Scanning my feeds this morning and I came across this article in the Toronto Star. The basic gist of the article is that a national Bank of Canada study shows that the big six banks hold 90% of the assets in the banking industry despite entries by foreign competitors.
Here is an excerpt:
Canada's banking sector is "characterized by monopolistic competition" even though the number of banks has risen more than fivefold over the past 25 years, says new research by the Bank of Canada.
The discussion paper, entitled A Note on Contestability in the Canadian Banking Industry, takes a fresh look at whether market concentration has compromised competition in Canada."Canada has a highly concentrated banking market," the report says. "The Big Six banks account for more than 90 per cent of the assets in the banking system."
The six biggest banks are the Royal Bank of Canada, the Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and the National Bank of Canada.
What I found most interesting in the study was that there was only a footnote mention of credit unions that basically stated, "Asset data was unavailable, so we didn't bother including credit unions in this report." This might not be verbatim!
This got me to thinking: we should take a page from their book and reduce the big banks to a footnote in the credit union industry's book, rather than the headline!
The credit union movement continues to obsess over what the big banks are doing by mimicking their products and services and their appearance. Unfortunetly, this is a battle that cannot be won.
However, if the credit union movement digs in and really positions itself as a differentiated niche player and a true member-centred alternative, let the big banks have their monopoly. There will always be plenty of under-satisfied big bank refugees who are looking for something different. Your credit union is different, right?
The real opportunity in the face of a huge competitor is to do something different. If Wal-Mart moves to town, the way to coexist with Wal-Mart is not to try to be Wal-Mart, but to offer something that Wal-Mart is uninterested in or incapable of offering or to target an under-served segment. Sounds like a no-brainer to me!
P.S. When I was young, I used to love playing Monopoly—the problem was, no one liked playing Monopoly with me! I wonder if anyone would like to play with the grown-up, credit union Tim?