
17 she decided to pursue her passion to raise awareness
about the benefits of natural health. As a result, there are
countless people who have benefitted from her wealth
of lmowledge - from NHL players to Olympians. And to
think it all started the day she walked into a credit union
that was willing to give this teenager a chance.
Also in this issue, we span across the generations
in "Debt and the Silver Tsunami" (page 13) and "Junior
Boards" (page 29). We explore a problem that an
increasing number of baby boomers are facingcarrying debt into retirement - and we tal<e a look at
the new blood entering the sector as we speak to some
credit unions that have introduced programs to attract
the fresh ideas of Gen Y and get members involved at a
young age.
Our main feature looks at a subject matter that,
while not new to the world of technology, is one that
has many people on the edge of their seats ... cloud
computing. The idea that you can use the Internet to
store and process data remotely may seem a rather scary
prospect as it appears so intangible, but the cost-savings
that can be had by using this technology has some
advocates claiming it is the future for credit unions.
And of course, as we enter into this festive-season,
we couldn't publish this issue without exploring what
those few extra festive drinks could be doing to your
body and how to prevent something that many of us may
associate with summer, namely dehydration. That's not
to say don't go out and enjoy yourself of course!
As always, keep those emails corning in as we love
hearing your feedback and your stories, and Happy
Holidays. See you next year.
Natalie Bruckner-Menchelli
[email protected]
Evaan Kheraj
Building your business and your clients' wealth is our priority.
Now your vision can become reality.
At Credential, we' re empowering positive growth .
credential.com
Credential®
Small Talk
First in customer service
For the eighth consecutive year, Canadians
ranked credit unions first in overall "Customer
Service Excellence" for retail banking among
all financial institutions in the lpsos Reid 2012
Best Banking Awards.
Credit unions also took top honours in
"Branch Service Excellence" for the eighth year
in a row and "Values My Business" forthe
fifth consecutive year.
Swipe and go
Awareness of the "mobile wallet" is increasing
among users of mobile banking apps, according
to research from Toronto-based Solutions
Research Group, conducted as part of its
ongoing
Digital Life Canada study.
The research found that 56 percent of
-""1i!s.:;....,,,_._,,=r"7,
users of mobile banking apps are aware of
c:>-
an upcoming service that would allow them
1· -<5
to swipe their phone to pay for goods and
services at check-out counters. That figure
is up from 47 percent a year earlier.
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"Have you given much thought to what kind of job you want after you retire?"
Your Financial Toolkit has been divided
CEOs to ratire
._
customers online and through a handful of
Cafes -
it has no brick and mortar branches.
John Lahey, CEO of Ontario's Alterna Savings
into 11 modules that cover a variety of topics
and Credit Union, Les Messmer, CEO of
from banking, budgeting and saving to
Saskatchewan's Synergy Credit Union, and Brian
debt management, fraud protection and
Bentley, CEO of lntegris Credit Union, are retiring.
retirement planning.
Lahey and Messmer will retire at the end of the
has been designed by the Financial Consumer
DIRECT will continue to operate as its own brand.
year and Bentley will be retiring in June 2013.
Agency of Canada (FCAC). the Investor
The transaction is expected to close by the end
Education Fund (IEF). and l'Autorite des
of this year, subject to regulatory approvals.
Your Financial Toolkit
Post job ads here I
Marches financiers (AMF) and is available
The national credit union careers website
free of charge on line at the FCAC website.
creditunioncareers.ca has launched its new, re-
ING DIRECT customers wi ll not be affected
by the purchase as on line account numbers and
passwords will remain unchanged. Initially, ING
Satisfaction not alwl)'Ji guaranteed
Overall customer satisfaction with the Big 5
vamped, self-service employer site. The site's new
Scotiabank to purchase ING DIRECT
Banks (and mid-size banks) has fallen this year,
features help speed up the recruitment process
Bank of Nova Scotia (Scotiabank) reached a
according to the J.D. Power and Associates
as credit unions can now manage their postings
definitive agreement to purchase ING Bank of
2012
creditunioncareers.ca
Canada (ING DIRECT) from Netherlands-based
independently. This year,
helped credit unions fill more than 400 jobs.
parent ING Group for $3.1 billion -
in cash .
The purchase is expected to result in a
Canadian Retail Banking Customer
Satisfaction Study.
Th e decline is attributed largely to a drop
in fee satisfaction, with 27 percent of customers
Your financ.i•I toolkit
net investment by Scotiabank of approximately
experiencing changes to their fee structures
The Government of Canada has released a new
$1.9 billion after deducting the excess capital
in 2012, compared to 17 percent in 2011.
resource, which includes videos, checklists,
currently at ING DIRECT.
quizzes, reference materials and self-assessment
In Canada, ING DIRECT is the eighth largest
While online banking was shown to have
increased to 86 percent from So percent in 2010,
tools to help Canadians make better-informed
bank. It offers savings and chequing accounts,
the study found that branch locations continue
financial decisions.
mortgages and mutual funds to its 1.8 million
to be an important driver of satisfaction. ~
8
ENTERPRISE· NOVEMBER 2012
©Barbara Smaller/The New Yorker Collection/www.cartoonbank.com
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Person of Interest
Healthy Growth
A passionate teenager's dream led her on a journey of the human body
by Carol Crenna » photography by Darrell Noakes
''I have fond memories ofworldngwith health industry legends, such as renowned orthomolecular
WHEN A HIGH SCHOOL student
walked into a Saskatoon credit union saying
that she needed financial help to launch a
business never before attempted in Canada,
the lenders didn't flinch and granted the
teenager a $21,000 loan. That was in 1977,
when Lovie Wesolowski-Spicer took a series
of daring steps to realize her dream of
opening a health store.
