Evolution of CUSOs Provides a Platform for Credit Union Success

Credit Union Service Organizations (CUSOs) are more important than ever to credit unions. New CUSO models are enhancing member value while expanding the reach and impact of credit unions in the financial services marketplace.


Today, CUSOs have unprecedented strength. There are 887 active CUSOs today, comprised of 697 that are wholly-owned by individual credit unions and 190 owned by multiple credit unions. Over $1.4 billion is invested or loaned to CUSOs by credit unions. These entities offer a wide range of products and services while serving a variety of purposes. Some are focused on reaching members. Others are focused on the institutional market. Technology, financial services, transaction processing, delivery systems, and investments in start-up operations are among the businesses that CUSOs encompass.

The diversity of services generates new business models across the spectrum of CUSOs. Wholly-owned CUSOs primarily serve their owner credit union but some serve multiple credit unions. Some of today's multi-credit union owned CUSOs began in one credit union but expanded ownership to multiple credit unions as they increased in size.

Multi-owned credit unions often started as partnerships among local credit unions before gradually extending their reach. Other multi-owned credit union CUSOs began as collaborative efforts among credit unions nationwide, including Callahan Credit Union Financial Services Limited Partnership (CUFSLP). A few, such as MEMBERS Development Company (MDC), were initiated as a cooperative that included both credit unions and non-credit union entities, CUNA Mutual in MDC's case.

Networking Networks

The next evolution that is occurring in the CUSO space is the increasing interconnectivity between both CUSO and non-CUSO networks. Networks are a fundamental part of financial services today. Whether by physical networks such as branches, ATMs or card processors, or virtual networks that connect via the Internet, credit unions and their members are increasingly tapping into resources that are interconnected. CUSOs are enabling credit unions to take this evolution even further.

This evolution is manifesting itself in a variety of forms and bringing a new paradigm to many of the existing business models. Some of this enhanced connectivity comes through consolidation. The most prominent example of this among CUSOs over the past year was CO-OP Financial Services' merger with Credit Union Service Centers (CUSC), bringing together two of the largest shared ATM and branching networks.

The evolution is seen in more than just mergers, however. New partnerships are being created that connect both similar organizations as well as a diverse range of entities. CUDL is now working with local credit union indirect lending networks such as Credit Union Dealer Direct in Washington state and Credit Union Auto Finance in Rochester, NY. Wescom Central and PSCU Financial Services are partnering on CU Card Association, the first credit union-owned purchaser of credit card portfolios. PSCU Financial Services, WesCorp, MDC and CUFSLP joined together to launch Procura, a purchasing card solution for both credit unions and their small business members.

Beyond these new networks of credit union-owned entities, CUSOs are looking to non-credit union entities to further extend the industry's reach. FSCC debuted a partnership with 7-Eleven stores to provide members access to 2,000 VCom kiosks that allow for a full range of transactions. Prime Alliance teams with Fannie Mae, Callahan & Associates, and over a dozen credit unions to form the CU Housing RoundTable with a goal of raising credit unions' share of the mortgage market from 2 percent to 10 percent in 10 years. CO-OP Financial Services is working with Costco to place ATMs in their stores. Combinations such as these provide a new level of accessibility and growth possibilities to credit unions.

A Foundation for Future Success

Credit Union Service Organizations (CUSOs) are more important than ever to credit unions. The scale and market reach of these organizations strengthen credit unions' role in the financial services arena. They reinforce and enliven the essence of credit unions – cooperation. Most importantly, CUSOs deliver innovation that continuously enhances member value. Their innovations will be an essential element of credit union success in the 21 st century.

For more information on CUSOs, tap into the just-released 2007 Directory of CUSOs . Case studies on CUSO business models complement the contact information for all 887 CUSOs.




Sept. 10, 2007


  • Nice job Jay. This topic needs a lot more air time. Credit Unions need to be more aware of opportunities to collaborate to expand services and reduce operating expenses.
    Jeff Kline