MUSKEGO, Wis.—Corporate credit unions continue to evolve following NCUA’s new rules post corporate crisis, and many will need to add new lines of business to continue to meet members’ needs, asserts one corporate CEO.
“It’s an interesting landscape now,” said Chris Felton, interim president/CEO of Corporate Central.
Felton stepped in after long-time president Bob Fouch retired in December. “There are about 12 corporate credit unions. And if you spoke with all 12 about their business models you would probably get 12 different answers. That is what has emerged out of the financial crisis,” said Felton.
With corporate CU investment activities greatly restricted under the new rules—compared with the much looser guidelines prior to the recession—and the fact that natural-person credit unions are becoming fewer in number and larger, Felton emphasized how those marketplace developments have led to a great deal of emphasis on corporate credit unions getting “close” with their individual members.
About The Member
“At the end of the day it is always about the member credit unions,” said Felton. “That is why we are placing a tremendous amount of energy behind meeting with our members and talking to them about their needs, so we can determine what a corporate should look like three, five, even 10 years from now.”
Felton said Corporate Central’s business model retains its core function of offering on-balance-sheet products and being a liquidity source for members.
“Here in the Midwest, and especially within the state of Wisconsin, our members have always relied on us to be a liquidity source for them,” said Felton. “And certainly there have been regulations that have affected credit unions’ need to have diversification of their borrowing sources. But we take a lot of pride in the fact we are able to and will continue to be a primary source of liquidity for our members.”
Out-Of-The-Box Thinking
Longer term, the new corporate rules dictate that corporates must think more “out of the box,” said Felton, adding that is a key reason Corporate Central launched CUSO InterLutions last year and has formally rolled it out this year.
InterLutions focuses on business solutions for the credit union community, starting with healthcare services. I-Care is the CUSO's first product launch, with a goal of enabling member CUs to reduce volatility and expenses associated with health insurance by pooling risk.
“If you asked anyone four or five years ago if they thought a corporate would be involved in the healthcare space—albeit through a CUSO—the answer would probably have been ‘no’,” said Felton. “I-Care is a good example of Corporate Central listening to its members’ needs and looking at things differently.”
Felton added that with the payments industry changing quickly, due in large part to new technology and mobile, corporates must closely examine their current partners and find new ways to leverage and make greater use of existing relationships.
Chris Felton, Corporate Central
Adjust To New Rules
Perhaps the biggest adjustment for all of the corporates, reminded Felton, is simply learning to do business with tight rules in place, versus a period in which restrictions may have been too loose—for some.
“We all got painted with the same broad brush,” said Felton about investment strategies and other practices that led a half-dozen of the largest corporates to be placed into conservatorship. “The regulatory pendulum has swung from being too loose to really tightening down on the corporates to make doing business a real challenge.”
Felton acknowledged that changes made by NCUA during 2015 to some corporate regulations has been helpful, but stated again that the new environment has forced Corporate Central to place a “supreme” amount of focus and energy on managing its balance sheet in such a manner so that it can position its portfolio to continue to be reliable liquidity source for members.
Not About Adding Volume
With that as its business base, Corporate Central can work with its members to find new ways to serve them, Felton said.
“It’s a lot less about trying to add volume through sales efforts to existing core products and more about development of the next innovation where Corporate Central is able to play a role in that for our members,” Felton said.