Gregory A. Thomas is the credit union industry's Alvin Toffler.
Mr. Thomas, the Space Coast Credit Union chief executive, smiles and his eyes gleam in describing the high-tech wonderland of financial services. It's a sleek futureworld where people bank on their televisions, their computers and their telephones, and where money is broken down into zeroes and ones.
Indeed, the Florida credit union's view is almost comically long-range: According to promotional material, you can join Space Coast if "you are a member of any expedition or colony on any celestial body including the moon and planets in this or any other galaxy."
But this brave new world Mr. Thomas expects, perhaps only a decade away, can be treacherous. Ill-prepared financial institutions will be in for a shock from which they might not recover, he said.
"We're going to wake up one day and the whole world is going to be different," Mr. Thomas said. "We all have to stop and ask who the players are going to be in the future."
For the past eight years, Mr. Thomas has worked to ensure that $582 million-asset Space Coast - the place he got his first job in 1972 - will be a player in his new world by pushing the use of technology.
His standing in the industry is such that the Credit Union National Association appointed him to a 22-person steering committee to study how the trade group and its members should prepare for the next century.
If the future is indeed electronic, Space Coast seems to be on track. According to a recent study, the credit union handles 70% of its transactions electronically, either by phone, ATMs, a PC-based home-banking system, or by direct deposit.
The credit union is moving ahead with plans to install interactive, PC- driven video screen kiosks in some of its branches. Initially the terminals will provide only information; later they will be used for transactions.
Still, Mr. Thomas is haunted by the fear he might be moving too slowly.
"It disappoints me to think we might not be moving fast enough," Mr. Thomas said. "I just hope we can stay in touch and see things early enough to shift gears."
A widely dispersed and a high-tech oriented membership were the two factors that drove Space Coast to embrace electronic delivery.
When Mr. Thomas took the credit union's reins eight years ago, he worked on expanding its presence outside Brevard County on Florida's west coast. Through expansions of its membership base and mergers with other credit unions, Space Coast now has 1,600 different employee groups and 120,000 members statewide.
Conventional means of reaching the members wouldn't be possible for Space Coast. Like most other credit unions, it couldn't afford to build a branch network as expansive as a bank's.
"You cannot build enough brick and mortar to keep up with where the different pockets of membership concentration are," he said. "The future relies on electronic means by which you can reach members in remote locations."
In fact, brick-and-mortar has cost Space Coast dearly. The credit union built six new branches last year, for a total of 23. This jacked its operating expense to total income ratio to 42.5% for June 30, according to Callahan & Associate, a Washington-based consulting firm. The peer group averaged a 36.6% ratio.
Thanks to high operating expenses, the credit union's return on assets for June 30 was 0.73%, compared to the peer group's 1.01%, according to Callahan. Space Coast's ratio has been higher than the peer group four of the past seven years.
"There's a cost involved in the geographic expansion," Mr. Thomas said.
Besides branches, Space Coast relies on 28 ATM, an automated phone line and a 30-person telephone service center to reach its members.
The institution is a member of CU-24, a multi-state credit union-owned ATM network that has 237 machines in Florida. Space Coast also belongs to Florida's system of about 20 branches that are shared by different credit unions.
Space Coast's membership is receptive to using electronic delivery systems, as it includes computer wonks of the Kennedy Space Center and Patrick Air Force Base, a wing of the National Aeronautics and Space Administration. According to a Space Coast survey, a few years ago, 40% of its members have personal computers.
But Mr. Thomas argues the appeal of technological delivery systems goes beyond the techies that belong to his credit union.
"Computers are getting easier to use," he said. "And I've been noticing older people are getting more accustomed to using ATMs."
Electronic delivery may rule the financial world of the future, but Mr. Thomas does not see branches going the way of the dinosaur. Rather, he sees them evolving.
"Branches are going to be places of education," he said. A branch of the future will include different automated services as well as a sales staff that will "entice" members off line to promote different products and services.
But while Space Coast has reached for the stars in technology, its balance sheet problems are a little more down to earth.
Since 1990, assets have grown an average of 21% annually and loan portfolios have exploded nearly 27% a year, according to Callahan.
In that time, credit unions in Space Coast's peer group had their assets increase 9% a year and their loan portfolios expand 8%.
Mr. Thomas said he wants to slow down the pace.
"Twenty percent asset growth is a difficult one to keep up with," he said. "Asset growth of 15% might be easier to keep up with."
Indeed, there are signs of wear at the credit union. Asset growth has exceeded Space Coast's ability to build capital through retained earnings, and the credit union's capital-to-assets ratio has been sliding since 1993. As of June 30 the ratio was 7.95%, compared to 8.18% at the end of 1994 and 8.19% in 1993.
Space Coast's delinquency has been rising since 1992, just as the industry's ratio has been falling. The credit union's delinquency ratio at June 30 was 1.01% compared to the peer group's 0.63% ratio, according to Callahan.
This rise has caused the credit union to take a look back and review its loan policies and collections, Mr. Thomas said.
"I think a 1% figure is a good time for assessment," he said. "At the same time, a credit union with a half-percent figure might ask if it is doing a good job of lending to its members."
Although a concern, the rapid growth "is a good problem to have," Mr. Thomas said. Space Coast's management and board are in the process of crafting a strategic plan to address the issue.
But as it addresses current concerns, Space Coast will continue to look to the future. Mr. Thomas believes preparing for things to come is as critical as dealing with what's happening.
"Positioning is important," he said. "The stakes in the future are very high."