With the loan from St. Mary's Credit Union
(now part of Affinity Credit Union) and help
from her brothers and parents, who co-signed
the loan, plus an additional seven thousand
dollars that her brothers chipped in, Lovie
opened Nature's Health Centre in Grosvenor
Park Shopping Centre, Saskatoon.
How could they have !mown that this
ambitious 17-year-old would not only
maintain that business in the same location
for more than three decades, but also become
a health and performance-nutrition pioneer?
"I was fascinated by the human body at an
early age and, although we were poor, I would
ask for models or colouring books of the
organs and systems whenever I was offered
a gift," says Lovie. "With the money I earned
by playing the violin as an eight-year-old, I
would buy health books. Our family physician
kept telling my parents about my affinity for
healing, saying he conversed with me like a
colleague when I was in my adolescence."
BegiMing the journey
Chronic bronchial problems propelled Lovie
on a personal healing journey. She became
aware of the foods that made her feel unwell
and began exploring natural remedies. "I
innately knew what was right and wrong for
my body chemistry. I stopped eating milk
products and meat in grade two."
Lovie was 18 when her store opened with
a business model and booldceeping system
that she had developed in her grnde 12
business class (and still uses today). "There
was no template for this type of store. I wrote
to each manufacturer explaining how I
needed catalogues of products. My strength
is in chemistry- choosing product ingTedients that are the best [and] most effective,
regardless of brand." Lovie says she built
Reaching peak fitness
advised Canadian Olympic bobsledder Jamie
Cruickshank and professional superbike
racer Brett McCormick. Today, she works with
NHL players Devin Setoguchi (Minnesota
Wild) and Luke Schenn (Philadelphia Flyers).
Lovie helped both increase their bodies'
muscle-to-fat ratio as teenagers, preparing
them to play in the NHL.
In 2004, former Saskatoon Blades general
manager Brent McEwen approached Lovie.
"The team had been last even though they had
Mike Green, Wacey Rabbit and Devin Setoguchi,
who later became some ofNHL's highest paid
players," says Lovie. She began worldngdirectly
with 33 on-ice players and 28 prospects, creating
individual off-season programs. As a result, in a
single off-season, the average muscle gain per
player was 22 pounds, and speed and endurance gains were "extraordinary," says Lovie.
Now a Registered Nutritional Consultant
(RNC), Certified Natural Health Practitioner
(CNHP), and an International Sports Sciences Association (ISSA) specialist in sports
nutrition, Lovie has lectured to national
audiences, and works with the University of
Saskatchewan's department of medicine and
its medical students.
In the same year as she opened the store,
Lovie launched Performance Nutrition Inc.,
a consulting company, and over the past
30 years she has worked with many famous
athletes. They include NHL players, Calgary Stampeders, Saskatoon Blades, and
University of Saskatchewan Husldes. She
quicldy recounts notable names: Charles
Servizio, in the Guinness World Records
for the most push ups (46,001 in 24 hours),
was trained by her; former NHL player
turned Winnipeg Jets general manager,
Kevin Cheveldayoff, has been a client since he
played in the juniors; trainer-to-the-stars Grant
Roberts, who worked with Hilary Swank on the
film Million Dollar Baby, was a customer at
Lovie's store when he was 15, and was later
coached by her.
In fact, the list of names goes on. Owner
of Bliss New York Spa, Marcia Kilgore, whose
client list includes actress Julia Roberts,
worked for Lovie and continued getting
advice while opening her business. Lovie also
Lovie still banks exclusively with Affinity Credit Union, has a mortgage with the
financial services cooperative and invests in its
ethical funds program. "I have grnwn up with
its staff, and even though my store is across
the city from that location, I never left them
because of who they are: a community of
real people," says Lovie.
Lovie is also a District Council Delegate
at Affinity Credit Union. "When I was
able, I wanted to help others. With my
experience, I know that if you let something
small germinate it will grow into something
big," she says.
Now in her sos, she still manages the store
and consults onsite. When asked what keeps
her motivated, even after raising eighteenyear-old twins, she says; "There was never any
choice. I am where I needed to be. I still feel
17, having the same passion and living by the
same philosophies."!;;
relationships with customers by giving free
health consultations to pelp them understand
why they needed certain products.
While she was opening Nature's Health
Centre, Lovie began working as a sports
nutrition coach, using her body-building
brother as a guinea pig. "I felt if! can help
people who are sick, can you imagine what
I could do with people who are well?" As for
her brother, his lean body mass increased so
much that "many athletes took notice and
wanted to know his secret," she says.
