Multi-credit union owned CUSOs have come a long way in the past
several years. Originally founded to help credit unions serve their
members by getting involved in businesses that were outside their
immediate operating scope, CUSOs are now giving credit unions new
opportunities and control of product development, options once driven
exclusively by vendors.
The multi-owned CUSO combines some of the best organizational advantages
of a credit union with those of a private company. Some of the capabilities
these hybrid organizations are achieving include:
- enhanced market power through cooperative buying;
- reduced costs from economies of scale and eliminating process
- accelerated development through shared research and evolution
of new opportunities;
- expanded ownership of intellectual capital and business processes.
Some mulit-owned CUSOs are using these capabilities to form a
networked organization that significantly enhances their
credit union owners competitive position.
Our own CUSO, the Callahan Credit Union Financial Services Limited
Partnership (CUFSLP), is one example this evolution. Founded in
1987, CUFSLP has transformed itself from a one product, investment
focused group that was founded using economies of scale, to an action-oriented
group whose focus spans multiple initiatives from investments to
technology to credit union core business. CUFSLPs most successful
initiative to date was the creation of the Trust for Credit Unions
mutual fund family. This foundation has made it possible for our
CUSO to spend resources exploring new opportunities for competitive
Scale for Cooperative Research
The need for collective action by credit unions is growing. Credit
unions share of the financial services industry is challenged
by national competitors that can offer more comprehensive services
to members. Maintaining strong relationships with members and using
the latest e-technology requires scale and cooperative efforts.
Account aggregation was one of the first initiatives our group tackled
under a new vision. The benefits of developing this type of opportunity
through the CUSO instead of each credit union searching for its
own solution were manifold. As general partner, the staff at Callahan
Financial Services spent nearly a year researching this project.
Vendor selection, contract negotiations, and implementation were
a few of the areas in which partner credit unions pooled resources
together to complete the project more efficiently. If code was developed
by one credit union to complete an aspect of the project, it was
shared with all the credit unions involved. Individual credit unions
did not employ separate legal teams to finalize agreements, the
general partner handled contract negotiations for the whole group.
For complex initiatives, multi-credit union CUSOs take much of the
burden off of individual credit unions by pooling expertise and
breaking work into more digestable bites. Many credit unions do
not have the resources to research multiple opportunities, but the
CUSO can steer several working groups at once. The financial advantages
of using multiple credit unions, specifically the discounts that
can be negotiated from economies of scale, continue to make CUSO
working groups an effective option.
Through CUFSLP weve found that even when opportunities do
not materialize into core businesses or actionable projects, the
benefits the credit unions derive from our research is still valuable.
The idea of credit unions transforming their websites into Portals
was an area the Partnership targeted for research. After several
months, we found that there was not a solid revenue opportunity
or a benefit to collective action at this time. This group research
saved individual credit unions time, trouble and, in some cases,
the expense of discovering the hard way what our group research
had told us months earlier.
In addition to market scale that multi-credit union CUSOs can bring
to the table, several CUSOs are transforming themselves into networks
where information and advances can be instantly shared among credit
unions. Retaining ownership of the business processes is one of
the key benefits of working through a CUSO. Developing products
and services in a CUSO as opposed to partnering with a traditional
vendor, allows the credit union to be part of the strategic process
and prioritize projects to truly meet their needs.
Networking through meetings, conference calls and working groups
is a traditional way that CUSOs share information among credit unions
quickly. Expanding this information sharing to a networked operation
to deploy new services is an ability our CUSO is still working laugh.
As we move forward in the coming years to create a cooperative network,
multi-owned CUSOs may be the force that keeps credit unions at the
forefront of innovation.
Sharon Simpson is Director of Marketing and Administration at Callahans
Financial Services, Inc. Callahan Financial Services, Inc. is the
co-distributor of the Trust for Credit Unions, the first and largest
family of mutual funds designed specifically for credit unions.
For more information, call 800-CFS-5678 or email Sharon at firstname.lastname@example.org.