North Shore Credit Union Nets New Market

Blue ocean | BCBusiness
When North Shore Credit Union’s traditional market segment declined, CEO Chris Catliff and his team got creative to target a new market share.

Local banking chain successfully uses “blue-ocean” strategy to swim when their traditional market sank.

In a “blue-ocean” innovation strategy, a business grows by generating demand in an uncontested market space, instead of battling it out with other suppliers in an existing market segment. The concept has been around for almost a decade, and has taken root at some large global companies. Although it’s not yet common locally, a few Vancouver companies have used a blue-ocean strategy to great effect. North Shore Credit Union is one.



The Problem


In 2004, North Shore Credit Union found itself serving a declining market. Its credit union roots were sunk deep in the blue-collar culture of Vancouver’s North Shore. Over time, though, the region had become home to more white-collar workers. It was time for the local institution to better align itself with a population that was aging, growing wealthier and needing more from its credit union than traditional products such as deposits and loans.


The Solution


North Shore Credit Union CEO Chris Catliff and his strategic planning team recognized that their catchment area abounded with well-off people who needed financial and retirement planning as well as “wealth management” help. These people, while solidly middle to upper-middle class, typically didn’t qualify for wealth management services offered by private investment managers and big banks (whose cut-off is usually $1 million in investable assets). 


Catliff’s team devised a radical strategy: the credit union would create a new market segment by becoming a “lifetime” wealth management service provider. While maintaining its non-wealthy members, it would sharpen its focus on the needs of this primarily baby-boomer cohort.


But how to convey the shift to members and potential members? The team hit on the concept of reinventing the typical branch, converting it into a spa-like drop-in centre to fit the lifestyle of its hoped-for customers. In 2005, its first financial “Zen centre” opened, in West Vancouver. The traditional branch had become a virtual retreat. On arriving, members were shown by a concierge to private rooms where they could chat with advisors over coffee or tea in a Japanese-style room whispering with soft music and burbling water. 


The soothing atmosphere was a hit with customers – and also with staff, who clamoured to work at the centre. The branch showed rapid growth and the credit union spent the next six years remodelling most of its 12 branches on similar aesthetic themes. The conversion culminated this past fall when an entirely new branch was opened in Kitsilano, featuring shoji-screened rooms, aromatherapy and other tony accoutrements. 


Did the blue-ocean strategy of focusing on growing “share of wallet” (and not necessarily client numbers) succeed? North Shore Credit Union believes so. Between 2005 and 2010, its assets under management grew from $1.7 billion to $2.5 billion. Value of deposits grew by more than 10 per cent each year, reaching 18 per cent in 2010. And the credit union’s “wealth book” – its wealth under management – has grown 16 per cent annually since the switch. 


Lessons


• Consider the context.
If your market share is declining, it may be time to seek a new market with less competition. 


• Be bold.
North Shore Credit Union defied skeptics who said no one wanted a credit union focused on retirement planning. 


• Dive deep into your market’s needs.
North Shore Credit Union designed a service the market didn’t know it needed – until it got it.