Credit unions are in the mature phase of their life cycle and facing unprecedented challenges in today’s marketplace. But with economic adversity and industry challenges, comes opportunity for those that are well prepared. Now is the time for credit unions to make history and gain market share.
Sustainability is the most critical issue facing credit unions today. In order for credit unions to sustain themselves, they must execute three drivers of business strategy: 1) identifying their markets, 2) determining how to create value and competitive advantage in the market segments they are going to serve, and 3) capitalizing on optimal timing. The timing in our marketplace could not be better.
The most feasible solution to credit union sustainability is collaboration and getting credit unions to work together in collaborative ventures and multi-owned CUSOs to create scalable platforms, meet shared needs, and ultimately drive greater value back to credit union members. Collaboration is the new currency of the credit union industry. In this era of unprecedented economic turmoil and industry uncertainty, membership in NACUSO will help you to identify collaborative opportunities to help your credit union grow and survive.
A demonstration of the value of collaboration is found in a comparison the 5-year average annual performance of credit unions having an investment in a multi-owned CUSO with those having no investment in a multi-owned CUSO:
Source: Callahan’s Peer-to-Peer Software
Credit union collaboration provides pooled resources and expertise, spreads the risk, and allocates the capital investment in business ventures across many credit unions. Credit unions have only 6.2% market share of the total financial services industry’s assets and they need scale to: 1) develop lower-cost operations, and 2) develop higher-value products and services – the two fundamentals of profitability that ultimately translate into increased value for members.
There are many excellent examples of successful multi-owned CUSOs in the areas of shared branching, ATM networks, credit card services, indirect lending, mortgage/title/real estate services, business services, call centers, investments and insurance services, trust services, data processing and technology services, disaster recovery services, and compliance services. While interest and participation in multi-owned CUSOs and business networks is growing, it is still not the dominant theme. When the going gets tough, the tough collaborate. You alone can do it, but you can’t do it alone. Collaboration is an essential element to credit union industry sustainability. NACUSO is your primary resource for learning about collaboration and business networks.