A joint venture between Level 9, a private company, and New England Federal Credit Union ($679M in Williston, VT), L9.com was formed in 2005. Since its inception, the CUSO, headquartered in Barre, VT, has received inquiries from credit union clients and other organizations about becoming owners. Specializing in credit union website development since 1999, L9.com has worked with over 75 credit unions, providing them with website solutions and brand integration strategies.
Propelled by the growing interest, the CUSO restructured its operating agreement with the current owners and created a two-tiered system – Class A ownership for the original founders and five open Class B slots. Their first Class B owner, Heritage Family ($186M in Rutland, VT) was incorporated in 2008. Dave Mayette, CEO, notes, "Our CUSO had a restrictive agreement, but was a true collaborative model. We wanted the structure to allow the collaboration to flourish and extend itself. Moving into the future, we've added the ability to have more credit union and vendor partners."
Heritage Family had been an L9.com client prior to joining the organization's ownership. According to Mayette, they were pleased in terms of the service, but were enthralled by L9.com's service, capacity and commitment to the credit union's success beyond any contract or service period. By buying in to the CUSO, they were helping bring L9.com's value to the larger marketplace.
L9.com isn't actively looking for additional owners. From the first day of business, the CUSO has been a profitable business with no continuing support from the founding members. Mayette says, "Everything takes second place to our mission of keeping pace with the technology. We live on a sharp edge that requires an intense daily focus. But, their support was critical to the mission and morale of the CUSO."
Networked Strategies and Cutting-edge Platforms
Mayette recognizes, "In our specialty, the next movement is what we are measured by as a business. This, though, applies itself equally to the promise of the CUSO structure and how we serve our owners and clients. As an industry, we have not met our full potential. There are a myriad of CUSO options available. How can credit unions use us more effectively? Embrace us within the larger industry. We do bring something special – not just vendor services, but a deep understanding of the market that is difficult to mimic in other formats or organizations."
CUSOs, Mayette notes, allow for true collaboration – a differing of opinions that results in a melding of both technical and thought capacities. L9.com is a partner of Credit Union Student Choice Partners, a relatively new CUSO that uses a networked business model of credit unions, CUSOs, and suppliers to deliver a comprehensive student lending solution. Mayette says, "CU Student Choice, – that's the future model of CUSOs. We like to pride ourselves on being associated with the most functional, pro-active, and sound players in the marketplace." He continued on, "A hard-core scientist is not reductionist in scope. They are masters of a singular universe, but they approach that universe from many different angles. The beautiful aspect of a multi-owned collaborative model is the varying vantage points. The combination of ideas should be both opportunistic and meaningful in terms of timing, business model and market needs."
There's a point in time, maybe three to five years in the future, he says, where the majority of transactions at a credit union will happen online. One project currently underway is the building of Realtors Federal Credit Union ($10.2M in Rockville, MD). The first virtual credit union, serving realtors and their families across the U.S. will use some of the finest technology to serve members without physical branches. Mayette says, "There are great efficiencies in this model as costs associated with buildings and staff for the buildings are minimized. The majority of those savings can be transferred to the member in terms of better rates or more convenient options. They're getting a better service, at a better price point, exactly when and how they want it."
Realtors Federal offers an efficiency model that can be extended to the entire industry. But the web is much more than technology. Mayette remarks,"I remember back in 1995 or 1996 where the only capability was to put a small graphic in the middle of a gray screen. But the later experience that Level 9 had, from Fiserv Corporate's website to the national tourism site of Switzerland, has developed a unique CUSO value proposition. We can blend multiple technologies at a complex level into a cohesive solution that allows the member to interact with many individual applications, but still feel comforted by the one virtual entity. They are in one spot with the brand umbrella and communication capacity but have access to everything they need."
Future Opportunities and Growth
Regarding, the current economically challenging environment, Mayette remarks, "Some credit unions have approached us with a different mentality recently, but the vast number are doing business as normal. Many are continuing to have difficulty in differentiating themselves – especially now when it can make a measurable difference."
Future growth for the CUSO will center around two areas – continually improving their comprehensive solutions and building their reputation within the industry. Content management systems are the key to effective web power and this need will continue to grow. Security is also critical with the web platform. Mayette notes, "Level9 decided to enter this market because we believed in it. The resources – financial, physical, and more, were ours. We take that commitment very seriously. We may currently be a troubled industry in some respects, but overall I’m positive about where we can be and grow."