Living by the same philosophies
pioneer Dr.Abram Hoffer and Order ofCanada recipient and paediatric expert Dr.john Gerrard."
NOVEMBER 2012 • ENTERPRISE
11
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Baby boomers try to stay financially afloat as they dive into
retirement
DEBT IS CASTING
According
to Statistics
Canada,
approximately
1,300 Canadians
will turn 65
every day for
the next 20
years.
14
ENTERPRISE • NOVEMBER 2012
hat's a sharp poke in the eye to
conventional wisdom, which
dictates that while the young and
middle-aged have plenty of time
to recoup, retirees must enter
life's homestretch with zero debt and a nicely
diversified portfolio.
"Twentyyears ago, it was a bigdeal to see
someone contemplate retirement without
having their house paid off," notes David
Mortimer, senior vice-president of retail
banking at the $2.4-billion Cambrian Credit
Union in Winnipeg. "Today that situation is
more the norm than an anomaly," he says.
"On an anecdotal level, we're seeing more
members figuring out ways to retire or semiretire while carrying real consumer debt - a
mortgage, a line of credit, an outstanding car
loan or credit card debt. There's quite a bit of
creativity in how people are coping and
times have definitely changed."
T
What has been nicknamed by the media as
the "silver tsunami" - a term used to describe
the retirement of baby boomers - has begun
in earnest. According to the medium-grnwth
scenario of the most recent population proj ections of Statistics Canada, approximately 1,300
Canadians will tum 65 every day for the next
20 years. And it now appears that debt will be
a fact oflife for a good percentage of them.
While the Harris/Decima poll didn't quantify debt levels, a spring 2011 Statistics Canada
study revealed that 17 percent ofretired debtors are in hock for more than $100,000, while
a quarter owe less than $s,ooo. The median
debt level was pegged at $19,000. Statistics
Canada also found that 40 percent of Canadian
retirees were in debt 18 months ago, not so bad
compared with the unprecedented six-in-ten
identified in the July Harris/Decima survey.
"If the numbers are accurate that's a huge
increase in a very short period," notes Greg
Pollock, president and CEO of Advocis, the
Financial Advisors Association of Canada.
"[The jump indicated in the study] is too much
to attribute to a mild recession," says Pollock.
"Other factors are clearly operating here.
People are developing more risk tolerance,
often of necessity but also perhaps inadvisably so. A rise in interest rates will happen
eventually and then we're going to see all the
worst-case bankruptcies and foreclosures. I
wouldn't say I'm alarmed about all this but it is
definitely cause for concern."
Travis Koivula, an investment adviser
with the $i.4-billion Island Savings Credit
Union on Vancouver Island, confirms that the
findings are about right from his perspective.
"We're seeing a lot more people retiringwith
debt, especially those with pensions since they
can work it off against a guaranteed income.
These people are usually pretty smart around
consumer debt and pay down their expenditures quickly," he says. "Other members on a
fixed income are more at risk if, and when, the
fiscal environment changes. I threw my crystal
ball out a long time ago, so my best advice is
to be prepared and get your financial house
istock
\
ria
in order as best you can and as soon as
possible," he says.
reinventing everything their parents did and
now they're busyreinventingretirement," says
Mccurdy, author of How Much Is Enough:Bal-
Fear of numeracy as boomers
reinvent retirement
ancing Today's Needs With Tomorrow's Retirement Goals. "I think they've always felt that
A myriad of factors have combined to create
more debt, explains Pollock, who was one
of 13 members enlisted in 2009 by Minister
of Finance Jim Flaherty to participate in the
federal government's Task Force on Financial
Literacy (see page 16 in the March 2011 issue
ofEnte1prise). "We identified two key issues:
increasing debt levels and decreasing
saving rates among Canadians of all ages
and kinds. We did not focus specifically on
retired seniors, but the warning signs are
all there," Pollock says.
The Task Force reported that the ratio
of household debt to disposable income in
Canada has risen from 80 percent in 1990 to
148 percent in 2010. Latest data from Statistics
Canada shows that ratio climbed in the first
quarter of 2012 to a peak of 152 percent. As
a result, some Canadians are increasingly
vulnerable to major economic shifts as well
as to more personal issues, includingjob loss,
divorce, illness and disability.
"We found that far too many Canadians
lack the necessary skills and knowledge to
make informed financial decisions," notes
Pollock, who represents 11,000 financial
advisers and planners across the country.
"Nearly one in two Canadians are uncomfortable with basic arithmetic calculations. And if
people have a natural fear of numeracy, then
it's going to be very difficult for them to deal
realistically with their finances no matter
how young or old they are."
Sky-high housing prices combined with
low-borrowing rates are certainly a defining
factor in the debt load. A more capricious
attitude to spending and savings is also a
generational benchmark for the latest and
largest wave of retirees in Canadian history,
explains Vancouver-based financial
planner Diane Mccurdy.
"The boomers have spent their lives
they were forever young. As we're constantly
reminded, the new 65 is 50 or lower. And if you
hear that enough, you start to believe it. Unfortunately, what happens is that people suddenly
turn 65 and discover that age has caught up
with them," she says. "And many realize they
haven't done the kind offinancial planning
they should and could have."
