VISTA, Calif.-Concerns over the future of corporate CUs has led more natural person CUs to look to alternate strategies to cut out the middleman on item processing.
"We are getting inquiries on a daily basis from natural person credit unions about bringing item processing in-house," said Dick Drew, executive VP at Bluepoint Solutions, who called the spike in interest "unusual."
The technology vendor will be hosting a webinar for prospective credit union clients in the near future and already 50 institutions have signed up. Drew said the number of participants signed up is about average, but the difference is that Bluepoint Solutions has yet to do much in the way of marketing to bring attention to the event-the interest appeals to be all organic.
Tom Eaton, president/CEO of Tulsa, Okla.-based St. Francis Employees FCU, isn't surprised by the surge in natural person institutions looking to end their reliance on corporates. With pending rule changes and ugly balance sheets, many retail CUs are worried about both the corporates they are working with and what the system as a whole will look like when everything shakes out.
The $30-million St. Francis Employees FCU took its item processing in-house during the early 1990s and essentially taught itself to work directly with the Federal Reserve. Staffers went through a similar learning experience when switching to Check 21 in 2007. Eaton believes that CUs of any size can deal directly with the Fed with little trouble.
"If they are familiar with check processing, all they need to do beyond that is cut and paste. The back office operations isn't much different than using ACH files, they're just check files instead," he said, adding that he thinks corporates' added value on the back end of these transactions is "non existent. They really weren't doing as much as people were led to believe. It's pretty much an autopilot with [Bluepoint's] software."
For its part, Bluepoint noted that it has strong corporate credit union partners and while it provides software installation and training, it does not provide outsourcing.
"The credit unions know the subject better than we do, they're the ones that have been doing the processing for years," Drew said.