IFT Supports Canada’s First West’s Transition to a Federally Regulated Credit Union
By Roy Urrico
In 2021, one of Canada’s largest credit unions, the CA$17.4-billion First West Credit Union, based in Langley Township, British Columbia (B.C.), began to transition from a provincially regulated to a federally regulated organization to become more competitive with large banks. To proceed toward its objective, the credit union had to first sunset its consumer lease division and enlisted the help of Integrated Financial Technologies (IFT), a provider of business process outsourcing (BPO) solutions
First West Credit Union, with roots dating back to 1946 and more than 250,000 members, operates four regional brands (Envision Financial, Valley First, Island Savings, and Enderby and District Financial). The organization provides personalized banking products and services to through innovative financial technology.
Transitioning to a federally regulated credit union would allow First West Credit Union to increase its loan portfolio over time and accelerate profitability. “We are seeking our federal license. That means we can do business outside the province,” said First West’s Vice President of Real Estate Darrin Lee.
However, Canadian laws do not allow federally regulated lending companies to offer consumer leases — and First West Credit Union held more than $200 million in legacy consumer automotive and equipment leasing accounts.
Getting Ready to Go National
The credit union’s leadership reviewed several options to address its existing book of consumer leasing accounts. Executives had the choice to either sell the portfolio outright — an arduous, time consuming, and expensive process — or close the consumer leasing business altogether, allowing existing contracts to run out.
“We looked at selling the company in the beginning. That did not pan out, so therefore we made the strategic decision to wind it down. Now, winding it down meant I still have to run the book. I still have to collect leases for five years. I still have to do all of that,” Lee explained. The credit union, he added, determined that hiring a third party to look after the book was probably the best way to go.
While researching the possibility of a sale, First West Credit Union found Burnaby, B.C.-based IFT, which offered front-and back-office services to credit unions and other lenders. IFT was in the process of launching its fully compliant and brandable IFT Ignite servicing platform, which facilitates all lending management processes, including sales, onboarding, customer service, and collections.
Tod Chisholm, president at IFT, explained Ignite “intelligently combines years of lending experience with state-of-the-art artificial intelligence (AI) and machine learning technology.” This helps lenders optimize efficiency, reduce costs, improve profitability, and build customer loyalty.
Chisholm added, “Through the IFT Ignite platform, we can create and implement effective marketing campaigns, reduce receivables, provide accurate and consistent customer service, and give lenders confidence that all mission-critical back-office operations will be performed with unmatched speed, accuracy, and execution.”
Fulfilling a Growth Strategy
Today, First West Credit Union continues its transition to the federal model. According to Lee, IFT seamlessly manages the life of the remaining contracts. As the leases expire, IFT will continue to minimize this business until First West’s consumer leasing book is entirely terminated.
IFT assigned an outsourcing team in 2021 to manage First West Credit Union’s book of consumer automotive leasing contracts, which amounted to close to 2,500 accounts. “When they started (the First West leading book) was over 200 million. I think we are just shy of 15 million today,” said Lee.
Meanwhile, the credit union reallocated personnel away from a portion of the business that was marked for closure (yet still collects interest on the -remaining accounts).
“Those are normal services that we provide to the credit union space in particular,” said Chisholm. “They are often a little bit constrained on resources and all also a little constrained on expertise. We bring both of those things to the table. For many of our credit union partners keeping the technology lift low for them is a huge benefit.”
Chisholm noted a servicing business is more than backend processes. “We're one of the very few servicing businesses that will also help you on the front end,” he noted. Chisholm mentioned from IFT’s perspective the credit union space is certainly a key target. “We can provide additional value on the front end of the business around sales and lead management and closing customers, and providing better customer experience.”
Said Lee, “From the start, it made me comfortable that IFT’s leadership had successfully managed ambitious automotive leasing projects before. Their agents have a great deal of practical industry knowledge. I was confident they could help us with our plan to scale the business, while providing a cost-effective course of action that best served our legacy customers.”
Making It Work
IFT Ignite facilitates the management and delivery of a wide range of essential lending processes. The cloud-based system enables agents to access and retrieve vital member data in real-time, including up-to-date personal information such as current account data, addresses and contacts, employment records, payment histories, past loan applications and decisions, and other necessary information.
Said Chisholm, “We also pride ourselves on having industry-leading technology tools to make workflows as efficient as possible, whether that’s through bespoke automation (integrating with other existing machines), or granular, AI-based reporting on our progress.”
The ongoing BPO operation has also supported First West Credit Union in its effort to become compliant with federal regulations. IFT, fully versed in the complicated regulations and statutes of the Canadian leasing community, and adheres to the industry’s stringent data privacy, security, and compliance mandates.
“From a regulatory standpoint, we do a 100% QA (quality assurance),” explained Chisolm.
IFT Ignite records every call, text message, or interaction with a customer and reviews it using artificial intelligence, he said. The system also looks for sentiment indicators – keywords that reveal a customer's distress, desire to speak with a manager, or maybe happiness over their experience.
Added Chisholm, “There is nothing that you as a lender when servicing through the IFT Ignite platform would not know what is happening. They can actually get access to every single iteration of everything that happens.”
IFT Eyes the U.S.
IFT’s clients comprise credit unions, banks, automotive lenders, power sports financing companies, and other providers. “We have many customers in Canada, some of the largest credit unions, for varying levels of equipment, automotive and power sports, using IFT Ignite and also using our (other) services,” Chisholm said.
Among them, the Auto and Equipment Division for the CA$27 billion Vancouver, B.C., Canada-based Coast Capital Savings; and a joint venture in the collector car space with Mecum Collector Auctions that caters to consumers who are applying for financing online, and places them with various lending customers, including credit unions, to get financing.
“Our core mission now and all the way through for the next three years is to expand our footprint into the U.S. We are pretty well-known in Canada,” said Chisholm. “Not to say that we would don't want to do more business in Canada, but we really see the opportunity being expanding the same core services into the U.S.”
“We have effectively built a solution for the Canadian credit union market that has direct application in the U.S. and now we're at the stage where we want to expand the (lender) servicing opportunities into the U.S.,” said Chisholm. IFT’s sister company Inovatec, which provides cloud-based loan origination and loan management solutions, has already pressed heavily into the U.S. market.