Mccurdy describes the boomers as "the
most fortunate generation in history, and they
like it that way. They enjoy their lifestyle, they
like heading off on two and sometimes three
vacations a year and they're not keen to give
anything up. They think they're younger, they
want to retire younger and yet the fact is that
many people are living longer, which they're
thrilled about and yet longevity is bringing up
issues around whether or not they'll outlive
their money."
Good intentions and bad timing are also
at the root of the problem, states Cambrian's
Mortimer. "Many folks acquired a good
portion of their debt pre-2009 when real estate
values were very strong and the economy
was still somewhat robust in this country.
Since then the market has been volatile and
low interest rates mean minimal returns for
anyone with fixed-income investments. They
either had their own mortgages or had tal<en
equity out of their own homes to help their
kids get into the market. As a result, some
good people got themselves into a difficult
situation. Some were na'ive, but many were
unwitting victims of circumstances over
a short period of time."
We help credit union
leaders make sustainabl e,
differentiated improvements
in the performance of
their organization s.
Are you compliant with
Ontario's By-law#5?
Call us for support
today. Working with
credit unions from
coast-to-coast, we offer
a full range of
governance assessment
and development
services.
g
ll
)ur
:ing
d
ms
P's
nd
r:
Long-term planning
The Task Force on Financial Literacy concluded that while seniors are adept at maldng
ends meet month-to-month, they struggle
to varying degrees with long-term planning.
Financial advisers must first convince more
NOVEMBER 2012 • ENTERPRISE
15
•
OC<lll
to the
A technology
trend is taking
the computer
world by storm,
but credit unions
are treading
very carefully
BY NICK ROCKEL
18
ENTERPRISE · NOVEMBER 2012
cott Ferguson sometimes
ventures out into the cloud, but
he's careful where he steps. As
vice-president, information
systems, at Libro Financial
Group, Ferguson oversees all
thecomputingservicesofthe
$i.6-billion credit union in London, Ontario.
Ferguson says Li bro, which brought its banking
system in-house in 1999, has a strong tradition
of developing its own technology.
But when his 24-member team has a
problem, it's open to outside solutions. Over
the past few years Libro has made more use of
cloud computing. This technology consists of
resources, such as software and data storage,
delivered as a service via the Internet or another
network. "Cloud has advantages if you find the
right application for it," says Ferguson, who
consciously avoids the term because he finds it
vague. "But just because it's new and it's called
'cloud' doesn't mean everything needs to
be there."
Although it's unclear who coined the
phrase cloud computing, one popular
theory of its origin is that people have
long used cloud symbols to diagTam the
Internet and other computer networks. The U.S.
government's National Institute of Standards
and Technology (NIST) defines it as "a model for
enabling ubiquitous, convenient, on-demand
network access to a shared pool of configurable
computing resources." NIST breal<s cloud
computing down into three service models
- software, platform and infrastructure - and
four deployment models: private, community,
public and hybrid.
Libro uses a hybrid of private and
public cloud services - the latter are shared
with other users. On the private side, the
organization began virtualizing its onsite
servers two years ago through solution provider
VMware. Ferguson says Libro can get a better
return on investment for each physical server
by creating several operating systems on a
single platform on the cloud.
Mixed success
Libro has had mixed success with the public
cloud, according to Ferguson. Earlier this year, it
started using ScientiaMobile, a software service
that detects which devices members are using
for mobile banking. Ferguson says that while
Li bro had attempted to create its own table for
tracking devices, it would be tough to keep the
list up-to-date, and so the credit union handed
the detection service over to ScientiaMobile.
But things didn't go so well in 2011 when
Libro turned over deployment of a video-heavy
promotional website to a host on the cloud.
Doing so was cheap and easy, Ferguson recalls,
but during the six months thatLibro ran the
site, hackers breached it twice. Luckily,
there was no member information at stal<e.
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Although Ferguson thinks some services are
probably highly secure, Libro is selective about
what it puts on public clouds. "The question
is, 'What are you trying to protect?"' he says,
noting that Li bro wants its members to feel
safe and secure when they bank. "I'm not sure
if they would have that same sense of security if
they thought that all of their financial data was
somewhere out on a [public] cloud," he says.
Gaining mainstream acceptance
An obscure technology as recently as 2008,
cloud computing has rapidly gained
mainstream acceptance. "Probably the largest
thing that has driven cloud, certainly among
SMBs and possibly among credit unions,
would be the consumerization ofIT," says
David Senf, progrnm vice-president in the
infrastructure solutions grnup at market
intelligence firm me Canada.
Senf points to the explosion in consumer
use of public cloud offerings such as Face book
and Gmail. "That kind of usage has had an
impact on the willingness of an organization
at large to start to investigate these services
because we've just become more comfortable
with them and familiar with them."
There are three main kinds of cloud service.
One is infrastructure as a service (IaaS), or
access to hardware, such as servers and storage.
The second is platform as a service (PaaS)a computing platform minus the software and the third is software as a service (Saas).
All three could be located anywhere, notes
Albert Silverman, a Toront.o -based senior
vice-president in the consulting practice at
PricewaterhouseCoopers.
