Not content to "hurry up and wait" while the Securities
and Exchange Commission delays releasing final guidelines for investment
CUSOs, some CUSO officials are looking beyond that and facing up
to other strategic issues that remain unresolved.
During a Callahan and Associates Webinar broadcast on October 9,
Randy Karnes, CEO of CU*Answers, Kentwood, Michigan and Nader Moghaddam,
president of Kinecta Financial & Insurance Services, Manhattan
Beach, California, and Leonard Gzesh, Kinecta's chief operating
officer discussed using a CUSO for Information Technology solutions
and creating a benchmarking program for investment and insurance
Using an IT CUSO for a credit union's data processing solution
is a good fit because the CUSO "aligns with the CU's needs,
understands the marketplace, the members and the philosophy,"
said Karnes. "The closest thing you can do to having an on-staff
IT department is to run your DP through a CUSO."
Historically, CUs have been struggling to find the IT business
model that will give them what they need, he said. "It's frustrating
for them. How often have they heard, 'This software will save you?'
Well, they heard that about the software before that, and the one
before that. The real challenge is to educate everyone about the
software, to teach it, to use and make the most of it, and it has
to be built in. Why is there no call center for the IT department?
Ask this question: does it come with a help desk? The challenge
is to teach DP to non-techies."
Karnes knows better than most people that software is only as good
as the people who drive it, and learning to drive takes time and
some study. Once you learn you can go virtually anywhere, and it's
the same with software. And Karnes asserts that there is a strategic
advantage to using the cooperative structure of CUs and CUSOs to
target and meet CU DP goals: it can mean being first to market with
the latest technological capability, and that can bring improved
Nader Moghaddam and Lenny Gzesh presented a starting point for
the creation of a benchmarking program for investment and insurance
CUSOs. "We started looking at this from inside and realized
the difficulty with trying to have standard benchmarks because CUSOs
are so diverse. We have investments, P&C insurance, mortgages
and so on," he said.
Kinecta CU president Tom Graham evinced a "special passion"
for developing this, Moghaddam added, so they pressed on and created
a segmented approach with various data elements for the CU, the
investment side and the P&C business. "We put our ratios
on the table as a beginning, in the hopes that, once started, other
CUSOs would get involved."
"What we tried to come up with was a level playing field,
CUSO to CUSO, so that it doesn't matter what asset size the credit
unions is," explained Gzesh. "Our parent credit union
is a $3 billion institution, so how can you compare that with a
CUSO of a $300 million credit union? The only way to do that, we
felt, was through averaging."
"I know the need is out there to have a true comparative benchmarking
program for CUSOs, and we wanted to move past the informal means
of doing so," Moghaddam said.