Although the maturing of the Corporate Credit Union Network means increased competition, it also offers opportunities for enhanced cooperation to serve member credit unions better. With the advantage of hindsight, it now seems safe to conclude that the first period of the history of the Corporate Credit Union Network is at an end. From the mid-1970s through the mid-1990s, natural person credit unions across the country came together to address their common needs for liquidity, investment and correspondent services, and other wholesale financial services by establishing corporates. At one time, more than 40 of these organizations, acting largely on a state and regional basis, were open for business. During these formative years, corporates created what might best be described as a close knit community made up of credit union leaders who understood their success was built not only on the uniqueness of the individual corporate, but also on a foundation of cooperation with other corporate credit unions. As a result, in this early period the corporate network made great strides in developing shared solutions for such needs as data processing, settlement and investments. Additionally, it developed “self-regulating” standards & guidelines to protect the safety and soundness of the network. In combination, these offerings enabled corporates to enjoy a disproportionate share of the credit union movement business. But that was then. Now things are a lot different and changing rapidly. The corporate network is currently experiencing a significant transformation and is beginning to exhibit the classic signs of a maturing industry. Consolidation has reduced the number of corporates by more than a third – there probably will be less than 30 left by the end of 2003. Competition among the corporates, once kept in check by informal “gentlemen’s agreements” and localized loyalties, has become very aggressive. Most corporates continue to rely on mature product lines that exhibit little differentiation and are largely commodities that sell on price rather than quality. As a consequence of this situation, some corporates are losing market share to non-corporate competitors. Finally, there is a perception that an evolving “circle the wagons” mentality is causing corporates to move away from cooperation within the network. As one considers this brief history of the corporate network, two questions come to mind: First, can the corporate network reinvent itself and extend its useful life so that credit unions continue to gain advantages from the existence of this unique member-owned infrastructure? Second, can corporate credit unions still find opportunities to work together for mutually beneficial gain? As someone who is engaged in the transformation of a corporate credit union that both cooperates and competes with other corporates on a daily basis, I am optimistic that the answer to both questions is yes. Over the last few years, many corporates have individually or in concert with other corporates, made significant investments to reinvent themselves and their product lines. Investments have been made to enhance and extend current offerings, while others have introduced new lines of business altogether. These efforts all have one thing in common: an attempt to create specialized niches and achieve economies of scale. This is how a mature industry makes a fresh start, and it is a very positive sign. What is most interesting about this new form of cooperation is that it is informal and voluntary rather than system-wide. Instead of the entire network taking on a project and trying to make one solution fit all needs, ad hoc groups of corporates are tackling individual issues as their situations dictate. Corporates have come together cooperatively to tackle such shared needs as data processing, brokerage services, bill payment, business services and Web development services. Corporate credit unions have also enjoyed the benefit of cooperation at a network level through their ownership in U.S. Central Credit Union. Specifically, corporates have cooperatively worked together to guide advances made in ACH and other electronic payments at U.S. Central for the benefit of the corporate network. The long-term success of corporate credit unions ultimately will be measured by how well they meet the needs of natural person credit unions. By embracing specialization, convenient cooperation, and occasional competition, corporates can ensure that their members will be the ultimate beneficiaries. After all, maturing means we’re growing up. It doesn’t have to mean we’re growing old.

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