Two advantages of cloud computing over
traditional IT are that it's pay-per-use and can
be quicldy scaled up or down. For example,
users of Salesforce.com, a popular customer
relationship management (CRM) software-asa-service tool, can effortlessly add or subtract
licences as needed.
Canada treads cautiously
Large or small, credit unions cannot ignore
cloud computing. Its potential benefits include
cost savings and more time to innovate.
But if Canada lags in embracing the cloud, its
Jesus Sanz
financial institutions have been even slower
than other sectors. That's partly because credit
unions worry about threats to the privacy and
security of their members' information. In
spite of those risks, credit unions that don't
use cloud services could soon be a rarity.
"For cloud computing, it's not a question
of'if.' It's a question of'when,"' says PwC's
Silverman. "In the next five years, every credit
union in Canada will be using cloud services
of some sort or another and you need to
understand how to use those services. You have
to have a plan, a strategy.''
But Canadian organizations haven't rushed
into cloud computing, at least not compared to
their American counterparts. In a 2011 survey
for Microsoft Canada of about 700 business and
government leaders, Leger Marketing found
that just 29 percent ofrespondents' organizations were using or considering the cloud. When
California-based Advanced Micro Devices Inc.
conducted a similar poll across the border last
year, the number was nearly 75 percent.
Canadians are being prudent, one expert
contends. "Financial institutions and
Canadian businesses generally are moving
very cautiously to cloud computing. Not
because they don't understand it but because
I think they do understand it," says Bradley
Freedman, partner and technology practice
leader at the Vancouver office oflaw firm
Borden Ladner Gervais. "And they understand
that the compelling business benefits that can
be presented by cloud computing have to be
weighed against t11e costs and the risks," adds
Freedman, whose clients include financial
institutions and cloud services providers.
Senf at me Canada says he's seeing an
uptal<e of private and public cloud usage
among financial institutions. Yet they've
shown less enthusiasm than other industries
- a trend shared with the public sector due to
concerns over security and regulatory compliance. But that won't last, Toronto-based Senf
predicts. "As they start to peel apart what data
it is that can easily, safely make its way into
the cloud from the data that needs to stay on
[premises], then we're going to see even more
grnwth within the financial services sector,"
he says. "So even though they've been slower
to adopt, they're going to be showing stronger
adoption over the next three years."
Risk and privacy concerns
Mindful of security and compliance, many
large banks and insurers only use private
clouds. As midmarket organizations, credit
unions find themselves in the tough spot of
being hypersensitive to those matters butlacking the resources to manage them t11e way big
financial institutions can, says Senf. "For [credit
unions], it starts to mal<e more sense from a
cost-savings perspective and from an agility perspective to focus on things like public cloud. "
B.C.'s Integris Credit Union is one credit
union that is being very careful when it comes
to adopting cloud computing. It's simply too
risky, says Bryan Simon, information security officer at the $497-million organization.
Integris has done virtualization privately since
2004. Simon prefers not to label this practice
cloud computing, but he says it uses the same
technology as public cloud services.
For Integris, one of the biggest problems
with public cloud providers is the locations
of their data servers. These might be in the U.S.,
for example, or the provider may even shift
operations outside Nort11 America at certain
times of day to save on electricity.
In Canada, the rules governing where
NOVEMBER 2012 • ENTERPRISE
21
RISE AND FALL OF
s the trend toward 'gTeener' more
energy-efficient homes continues
and homebuyers seek to reduce
their carbon footprint and save on
utility bills, financial institutions
are looking for ways to cater to the
· needs of mortgage owners. One
movement seen across Canada, to gTeater or lesser
degrees as a result of this new way of thinking, was
the introduction of the gTeen mortgage.
This idea started around the time of the
Government of Canada's ecoENERGY Efficiency for
Housing program in 2007 and built up momentum
with the extension of the ecoENERGYRetrofitHomesprogmm, which was part of the federal
government's Economic Action Plan. This program
provided tax breaks to Canadians who retrofitted
homes with energy-saving technologies.
In turn, the green mortgage was introduced
in Canada to cover the construction of new
energy-efficient homes, as well as the retrofitting
of existing structures. Benefits included anything
from cash rebates on the mortgage to a one percent
discount on the posted lending rate. Among the
credit unions that introduced these mortgages
were Vancouver City Saving·s Credit Union (Vancity), with the Climate Change Mortgage, and Desjardins Group, which offered a green mortgage.
Today, nearly a year after the federal
government closed the ecoENERGY Home Retrofit Program, are green mortgages still on offer?
According to credit union consultant W. Robert
Hall, who works closely with the Filene Research
Institute, the practice of green mortgages is alive
and well in credit unions across Canada.
However, scour the Internet or search for green
mortgages currently on offer by Canadian credit
unions and Hall's statement doesn't appear to
be supported. The reason, according to Nicolas
Frechette, senior adviser at Desjardins Group, is the
low interest rate. "Interest rates have plummeted to
an all-time low. It becomes harder to give incentives
when interest rates are that low," he says.
