TALLAHASEE, Fla.-Corporates will need to rely on one another if they are to survive in a new environment.
Brad Miller, CEO of $3.2 billion Southeast Corporate FCU here, said that while it is difficult to predict what the future holds for corporates over the next few years with the changes to Regulation 704 and a rule governing legacy assets yet to be implemented, consolidation is likely and those corporates that avoid such a fate will have to work with regional partners to merge backoffice functions and achieve greater efficiencies.
"Mergers may happen, but you can be cooperative and generate efficiencies without merging," he said.
While back office consolidation may be necessary to squeeze out additional efficiencies, Miller dismissed the idea of merging all of the corporates into one giant entity, as was recently proposed by Members United FCU.
"From a practical sense I think that would be hard to do," said Miller, who took over at Southeast Corporate after previously heading up the Association of Corporate Credit Unions. "We're in a relationship business at the end of the day and you need the local focus."
Miller also declined to speculate as to how many corporates would be left standing after the system adjusted to the new regulations, saying that there is no way to determine the "optimal number" of corporates.
But it's not all doom and gloom for corporates going forward-with natural person CUs also feeling the headwinds of economic and political change, as Miller sees a number of opportunities for corporates to provide new services, especially in the fields of risk management, compliance and technology.
"Those are three areas where corporates have deep experience and expertise. I see this being where we need to put some emphasis," he said.
