If you’d told don wright a few years ago that he’d be running Central 1 Credit Union, which oversees 133 credit unions (CUs) in British Columbia and Ontario, he probably would have thought you’d lost your mind.
That’s because the 59-year-old Saskatchewan native has been a public servant for most of his career, rising to the level of deputy minister in the B.C. government with limited exposure to the private sector.
But Wright, a Harvard University-educated economist who spent five years as CEO at the B.C. Institute of Technology (BCIT) before joining Central 1, says the CU’s board approached him for the job, which he started in January, despite his lack of experience with financial services institutions.
“At first, I told them they must have the wrong guy because there’s no financial services experience in my background,” Wright says. “But the more we talked, the more interested I became.”
Specifically, Central 1 was looking for someone who could lead a complex, multi-stakeholder organization that has to deal with all three levels of government. Wright’s experience in both government and the private sector in leading change, he says, explains why he got the job.
In other words, the job of steering Central 1 through the uncertain future that faces all financial services institutions in this age of rising regulation and intensifying competition presented an opportunity for Wright to take on a different kind of public service, given CUs’ mandate to provide financial services at lower cost vs the banks.
One of the biggest challenges, Wright notes, is finding ways to reduce costs among organizations that vary widely in size and in the services they offer. Although Central 1 oversees an industry with $92 billion in assets under administration (AUA), its largest member, Vancouver City Savings CU, has $18 billion in AUA while some of the smallest CUs have only $50 million in AUA. And although the CU industry has cut costs, it is looking for ways to improve its competitiveness with banks by expanding services such as wealth management.
In the post-2008 world, regulation represents another, perhaps even more pressing challenge. Wright says regulators now expect a much stronger risk-management framework from all financial services institutions.
“Here at Central 1, we now have a much more comprehensive risk-management framework,” Wright says. “For example, core liquidity deposits now have to be primarily government securities of a shorter duration. Everything is under stricter, more conservative controls.”
At the same time, the rules are changing for CUs: although they are provincially regulated, Ottawa recently passed new legislation that permits CUs to go national by creating new entities that are federally regulated. (Ottawa also took something away: it no longer would step in if a CU fails.)
That shift has created greater uncertainty for the CU industry, Wright says: “There needs to be an extensive conversation involving the CU system, as well as the federal and provincial regulators, on just what regulatory framework is required. There’s now a real concern about who is responsible for what, in terms of liquidity, if we get into another 2008 situation.”
Wright suggests one step toward a solution could be a single, Central 1-style organization that would oversee CUs across the country. This could help streamline the administrative costs involved in having multiple organizations administering the 326 CUs in Canada outside Quebec.
“There’s probably too much overhead in the supporting centrals,” Wright says. “There are five [CU central] organizations overseeing CUs in English Canada and one in Quebec. If there was one central – at least, in English Canada – this might provide the basis for federal/provincial regulators to come to some understanding on who is responsible for what.”
Wright’s early experience gave him no hint that he would one day be steering a complex financial services institution through an era of fundamental change. Early on, he had every intention of obtaining a business degree and joining his family’s large construction firm.
But while Wright was at the University of Saskatchewan, where he obtained a bachelor of commerce degree, he developed a passion for economics. Wright then obtained a master’s degree from the University of B.C. and a PhD from Harvard University, both in economics.
Wright then spent two years in the economics department at the University of Saskatchewan, and seven years with the Saskatchewan government in ministries such as finance, economic development and advanced education.
Wright’s family relocated to B.C. in 1991, a return home for his wife, Nancy. Wright spent seven years with B.C. government ministries, including finance, education and forestry, as well as five years with Weldwood of Canada Ltd.
In 2001, Gordon Campbell, then B.C.’s premier, recruited Wright to be deputy minister of forests, for which major deregulation policy changes were in the works. Wright then returned to the private sector as a consultant, mostly in forestry, for a few years.
Five years at BCIT followed, where, among other changes, Wright turned a $12-million structural deficit into a $10-million surplus in his first two years.
For Wright,CUs have a crucial role to play in the community, especially as a banking alternative for consumers: “While our banks are very good, CUs also offer a check-and-balance to them.”
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