The 12 Principles of Networked CUSOs (part 2)

Collaborations, through CUSOs and otherwise, hold the promise of earning non-interest income from non-traditional financial products and of significantly reducing operating costs.


Last week, I wrote about the characteristics of a new business model we are calling the Integrated Network CUSO. The next generation of CUSOs will not be constructed as hubs but as fully integrated networks in which credit unions provide services to other credit unions through the network and are paid for it.  The networks will also provide income and member acquisition opportunities for its member credit unions. 

I also stated that the skills necessary to successfully build a network model are not intuitive. Below are 12 principles on which I believe a new kind of network CUSO would operate:

  1. Collaboration is consensual. A network earns the loyalty of the participants by providing value. Barriers to move in and out of a network are low or non-existent. Termination clauses are short and do not mandate fees or penalties. Credit union members use core services to be in the network and may elect optional services.

  2. The owners are exclusively credit unions and all owners must be network participants.  The co-interest of owners and users insure the focus on the quality of the network's performance.

  3. The network is governed by CEOs of the credit union participants.   The CUSO Board is elected by the credit union owners and composed of credit union CEOs who have the strategic vision and decision-making authority to keep the interests of the CUSO aligned with its credit union members.

  4. Services are brought quickly to the market.  A network organizes initiatives and deals with the due diligence and contract reviews on behalf of participating credit unions to create the efficiencies that fully leverage the network benefits.

  5. Performance standards are met and measured.  The credit unions and network have mutually acceptable and measurable standards to judge the network’s performance.

  6. The network is accountable.  If a network is not performing, it is in the interest of the owner/users to correct the problem. If a problem is not corrected, a credit union may readily withdraw from the service or the network.

  7. Fee structures encourage and reward usage.  Tiered pricing and rebates are used. Transactional pricing is the norm.

  8. Personal member information is protected from unauthorized disclosure.  Employees from other credit unions who are working for an employee-sharing CUSO network are provided member information as needed to perform the task requested but a network's technology and practices prevent unauthorized disclosures.

  9. Except for personal member information, everything is transparent and shared.  The power of sharing best practices and policies raises the performance level for all participants. The transparency of the business relationships creates trust and credibility.

  10. Credit unions control the personal member interaction. A network interacts with credit union members only as agreed by the credit unions.

  11. Network capital investment is not driven by returns.  Because all investment returns come from fees charged to the owner/users, there is little incentive to drive up revenue at the expense of the owner/users.  While some returns may be built into the model, it should not be a driving force of the network.

  12. A network rewards performance.  Employees providing excellent services are sought out. A network and its managers are rewarded for delivering outstanding service to members. Performance-based rewards encourages personal entrepreneurship to deliver innovative and effective solutions. 

In order to jump-start the development of these skills in the credit union industry, the National Association of Credit Union Service Organizations (NACUSO) is partnering with Pepperdine University to provide a Collaboration Professional Certification.  The Certification will require completion of a year of web-based classes and a collaboration project.  The first class began in October 2009; we are now enrolling the April 2010 class.
Collaboration is a powerful tool that can leverage credit union capabilities through networks. But it takes vision, leadership, and effort. Now is the time to set up 3.0 CUSOs.




March 1, 2010


  • We agree. CUsource has been around for 20 plus years, this "new" concept has served us and our Montana credit unions very well. We encourage more to look at this model.
    Tracy Houck