Kampen brings experience to U.S. Central

When Dan Kampen took over as president/CEO of U.S. Central Credit Union, Overland Park, Kan., he brought with him a working knowledge of the Corporate Credit Union Network. Unlike several of his predecessors at U.S. Central, Kampen is a system veteran. Kampen returned to U.S. Central last December from Corporate One Credit Union, Columbus, Ohio, where he'd been president/CEO. Prior to that, Kampen had been vice president, controller, and assistant treasurer of U.S. Central.

CU Mag: You've stated that your first goal is to improve member relations. Do you mean with the 36 corporate credit unions or with credit unions in general?

Kampen: Primarily, I'm referring to U.S. Central's relationship with its 36 corporate credit union members and, secondarily, with the whole credit union community. For the first time in U.S. Central's history, we'll have a senior executive devoted to member needs. We're working to centralize member relations, which has been dispersed throughout the organization. [Mike Lee and David Dickens came to U.S. Central from Corporate One Credit Union with Kampen to serve as senior vice president, marketing and member services, and as senior vice president, asset/liability management, respectively.]

In terms of our relationship with credit unions, we're a system player much like the other national level organizations. My history in the movement makes it easy for me to maintain those relationships. I've worked diligently to make sure those relationships stay solid. My reception in the [credit union] community has been wonderful. [CUNA President/CEO] Dan Mica, [National Association of Federal Credit Unions President] Ken Robinson, and [CUNA Mutual Group President] Mike Kitchen all have been very supportive.

CU Mag: Reportedly, a second goal for you is faster product development. Are the Auto Pilot [auto loan securitization] and Access [statement reporting] programs examples of things coming?

Kampen: Auto Pilot and Access are great examples of things U.S. Central can do for the Corporate Network. Auto Pilot is about 90 to 120 days away from issuing its first securities. And the Access product growth in the past three or four months has been phenomenal. We now have 1,000 credit unions on the Access Fax Statement program, where they receive their statements faxed to them overnight. And we have another 151 credit unions using the Access Cash Manager program via personal computer link.

We want to make the product development cycle shorter. This isn't just a U.S. Central problem. It's a credit union problem, too. A lot of the delay has to do with our being in a defensive mode as a movement. All our energies have been devoted to things such as the field-of-membership issue, the problems the Corporate Network had a couple of years ago, dealing with new regulations such as [the National Credit Union Administration's (NCUA)] Part 704 [the corporate regulation] and Part 703 [the credit union investment regulation].

At U.S. Central, we're going to standardize methods for product development. We want to bring that development curve down. We want to include the membership and the regulators at the right points so they're in the loop, too.

We're looking at a loan participation program, which will allow U.S. Central to partner with its member corporates in providing lines of credit to credit unions. The corporates drove this product. Having them drive product development is key.

We'll always be looking for new investment products and any wholesale activities, such as upgrading the automated settlement process. It's a benchmark product for the Corporate Network. More than 50,000 items amounting to more than $6 billion are settled every single day through U.S. Central. Automated settlement is probably one of the key benefits of membership in the Corporate Network.

CU Mag: You've mentioned U.S. Central and the corporates bringing technology-based products to credit unions. Would an Internet transaction system for credit union members be supported by the Corporate Network's settlement system?

Kampen: There are synergies between technology and transaction processing. It will be great if we can meld the synergies between corporates and U.S. Central, between corporates and their credit unions, and between credit unions and their members. We already have the basic foundation. We're just working to enhance the connectivity throughout all parties, throughout all entities, throughout the nation.

Some of the things we're in the process of bringing out-such as customized [securities] safekeeping reports-are on our private intranet, the private network between U.S. Central and its member corporates. We're talking about accessing a subset of that, which takes it out to the credit union member. CU Mag: Are you looking at technology upgrades for U.S. Central's systems, too?

Kampen: When I look at the future of financial services, we all need to be making some significant investments in technology. That's whether you're a credit union, a corporate, or U.S. Central.

