CUNA's Corporate Credit Union Next Steps Working Group released its report Sept. 20, announcing the Terry West-chaired team thinks the current corporate system might evolve into the best provider of credit union financial services.
Credit unions have invested a substantial amount into corporate infrastructure, the report said. Additionally, credit unions will also find alternate service providers will be more costly and less service driven than corporates have been in the past.
However, corporates will have to be willing and able to make the changes; and, the report said, changes must be driven by members and boards, not just management.
The group still stands behind a CUNA Corporate Task Report released earlier in March, in which it called for significant consolidation and smaller balance sheets. Smaller balance sheets are less able to generate net interest income to subsidize services. As a result, corporates must reprice payments and other correspondence services while improving efficiency.
"This need for efficiency will at a minimum require intense collaboration among corporates in back office services and more likely very substantial consolidation," the report said.
Corporates will also be challenged to provide liquidity services to credit unions with smaller balance sheets, because they will lack investments to be pledged as collateral. Options include peer-to-peer arrangements in which corporates act as an agent for Fed funds transactions among members, or collateralizing credit lines with pools of securities pledged by member credit unions.
The report also lists some of the alternative providers of corporate services available to credit unions, and the due diligence required of credit unions to select a provider.
The complete report is available online at http://www.cuna.org/initiatives/corp_report/index.html.