Corporate credit unions serve smaller consumer credit unions by providing investment banking and deposit services, pooling resources to make transactions more efficient, and offering better interest rates and benefits to consumers. This reflects a policy of regionalization to collectivize services and avoid duplication of efforts.
A corporate credit union is a larger credit union structure that serves several smaller “consumer credit unions.” When the average person thinks of a credit union, they are probably thinking of an individual consumer credit union that operates through interactions with employers and local groups to offer residents banking or lending options. The Corporate Credit Union is a third party that helps credit unions by offering them a variety of services.
Part of the value of a corporate credit union is that it provides investment banking services to individual credit unions. In some cases, this can facilitate the ability of these smaller banks to benefit from long-term or short-term investments that individual credit unions would have trouble making on their own. The corporate credit union also frequently offers “deposit services” to individual credit unions, for example, helping to facilitate ATM or check transactions.
Each country has its own system for operating banks and credit unions. In the United States, for example, a system of “credit union leagues” has largely replaced a more state-based approach. These agencies serve this large community of credit unions.
Financial professionals often explain that it makes sense for small individual banks or credit unions to rely on third parties for some of the services they offer to consumers. One way corporate credit unions help smaller credit unions is by pooling resources. As a third party, a corporate credit union can make many transactions more efficient and effective. In fact, the idea behind corporate credit unions actually reflects a policy called “regionalization” that many nations and regions are taking advantage of to collectivize services and avoid duplication of efforts.
At the point where corporate credit unions and their smaller credit union customers interact with consumers, individual credit unions often offer better interest rates than other local banks. They may also offer benefits to customers who are affiliated with specific groups or employers. A local credit union can help a consumer obtain a personal loan or other loan option that they may not be able to find, for example, from a car dealer, a third-party mortgage lender, or some of the less scrupulous independent lenders that offer payday loans or auto title loans.
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