Operation Sharing Ops

Sharing operations is a breakthrough model for large and small credit unions alike.


As both large and small credit unions seek ways to enhance efficiency and deliver more value to their members, sharing operations is an option worthy of serious consideration.

Bethpage Federal Credit Union ($5.4B, Bethpage, NY) launched a technology collaboration effort a decade ago through Open Technology Solutions. In 2012, Bethpage, Bellco Credit Union ($2.5B, Greenwood Village, CO), and State Employees of Maryland ($2.7B, Linthicum, MD) credit unions expanded that collaboration effort through S3, Shared Service Solutions, LLC. The CUSO centralizes back-office operations including deposit, consumer lending, collections, and call center solutions for the three credit unions.

“The fundamental reason we started collaborating 10 years ago still holds true today,” says Kirk Kordeleski, CEO of Bethpage FCU. “While our size is large for a credit union, it is not large for a bank or a bank holding company and we needed to create scale to compete with other financial institutions in our market.”

The scale that OTS and now S3 are helping create is not only financially beneficial but also has helped the credit unions in terms of speed to market and provided the ability to focus resources squarely on products and services.

“Bethpage didn’t have to do this to cut costs, but with our strategy to deliver on both service and price, we felt collaboration was critical for us to grow,” Kordeleski says. “If collaboration and scale are critical to your future success, you should absolutely consider it.”

The results are undeniable. According to Kordeleski, Bethpage saves $4 million a year with OTS and it will save $8 million more a year through S3, which still has six months left in its two-year roll out period. The dual-market strategy of offering the best price to members and delivering high-touch service is expensive. For Bethpage, reducing its back-office operating expenses through collaboration has allowed it to increase member-facing jobs locally by 13% and set the stage for long-term growth. Despite the strong up-side, however, it still takes courage to break down the barriers and drive the decision to collaborate throughout the organization.

“The actual agreement on standardization and setting up operations among the three credit unions wasn’t as difficult as we thought it might be,” Kordeleski says. “The much more complex and difficult part has been creating the right form of governance for the structures and getting the boards aligned. For something of this magnitude to be successful over the long term, you definitely need board and organizational support.”

The collaboration might be open to taking on a fourth or fifth partner in the future, but finding the right partners that see eye-to-eye is critical.

“Fewer partners come to quicker decisions and that matters,” says Kordeleski in relation to the make up of the OTS/S3 group.

A Shared Model For Smaller Shops

The shared model is not just for big credit unions. A small group of credit unions in the mid-Atlantic region is working on a similar joint operations effort. Through Mid-Atlantic Corporate’s Re-Kindle: Go Big initiative, six credit unions with assets between $60 million and $140 million are teaming up to streamline six major back-office functions in order to gain scale without mergers. The multi-year project was inspired by other credit union collaboration efforts such as OTS and S3, but is geared to smaller shops.

Each participating CEO has taken leadership for a distinct aspect of the collaboration project. Joan Moran, CEO of Department of Labor Federal Credit Union, serves as the Go Big group’s “Synchronicity Officer” and is leading the charge to make back-office processes, procedures, and practices similar while maintaining the distinct identity of each credit union.

“This initiative is a big commitment and will require all of us to re-think the way we do things,” Moran says. “But the end goal of ensuring that each of our credit unions is around for the long term to serve our members — without merging — is worth the effort.”

The six credit unions involved have already dedicated a significant number of man-hours to the project, and the early math is showing the cost savings of joining forces will likely surpass the group’s goal of saving 25% on the back-office operations. Initially core processing, contact center, compliance/vendor management, collections, and card processing/electronic funds transfer will be the focus of the collaboration effort, but the ground has identified other potential shared functions to consider down the road.

“The Go Big initiative is exciting for all of us and for our members,” Moran says. “I can’t wait to see what the future holds.”




Jan. 27, 2014


  • Kirk Kordeleski was right. You have to see eye to eye to make this work. But I applaud him and Rod Statz and the others who collaberate in this way. Credit Unions are a scale business. We depend on technology platforms that have high fixed costs and low variable costs. When credit unions share core data processing platforms they can save a lot of money. The question is can all of the participants agree on a development road map? For example if one credit unions wants to enter business services, will the other support that? What if one credit union wants SalesForce to manage member relations? SAFE CU is about to buy a new core data processing system. We have also had our own core because we do a lot of innovation and we want the freedom to choose our own path to the future. The alternative to collaberation is consolidation. That isn't always an easy road either. You develop scale but you end up in many cases having to dedicate a year to doing the merger and another year to clean up all of the loose ends or problems you find. I endorse what Kirk and Rod have done. You just have to find the right partners. Once you take that route it is very difficult if not impossible to go back to doing it on your own.
    Henry Wirz