Green mortgage evolution
This isn't the only reason, it seems. Tania Goodine,
vice-president of brand at the $1.6-billion Libro
Financial Group, says that while the organization
supports the idea of green mortgages, products are
developed to meet member demand and because
they make sense from the financial institution's
point of view. "Simplicity is important to Libra. To
this point, we have found ourselves unable to
develop a simple, fair 1 measureable and manageable definition of 'green.' Energy efficient relative
to what? What about 'reusing' an existing home
rather than building new? I'm not sure if there's a
future for green mortgages."
This opinion is shared by a number of
credit unions. William Azaroff, director of business and community development at Vancity,
agrees that the idea has evolved. "There is an
outdated perception on green mortgages. Our
vision is much more than just being 'green.' Our
model of sustainable banking includes the social,
environmental and financial well-being of our
members," he explains.
Azaroff adds that the biggest challenge in
offering a "niche product," like a green mortgage,
is that it can be alienating. He gives the Clean
Air Auto Loan as an example. This loan offered
preferred rates for low-emission transport. "The
problem was trying to get consumers to vote with
loan dollars . Auto insurers started to offer better
rates than we could offer. The demand was low; we
couldn't compete."
BY NATALIE BRUCKNER-MENCHELLI
Martin Barraud
NOVEMBER 2012 • ENTERPRISE
25
Assu rance Accounting Tax Advisory
www.bdo.ca
J
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J
BOO Canada LLP, a Canadian limited liability partnershi p, is a member of BOO International Limited, a UK
company limited by guarantee, and forms part of the international BOO network of independent member
firms. BOO is the brand name fo r the BOO network and for each of the BOO Member Firms.
IBDO
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As directors step down,
some of credit unions' youngest members
are getting ready TO STEP UP!
BY TIFFANY SLOAN
the average credit union
board is stacked primarily with men over the age of 50,
then junior board programs - generally comprised
of youth, mostly women, under 25- are a welcome
source of new blood. Across Canada, credit unions are
inviting young people into their boardrooms in the hope
of engaging them and keeping their finger on the pulse of
Gen Y, while cultivating the interest, understanding and
competency of the next generation of credit union leaders.
While junior board progrnms are few and far between,
advocates say the long-term benefits are invaluable to
the succession-planning crisis looming in the credit
union system. In a timely report produced this year, titled
Corporate Governance in Canadian and U.S. Credit Unions,
the Filene Research Institute and Credit Union Central
of Canada found that credit unions are successfully
attracting only as many board candidates as there
are vacancies, making the election process far from
competitive. Moreover, only 29 percent of board members in Canadian credit unions are women and a mere six
percent are under the age of 35, according to the report.
Kudrin Ruslan
NOVEMBER 2012 · ENTERPRISE
29
"The Youth
Council is
preparing the
next generation
of board
members for
the credit union
as a whole."
- Matthew Cormier, Youth Council
chair at Bergengren Credit Union
post-secondary education this fall, with both
expressing interest in joining a credit union
board as a regular director down the road. And
Sandhills' junior director Amy Nixon, 17, says
she not only understood more than she thought
she would in the meetings, but that joining the
board "won [her] over to business." She now
plans to take a commerce degree. "I didn't think
I was that interested in it, but the experience
has introduced a new perspective,'' she says.
Reengaging younger
members
With the goal of improving representation
of the under-35 demogrnphic on its b'oard of
directors, the $202-million Bergengren Credit
Union inAntigonish, Nova Scotia, chose
to tal<e the idea one step farther. In 2010,
the credit union introduced a separate
Youth Council, comprised of 10 members
between the ages of 16 and 25. The chair of the
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parallel board sits on Bergengren's board as a
non-voting director.
At BergengTen, about 30 percent of
its 14,000-plus members are under the age
of 25. While the credit union has a strong
elementary school deposit program, account
activity tends to drop dramatically after the
age of 12, explains youth coordinator Elaine
MacDonald. The Youth Council aims to
reengage those members, reminding them
of the products and services available to
them, while nurturing an understanding
of the cooperative philosophy and creating
leadership opportunities for them within
the community.
The council's first two years have
been busy. Initiatives have included a video
contest in support of the United Nations
International Year of Cooperatives, high
school presentations on financial literacy,
and ongoing social media campaigns - and
Bergengren is happy with the results. While
the credit union wasn't sure what kind of
uptal<e it would get from the young people
in the community, it was impressed by the
number and calibre of applicants, says
MacDonald. "They are the future of our credit
union. The idea of empowering them and
engaging them early, I think for us, has
been a huge success."
Moreover, council chair Matthew
Cormier, 18, and other Youth Council
members are well aware of the potential
impact that a rural grassroots movement
can have on a global scale. "The Youth Council
is preparing the next generation of board
members for the credit union as a whole,"
says Cormier confidently. "When [current
directors] leave, there will be no shortage
of fresh faces and new ideas."~
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32
ENTERPRISE· NOVEMBER 2012
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Cooperating in building the future
COFFEE BREA (
Tact
by H.L. McGee
Sometimes climbing the corporate ladder
means leaving friends behind
View From The Top
THAT HARD-WON PROMOTION is finally yours,
and it's time for celebratory drinks at the pub
Friday after work with the whole gang. But when
you step into work on Monday morning, it feels
like you've crossed to the other side - the
same people who were your friends and peers
last week are now your direct reports. But does
putting on the boss's hat have to change your
relationship with your co-workers?
