3 Leaders Share 3 Viewpoints On 3 Hot CU Topics
ANAHEIM, Calif.-Here are three different views on three different subjects-CUs and their collaborative future, the future of WesCorp, and a new CUSO model-offered during the California and Nevada CU Leagues' annual meeting.
Prepare For Brave New [Corporate] World
Stan Hollen, president and CEO of CO-OP Financial Services, warned margins are not going to improve much over the next couple years, and big changes are coming due to the evolution of the corporate network.
"Collaboration will continue to be important," Hollen said during a "Road Ahead" panel discussion at the California and Nevada CU Leagues' Annual Meeting and Convention here. "Credit unions must consolidate and aggregate to take advantage of the economies of scale."
Hollen predicted once legislation takes hold, debit interchange income will declined 35% to 45%. He urged CUs to take steps such as encouraging members to increase usage of debit cards, to nonetheless budget for a significant decline.
Another area to watch: ATMs. Hollen noted many big banks are advertising their deposit capture capabilities at ATMs. "We are behind and we need to catch up."
A Lot Of Work Ahead
Meanwhile, another panelist, Phil Perkins, president and CEO of Western Bridge FCU [formerly WesCorp], said the bridge corporate has a lot of work ahead of it, noting many of the decisions CUs make regarding the formation of a new corporate network will have an impact for years.
"We have an opportunity to make the system better, more efficient and safer," he said.
When pressed for the cost of recapitalization, Perkins responded by saying Western Bridge is seeking to minimize contributing capital. "Aggregation and consolidation are critical to driving the price," he explained. "We estimate we will have a $5 billion balance sheet, and we expect 5% initial capital. The cost depends on how many folks are in, but we think smaller credit unions will need less than 50% of the capital they had before."
Cost-Cutting CUSO To Help Bottom Lines
Lucy Ito, president and CEO of the two leagues' new CU Roots unit, said it is a CUSO designed to help credit unions lower operating costs by providing compliance services. Moving forward, CU Roots is exploring adding internal audit, collections, benefit administration and other services.
"Yes, there is pressure on the bottom lines of credit unions, but merger is not the only option," she said. "Credit unions can do back-office functions collaboratively. Many of these things are 'doo doo.' CU Roots allows credit unions to bring their 'doo doo' to us and spend their time with their membership."
Also on the panel were Mike Defnet, SVP of sales for CUNA Mutual Group, Joe Greenwald, VP of marketing and communications for CUDL, Sarah Canepa Bang, president and CEO of FSCC, and Bonnie Kramer, EVP/COO of FSCC.