A corporate credit union is a larger credit union structure that serves various 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 loan options. The corporate credit union is third party that helps credit unions by offering a variety of services to them.
Part of the value of a corporate credit union is that it provides investment banking services to the individual credit unions. In some cases, this may facilitate the ability of these smaller banks to profit from long-term or short-term investments that the single credit unions would have trouble making on their own. The corporate credit union also frequently offers “depository services” to the single credit unions, for example, helping facilitate ATM transactions or checks to clear.
Every 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 greater community of credit unions.
Financial professionals often explain that it makes sense for single small banks or credit unions to rely on third parties for some of the services that they offer to consumers. One way that corporate credit unions help out smaller credit unions is in pooling together 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 really reflects a policy called “regionalization” that many nations and regions are taking advantage of to collectivize services and prevent duplication of efforts.
At the point where corporate credit unions and their smaller credit union customers interact with consumers, the individual credit unions often offer better interest rates than those of other local banks. They can also offer perks to customers who are affiliated with specific groups or employers. A local credit union can help a consumer to get a personal loan or other lending option that they might not be able to find, for example, from a car dealer, a third-party mortgage lender, or some of the less scrupulous independent lenders offering payday loans or auto title loans.
