Vendors are critical partners for credit unions. With a little more than 1% of America’s credit unions exceeding $1 billion in assets, few individual organizations possess the financial strength or resource depth to internalize processes, particularly payments technology. The choices are to collaborate among ourselves, retain a vendor, or in some cases both.
My position on credit union selection of vendors is well-known: Banks and bank-owned processors should be the absolute last resort for credit unions. They compete for deposits and loans, and they pay dues to fund organizations that are trying to restrict the credit union movement.
There have recently been several bank-owned processors saying they are credit union-friendly. Ask them if the bank still pays ABA dues and what public positions their executive management have taken regarding CRA and taxation of credit unions.
Another key question is what does the vendor give back to the credit union movement? Do they participate in credit union advocacy? Do they support systems organizations? Do they contribute to credit union charities?
CO-OP Financial Services is a not-for-profit cooperative, owned and operated by more than 1,000 credit union shareholders. There are many other for-profit organizations for credit unions that are not bank owned. At the end of the day it is not just about function, service and price. It does matter where the profits flow and how they are used.
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