"Yes, it does, and you can't pretend otherwise,"
says HR consultant Roberta Matuson, author of
Suddenly in Charge: Managing Up, Managing
Down, Succeeding All Around. According to
Matuson, many newly promoted managers go
into denial, "but you need to recognize that
you're no longer one of the gang - and you
need to find a new gang."
Matuson recommends a forthright approach:
begin with a frank, one-on-one conversation
with each of your co-workers. "Let them know
that, from here on out, whatever is said to you is
said to you as their supervisor, no longer as their
friend . And whatever they shared with you in the
past will stay in the past."
Speak up. Unfortunately, you may find that
not everyone is on board with your new role.
Some of your co-workers might not think
you're the best person for the job, or they
may have thought they were in line for the job
themselves. The key, says Matuson, is to call
them on it and address their attitude right away,
rather than allowing it to be the elephant in the
room. Let them know you're aware that they
don't agree with the decision, but you're relying
on their professionalism and support going
forward - and if that's not something they
Vincent Besnault/getty, istock
can commit to, they should speak up . If the
option is available you can help them transfer
to another department.
"When you're inexperienced, you don't
want to have those conversations because
they feel like conflict," says Matuson, who
has helped leaders in Fortune 500 companies.
"But it's really something you have to do in
order to start out strong."
That's not to say that you need to rule with
an iron fist and stamp out all dissenting opinions.
"Remember that people need to vent," says Sharon
McMahon, vice-president of human resources at
Winnipeg-based Assiniboine Credit Union.
McMahon adds that you'll never prevent people
from ever disagreeing with you, so tap into
those opinions as constructive feedback.
Hold team meetings as a forum for your
co-workers to share their thoughts, and take
their input into account.
Managing perceptions. "As a leader, you
don't necessarily need to be the resident expert,
but you need to be able to leverage your team's
expertise, and acknowledge and respect it," says
McMahon. In fact, she adds, "I see a leader as
working for his or her direct reports, rather than
the other way around. It's our role to be there
to support them."
As you transition into your new role,
bear in mind the importance of managing
perception, she adds. "It can be challenging
for your co-workers if they perceive favouritism.
Even if you're not doing anything unfair,
it's real to them."
Gaining credibility takes time. Some
friendships will survive a promotion, while others
won't. Let your guiding principle be the good
of the team . "There are times when you need
to release a friend, and that's the hard facts of
business sometimes," acknowledges McMahon.!!.
FIVE qualities of an effective
manager, according to
Roberta Matuson
1. BE A STRONG COMMUNICATOR
Communicate with your team so they
always know where they stand.
2. BE TRUSTWORTHY Demonstrate
to your colleagues that you always have
their best interest in mind.
3. BE HUMBLE Shine the light on others so
they get the credit they are due.
4. BE COMPASSIONATE Give individuals
the flexibility they need to handle
personal issues that will arise.
5. HAVE A SENSE OF HUMOUR Don't be too
serious. Allow people to have fun at work.
NOVEMBER 2012 ·ENTERPRISE
35
Health
Facts On
ARE YOU SUFFERING FROM fatigue and tension
keep you hydrated . Most fluids , including
nutritional cont ent of its coconut water.
at work, or having difficulty concentrating?
milk and juice or even tea, coffee and pop, can
The product was marketed as " super-hydrating"
and "nutrient-packed."
Dehydration could be the culprit. Two recent
contribute to the total recommended amount
scientific studie s found that even mild
we need to drink daily. Coffee has typically been
dehydration, defined as a 1.s percent loss of
viewed as a diuretic, contributing to dehydra-
(FDA) and Health Canada guidelines that allow
normal water volume in the body, can cause
tion , but this is now changing. Medical research
products to claim they are a " good source of
" degraded mood, increased perception of task
centre the Mayo Clinic says that caffeine is only
electrolytes," they must provid e 10-19 percent
difficulty, lower concentration , and headache
an issue when consumed in large amounts
symptoms" in women and "adverse changes in
(more than 500-600 milligrams per day, th e
equivalent of five to seven cups of coffee).
of the daily nutritional value to qualify (15 percent
for Health Canada) .
vigilance and working memory, and increased
Still, some caution is warranted. A 20-oz. or
tension/ anxiety and fatigue" in men.
These two studies, conducted under the
larger brewed coffee might have 300-400 milli-
auspices of the University of Connecticut,
grams of caffeine, and a double shot of espresso
involved inducing dehydration in test subjects
has around 150, so the numbers quickly add up.
To meet U.S. Food and Drug Administration
Still, as Dr. Tod Cooperman, president of
Consumerlab.com. explain s, 'There 's nothing
really wrong with coconut water for casual
drinking. It's expensive but otherwise fine."
Coconut water is low in calories and, according
to the Consumerlab.com report, "certainly a
by walking on a treadmill before ta king a
series of cognitive tests that led to the
Coconut water: myth or miracle? There has
healthier choice than a can of soda or a fruit
studies' conclusions.
been a lot of media hype the past couple of
drink, which contain twice the amount of sugar."
