Not too long ago, Wescom Credit Union moved into the “B2B” market, and thus we now provide services to other credit unions. In October 2001, at about the same time we converted to Symitar as our host system, we entered into a 50-50 partnership with Integrated Data Systems. Accordingly we formed Wescom IDS, which offers a wide range of core system and online applications that can be integrated with both home banking and the host.
More recently we formed Wescom Resources Group (WRG), a CUSO that offers Wescom’s system resources to other credit unions in the form of service bureau applications, disaster recovery, and home banking hosting. And earlier this year, we acquired Profitquest, a firm that specializes in asset / liability management, profitability assessment, software solutions, and report development. Now a Wescom CUSO, Profitquest offers these services to other credit unions.
In forming these business entities, we obviously saw an opportunity to recover some of our investment costs related to technology. Like other credit unions, over the past five years we invested heavily in networking, systems and Internet technology. But in the process, we often found ourselves at the mercy of third-party vendors and outside service providers. Not only were we faced with huge upfront payments, heavy ongoing licensing fees, costly upgrades, and unsatisfactory timelines for implementation, but also the loss of ownership control, responsiveness and flexibility.
Given that, we made a new and considerable effort to design and develop much of our technology in-house, contracting outside for the technical expertise as necessary. This strategy has paid off, as we are now ahead of the technology curve.
In addition to the cost recovery, two other strategies came into play when we went into B2B — industry fit, and ongoing innovation and enhancement. We know that many other credit unions have the same “wants and needs” as does Wescom. Credit unions want programs and applications that meet their business needs, can be customized, and are in-place and proven. We at Wescom believe we now have these. In demonstrating Wescom IDS solutions to dozens of credit unions, in answering their questions and engaging them in dialogue, we see the value that Wescom IDS can deliver.
Now that we are in the B2B credit union market using “better technology” as the value proposition, we understand how critical it is that we accelerate our learning and continue to develop, enhance and innovate. Here again we believe our business model allows for this. As users of the technology, we’re in the position to quickly develop, test, and assess new applications as well as enhance existing ones. And as service providers to other credit unions, we remain close to the customer and gain first-hand knowledge of their needs.
Because the services of both Wescom IDS and WRG are closely linked to our core system and our core business of providing retail financial services to members, we believe that each CUSO will contribute to the success of our credit union and that the credit union in turn will support the success of the CUSOs.
The business strategies for Profitquest are similar to those for Wescom IDS and WRG – revenue generation, industry compatibility, and ongoing enhancement and innovation. Many credit unions have need for better profitability modeling and more effective asset / liability management, and prefer to work with an organization that understands regulatory requirements and the credit union business model. We can be that organization for them.
Although we expect each of these B2B ventures to be financially successful and generate income back to the credit union’s bottom line, the real return is in the ongoing organizational learning and development of technical expertise that the ventures bring to Wescom Credit Union.
Until 1997, Wescom was known as Telephone Employees Credit Union. Now, nearly 70 years after it was formed, Wescom Credit Union is a premier financial institution with more than 175,000 members, $2 billion in assets, and 23 branches throughout five counties in Southern California.