ACCU backs off of corporate network study; says there's enough information already available

WASHINGTON – In a surprising announcement, the Association of Corporate Credit Unions said it will not move forward with the planned study of the corporate credit union network. The study was supposed to look at what products and services corporate CUs should be offering in the future; how they could be delivered; and also the structure of the corporate network, including U.S. Central’s role and potentially how many corporates will be needed in the future. The ACCU was in the process of seeking a third-party firm to conduct the study, which was being funded by a $100,000 gift grant from U.S. Central. News of the study first broke in April when the ACCU Board agreed to pursue the study. What sparked the reversal? Apparently the ACCU has come to realize that there’s already a lot of information out there about what types of products and services CUs are looking for. As for the network’s future structure aspect of the study, the ACCU said it’s clear by what’s been happening with corporates that the marketplace will dictate their fate, not a study. “It’s a waste of money I think. We were looking at the scope of the study, and as we talked about products and services in the future we realized there was information already available. We have CUNA’s Environmental Scan, and the Filene Institute does relevant studies,” said Pete Pritts, president/CEO of FirstCorp, Phoenix, and vice chairman of the ACCU Board. Pritts was on a task force looking into the study since it was first talked about. ACCU Executive Director Gigi Hyland said there’s no question this was a very difficult decision, but that there was a strong possibility any study could have been out of date given how fast things are moving in the network. Hyland did say that as the association for corporates, the ACCU was in a tough position in terms of sponsoring a study that might have some sweeping conclusions of what corporates should look like in the future or how they should be delivered. She said it could have been prejudiced against certain corporates, or certain types of corporates. Hyland, like others interviewed, also pointed out that a study isn’t needed because the marketplace is already clearly dictating how the network will look. “Corporates are driven by a market that is moving quickly and members demanding movement quickly. Time waits for no man, no corporate and no credit union,” said Hyland. For example, the last few years have seen a number of corporate credit union mergers as well as corporate alliances for things such as bill pay driven by CU demand. Ultimately, said Hyland, CUs are the ones driving these deals. Ed Fox, president/CEO of Mid-Atlantic Corporate FCU, Middletown, Pa., backs the decision 100%. He said a study can’t replace real life. “I support the ACCU’s decision. I have much more confidence in the direction that is provided by the marketplace than in the findings of the study,” said Fox. David Preter, president/CEO of Mid-States Corporate FCU, Naperville, Ill., said he wasn’t too interested in this particular issue, but that he didn’t see a big need for the study. He said the ACCU certainly had a political aspect to consider. “I think most of the information the study was going to collect had already been collected. The ACCU being an association didn’t want to come out and be a sponsor of a potential study that said some of its members should deliver products in different ways than they do now,” said Preter. There was one prominent corporate that was disappointed – WesCorp, San Dimas, Calif. “WesCorp is disappointed that the study is not going forward. We believe there was value in conducting the study, especially for natural person credit unions,” said Bob Siravo, president/CEO WesCorp. WesCorp actually got the balling rolling on the study. It was a letter from former WesCorp President/CEO Dick Johnson to U.S. Central and the ACCU talking about such a study that started the process. At this point WesCorp has no plans to conduct the study on its own. Johnson said time and again that any study should be done by the network, and not one corporate. WesCorp wasn’t the only disappointed CU. Louisiana Corporate wanted the study to move forward. “I was somewhat disappointed that the study was cancelled. I don’t know what it would have shown, but I suspect that if the results were consistent with similar studies performed in the banking industry, it would have shown that increased conglomeration results in higher prices and slower innovation,” said David Savoie, president/CEO of Louisiana Corporate CU. “I would have liked to see the study results, but in the long run, individual credit unions `voting’ with their dollars will determine the structure of the corporate network, and the result will be more efficient than anything that could be determined by consultants and studies,” said Savoie. [email protected]