LIBERTY LAKE, Wash. — Growth is almost always a good sign that financial and strategic goals are being met, but for CU*NorthWest progress has come so quickly that the CUSO may have to pull back the reins this year.
The data processing and financial solutions provider is a subsidiary of Kentwood, Mich.-based CU*Answers, a conglomerate of online, check and direct deposit processing to more than 125 credit unions. The subsidiary was also founded by Spokane Firefighters Credit Union, Spokane Media Federal Credit Union, Spokane Catholic Credit Union, and Inland Empire Trades Credit Union. In a little over two years operating, CU*NorthWest's growth has been "unbelievable," said Greg Smith, president/CEO.
"It has far surpassed our projections," Smith said. "There are credit unions in this area that are really responding to the message."
Indeed, the CUSO was originally set up to serve 10,000 members. It has since exceeded that four times over, Smith said. Launched in October 2005 to serve credit unions primarily in the Northwestern states of Washington, Oregon, Idaho, Montana and Wyoming, it added another eight signed contracts late last year to come aboard by this May. Smith would not say how much the CUSO has earned in revenue, but did say it has almost doubled their expectations.
As a result of the rapid growth, CU*NorthWest "will have to close the door at some point to protect quality," Smith foresees. Starting this year, the CUSO will begin paying royalties to its parent, CU*Answers. The two are linked in nearly all ways including a national phone network, participation lending, no-fee shared branch networking, a cooperative liquidity exchange, best practices, policies and procedures. That connection has undoubtedly helped CU*NorthWest spread its wings financially, but some slight turns toward independence are in the works. "Right now, we're operating a data center in Washington and we have our own programming team," Smith said. "As we build our business, we're trying to make it more local."
Smith reiterated that the CUSO is "more than data processing" although it is the foundation to bring other services to the market including bookkeeping, marketing and professional lending programs. Through its alliance with CU*Answers, the CUSO is also able to bring an expanded array of services. CU*NorthWest's "call to action" to offset the costs for smaller credit unions will continue to be paramount, Smith said.
"We believe in credit unions big and small. We've got to believe that [smaller credit unions] should get into a network knowing that their members can have an in with a larger market [this way]," Smith said. "There is a ray of hope for smaller credit unions."
That beacon is not necessarily through a merger, Smith said, adding peer networks can stave off such moves. The nuances of the marketplace in any given region of the country play a huge role in what members are asking for. A common technology platform from which credit unions can build on can still set the tone for differentiation. "So you don't have a bunch of Midwest credit unions telling Northwestern credit unions what their needs are," Smith offered as an example. CU*NorthWest's motto for 2007 is "excellence in execution." Smith said the CUSO has helped its credit union clients build the vision and buy into the model. Now it is time for follow through. To that end, credit unions can expect more direct links with national switch providers for ATM and debit cards with the goal of creating more lower cost entries to these outlets.
"The credit union model is based on the most fairest of philosophies but the model may need a better foundation to build a collaboration based on innovation," Smith explained. "A lot of credit unions are innovative but they are not coming from that type of foundation. We're saying extend that model and work with other credit unions." –[email protected]
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