Firms Confirm They See Trend Among CUs Looking Beyond Corporates

VISTA, Calif. — Companies that provide item processing confirm they, too, are seeing a trend by CUs to look to providers beyond corporate CUs for the service.

Andrew Tilbury, director of marketing and communications for Bluepoint Solutions, which provides solutions to support intermediate item processing steps, such as check imaging and bundling items into a cash letter, has seen an increase in CUs choosing its products to support inclearing.

"Last year we added 25 customers who elected to go in-house with their item processing and I expect that trend to continue."

Bluepoint also recently entered into a partnership with Mid-Atlantic Corporate FCU, Harrisburg, Penn., to assist credit unions with lower check volumes to adopt Check 21-enabled branch capture, and to enable credit unions of all sizes to convert check processing operations to the corporate's systems (CU Journal, March 28).

Meanwhile, based on results at two credit unions, Tilbury may be right. The $1.6-billion Municipal CU became an inclearing credit union last June. Wong, in a previous report (Credit Union Journal, Nov. 29, 2010), said the move is expected to save 30% annually on share draft processing and provide the institution with security. Wong said cost reduction was important, but a greater concern was a potential stoppage of services from the corporates. MCU clears 2- to 2.5-million checks daily for its 260,000 members with checking accounts.

In Houston, JSC FCU recently moved to inclearing with the Fed and terms the process seamless (see related story). Paul Maslonka, COO, said the move has given the credit union greater flexibility to manage item processing since a third party is not involved. Maslonka said the decision is saving JSCFCU $10,000 a month.

Doug Wolf, VP at ProDraft Inc., which recently added correspondent services through Firth Third Bank to its item processing business line, reminds there are other options outside the corporate network than the Federal Reserve. "When you work directly with the Fed there are a lot more internal controls you have to have. We are finding that a lot of credit unions are not interested in dealing directly with the Fed. Plus, while you can do a lot of correspondent-type services directly with the Fed, you don't get a lot of other resources."

Based in Bismark, N.D., ProDraft, a CUSO formerly controlled by Midwest Corporate FCU, provides correspondent services to about 30 CUs, many owners of the CUSO.