We're in the process of upgrading the Corporate Credit Union Network (CCU) system, which is a great base system. The Access product, which is on our intranet, is one example. We're starting to look at what corporates can do to help credit unions with their technology needs. So we're approaching technology needs at all levels.

CU Mag: Will all parties continue to be able to communicate and automatically settle transactions as the CCUN system is upgraded?

Kampen: The upgrades will be part of a package, so it doesn't really matter what other systems a corporate uses. The corporates are driving the process. We have large corporates and small corporates in our CCUN metamorphosis focus group, some that use CCUN extensively and some that don't. We'll be flexible and allow a corporate, regardless of its size, to pick components it wants to use. It'll be a modular approach from which corporates can put together a package for their needs.

CU Mag: U.S. Central's size has decreased slightly in recent years. Is this because of less liquidity in credit unions, or is U.S. Central getting less of the liquidity invested? Kampen: Credit unions are at about a 14- or 15-year high in terms of loan-to-share ratios. That means credit unions are making loans to members. Also, it's becoming harder for credit unions to attract deposits because of competition from the mutual fund industry. So liquidity has dried up somewhat. The actual market share of corporate investable funds is rising. Corporates have 23% to 25% of investable credit union funds, and U.S. Central maintains a 50% to 55% market share of investable funds from corporates. So those market shares are holding their own and actually increasing. The shrinkage is really a function of liquidity.

CU Mag: You disagreed with the Treasury Department report that recommends the Central Liquidity Facility be discontinued. Since 1980, credit unions have had access to the Fed discount window. Why do they need the Central Liquidity Facility?

Kampen: The discount window serves an entirely different purpose from the Central Liquidity Facility. If you look at the times the Central Liquidity Facility has been able to step in and truly do its job, the Fed discount window wouldn't have been able to do it. Look back to 1994 and Cap Corp [the failure of Capital Corporate Federal Credit Union]. The Central Liquidity Facility stepped in and provided daily liquidity for Cap Corp member credit unions on a moment's notice. The discount window couldn't do that.

It's a mistake for Treasury to conclude that because the Central Liquidity Facility hasn't been used the past two years-because of the health of the movement-that we should do away with it.

CU Mag: Part 704 [of NCUA's regulations] requires capitalization on the part of the corporates, contains restrictions on investing in derivatives, and adds new reporting requirements. Will it, plus NCUA's stepped-up corporate supervision, hamper the ability of corporates to maneuver and react to the market?

Kampen: Part 704 was a long, expensive process that NCUA and the corporates put a great deal of effort into. We spent two years in dialogue, and I believe we came out with a very workable regulation.

We're just in the process of implementing that regulation. So it's yet to be seen how the implementation and interpretation of the regulation works. At U.S. Central, we're committed to making sure we're able to serve our corporates within risk parameters established by the agency. The agency agreed to work with the Association of Corporate Credit Unions. And the NCUA Board said it would formally review the regulation 18 months after its implementation date to make sure it's working in a way that doesn't hamper corporates' ability to serve their members.

CU Mag: When the Corporate Credit Union Network was first formed, it had a noncompetition clause, where one corporate couldn't market in another corporate's territory unless invited. That appears to be gone with mergers between corporates and some corporates seeking regional if not national charters. Can we expect more competition between corporates?

Kampen: Anytime a credit union has choices, credit unions and their members ultimately benefit. I think you're going to see credit unions having choices. I'd like to answer by quoting [Wendell A.] Bucky Sebastian [CEO of GTE Federal Credit Union in Tampa]. I was at a meeting a year and a half ago where he made a great comment. He was chastising credit unions in the way only Bucky can because he cares so much about them. He basically said, "It's either innovate, cooperate, or amalgamate. It's about time we as a movement started innovating or cooperating, or we'll be forced to amalgamate."

So I think if we all keep that as our heart's intent and focus on serving members, the rest of the issues will work themselves out. .

-Eugene Johnson is editor of Credit Union Magazine's News Now, available on the Web at www.cuna.org.

Copyright Credit Union National Association, Inc. Apr 1998
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