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At the crux of this issue is the competitive pressures brought to bear on our industry by not only the banks but WalMart, grocery stores, Home Depot…everyone is getting into the act. I’m just waiting to drive up to a fast food chain, and the associate ask if I’d like to open an account with my fries.
How have we responded recently? Here comes that word again…co-opetition. However, I think we’re doing more of the last half of that word instead of the former. While we’re focused on competing with each other, our members, and, more importantly, their children are being wooed away by “McBank.” And we still only have 6% market share because we’re competing among ourselves instead of outside.
We can change this dynamic by going back to the basics should be our mantra…collaboration, innovation and here’s a powerful word…trust. That’s how credit unions were founded, and, in the long run, will be what helps us grow once again.
Starting right in our own backyards, we now have just over 8,200 credit unions, over 800 CUSOs and 46 leagues, many running service corporations. And contrary to some people’s beliefs, we have some very smart people in our industry. Let’s use each other. Let’s trust each other. The best way to gain trust is to give trust.
Service corporations in their simplest form are the forefathers of CUSOs. Through collective purchasing power, leagues began contracting with other entities to deliver cost-effective products and services on an aggregate basis to its credit unions. In some cases those entities are CUSOs. In fact, leagues are often investors in CUSOs or have been the catalyst for CUSO development.
However, leagues compete head-on with CUSOs, even the very CUSOs they formed. I’m not against competition. I do believe it can make organizations stronger, however, I think it can be taken to extremes. The question I ask myself and others, is has this made our system stronger, or more fractured and less cost efficient?
It all comes back to dollars. The way for credit unions to be competitive over the long run and deliver the products and services members want, the way they want, is to become more operationally efficient. I submit the way to do that is to collaborate, innovate and trust each other.
Work together as one community to change the paradigm and create back-office efficiencies that allow us to compete head-on with the marketplace. Combine that power with the trust our members and consumers have in credit unions (we’re still one of the highest trusted organizations, especially in today’s economy) and we can grow and grow profitably to benefit our member-owners.
That means leveraging our cooperative nature to the benefit of credit unions and ultimately our members. There are many examples of best practices where credit unions, CUSOs and leagues are collaborating to create programs and services that provide a stronger value proposition for existing and potential members. However, our instinct seems to be to recreate the wheel, instead of strengthening the existing wheel.
I believe (trust), that if we bring all the stakeholders to the table (collaboration), and include them in development of best practices, we will arrive at a stronger solution (innovation) to ensure relevance and growth in the years to come. This happens some today in our industry, but it needs to become the norm.
It can and has worked. The league brings credit unions of all sizes together to discuss growth strategies and find out what gets in the way. They openly share their concerns and talk about how they can work together to address the issues. Some credit unions will need resources, some credit unions will have resources. Does it make sense to form a new organization or CUSO, or does an appropriate one already exist to bring expertise or resources to the solution?
In some cases, it makes sense to form a new CUSO. In other instances, it makes more sense to purchase ownership in another CUSO or simply purchase services from another CUSO. Don’t overlook that larger credit unions may have resources to assist, and have done so, because it makes the credit union industry stronger by building more credibility as a whole within the marketplace.
This exact process has been instrumental in the formation and growth of Credit Union Resource Group, a CUSO owned by 25 credit unions in Colorado and Wyoming. It provides operational products and services for its owners in the areas of human resources, employee benefits and technology; it is about to launch a shared compliance resource.
It was initially a project of the Credit Union Associations of Colorado and Wyoming in partnership with Colorado’s service corporation Credit Union Strategic Partners. Fifteen of the larger credit unions in those two states provided initial funding for operational costs and the CUSO became profitable by its third year of operations. CUSP seeded the CUSO by purchasing the first five shares.
Other league service corporations, CUSOs and credit unions have similar success stories, building on the trust of each other, but they need to become more commonplace.
In fact, many of our system’s league service corporations collaborate and innovate together to develop multistate programs that help to deliver higher quality, cost-effective solutions. We collaborate between our foundations, Filene, CUNA, CUNA Mutual Group, all the system partners to work together with our credit unions to help the system grow and be stronger.
