Consolidation Won't Be Limited To Number Of Corps
BIRMINGHAM, Ala.-Thomas Bonds surmised that NCUA's actions strongly signal a consolidation of the corporate system looms in the future.
"There will be significantly fewer corporates. I'm not sure we'll get down to regional corporates, but we will get down to something very similar," said the CEO of Corporate America CU.
While a number of analysts who spoke with Credit Union Journal contend the restrictive nature of NCUA's new corporate rule regarding investments will shrink margins and stress bottom lines, leading to higher fees for services, Bonds disagreed.
Noting Corporate America's investment portfolio has always been conservative and that the CU leverages technology to keep operating costs in line, Bonds said, "We have actually lowered our fees. Everyone is talking about having to raise fees-we looked at our business model and determined that it was not necessary. Natural-person credit unions are getting assessments and experiencing capital losses from many of their corporates. The last thing they need is for their primary service provider to tack on a bunch of fees to cover up operating inefficiencies."
Bit for some corporates, it may be too late to change the business model, Bond suggested. While the long-term corporate business model is up for debate, more near-term concerns are likely held by corporates that have yet to transition away from U.S. Central investment and payments system services, cautioned Corporate America CU CEO Thomas Bonds, whose CU took detailed actions over a year ago to move Corporate America off U.S. Central systems.
"It is very difficult to transition off of a payments system platform in its entirety," Bonds shared. "For corporates still reliant on (U.S. Central) and don't have staff to devote to the transition, it's not going to be possible. They have a very narrow window (two years according to the new rule) to take care of both of these issues."