Despite exercise having induced dehydration
for research purposes, there is a ·wider application
years about the benefits of coconut water.
Often marketed as a sport drink, it is promoted
On the job. What is clear is that staying hydrated
to the finding s. "Dehydration affects all people
as being better than water because it restores
and staying properly hydrated is just as
important for those who work all day at a
sodium levels that are depleted by sweating and
its energy content boosts blood sugar levels.
on the job should be a priority, especially during
the festive-filled winter months. Health Canada
computer as it is for marathon runners ,"
The product has been particularly applauded
dehydrate you. Also, drinking anything loaded
explains Lawrence E. Armstrong , one of the
for its special hydrating qualities.
But these assertions have been controversial.
with sugar makes the body work hard to process
In 2011 , an independent U.S. testing company,
that unless you are exercising during the day
scientists on the research team .
So how much do we need to drink to stay
warns that "drinking too much alcohol can
it, cau sing further dehydration." It also adds
hydrated? Armstrong recommends an often-cited
Consumerlab .com, examined three popular
and need to replace lost electrolytes, water
rule: eight, 8-ounce glasses of water a day, or
brands of coconut water and found that two
is probably the best choice.
approximately two litres -
indicator of dehydration . "By the time you feel
contained markedly less sodium and magnesium than advertised in their nutritional
Hea lth Canada recommends staying hydrated
thirsty, you are already dehydrated," says Sean
information . And as a result of the tests by
by drinking plenty of cool liquids, especially
Upton , media relations officer at Health Canada.
Consumerlab .com , there have been lawsuits,
water, as cool drinks are quickly absorbed by
with one of the companie s, Vita Coco, settling
the body. And, as the Mayo Clinic puts it, water is
a class action lawsuit for $10 million for
misrepresenting the health benefits and
Drink
and thirst is not a good
Understanding the hype. Perhap s surprisingly,
that morning cup of Joe is actually helping to
36
ENTERPRISE · NOVE MBER 20 12
Whether working, playing or exercising ,
"calorie-free, inexpensive and readily available."
up! ~
(coconuts) Amriphoto/getty, istock
r:ICCil
Business
solutions
through
information
technology®
Marketing Maven
Standing Out From The Crowd
With
2013
just around the corner, Enterprise delves into the TOP FIVE marketing strategies
to be deployed by the experts over the next 12 months by Adam Currie
1. Building brand equity
Client perceptions and attitudes have a direct relationship to a brand's
market position. Tania Goodine, vice-president of brand at Ontariobased Libro Financial Group, says that organizations are able to create
brand equity by making themselves "memorable, easily recognizable,
and being superior in quality and reliability." Goodine adds that building brand equity is critical. "Because we operate in such a competitive,
commoditized industry, we need to continue to strengthen our unique
value proposition based on straightforward advice, personalized
service, profit sharing, and involvement in our local communities."
2. CSR strategies and policies
"At the core of effective corporate social responsibility (CSR) is ensuring
that everyone is accountable and works to earn the trust of members
through ethical and responsible behaviour," according to Gail StepanikKeber, chief marketing officer at SelVUs Credit Union in Alberta.
Priscilla Boucher, vice-president of CSR at Winnipeg-based Assiniboine Credit Union, warns that profit pursued at any cost is unacceptable. "A business that pursues profits while demonstrating social, environmental, and ethical leadership is putting long-term sustainability
before short-term gain and helping to build a successful business model
based on the premise that people and the planet matter," says Boucher.
3. Enhancing the online experience
Many members today choose to handle transactions online. "As
consumer channel preferences are constantly changing, a continually
expanding portion of financial research, transactions and purchases
nowoccuronline," notes Libro's Goodine.
As a result, marketing departments are focussing not only on branch-
38
ENTERPRISE • NOVEMBER 2012
oriented relationship building, but also on developing strong
online connections with members. Bronwyn Dunbar, senior manager
of marketing and community investment at Island Savings Credit Union
in B.C., and Libro's Goodine concur that enhancing members' online
experiences is a key focus for 2013 .
4. ROI metrics
Return on investment (ROI) has become central for decisions
relating to all aspects of credit unions, according to Stepanil<-Keber.
Metrics are also beginning to play a larger role in securing approval
and funding for marketing programs.
"Marketing measurements are not always tangible, however,
we are putting details together to build our marketing metrics
dashboard," says Stepanil<-Keber. She adds that this includes basics
surrounding marketing spend-to-revenue (ratios), media monitoring,
social media metrics, brand health scores, community investment
ROI and product sales during marketing campaigns.
S. Supporting merger and integration processes
Credit Union Central of Canada reports that the number of credit
unions decreased by 726 between 1992 and 2011 due to mergers.
Facing a trend of consolidation, many credit unions have to consider
merger and integration processes to ensure smooth operations.
Bryan Mavrow, who oversees the Envision Financial and Valley First
brands as senior vice-president of marketing at B.C. 's First West Credit
Union, says that merger efforts in 2013 will be more focused on keeping
things local. "Consumers value localness. I haven't met a member
who'd say they appreciate having their money spent on banking
system conversions and renaming projects," he says. ~
Luc Latulippe