NACUSO President Tom Davis attended the results presentation at Wharton so he was familiar with most of the research when he read the report. "Filene and their resulting research have done a great job in illustration the need for collaboration," he said. "One competitive advantage we have over banks is the ability and willingness to work together."

CUNA Mutual Chief Economist Dave Colby disagreed with the statement in the report that the current business model is completely broken. "It certainly hasn't kept up with new realities to consumer financial services, but if it was broken, credit unions wouldn't have such high capital."

The institute's research found that U.S. credit unions may be overcapitalized by as much as $40 billion, which means credit unions have enough capital to invest in large-scale collaborative efforts.

After reading the report, Andy LaFlamme, a teller at Maine State Credit Union, said that the Maine Credit Union League has made an effort to encourage collaboration by creating a forum on its Web site (www.mainecul.org) to help facilitate the exchange of information and ideas.

"I think if we're really going to be innovative it's essential we collaborate, but unfortunately the forum doesn't see much traffic apart from me and a few of my co-workers," LaFlamme said. "I'm not sure if it's because people just don't feel like collaborating or if it is a matter of people being unaware of the resource."

The lack of momentum in the industry when it comes to collaboration was not just noted by LaFlamme. George A. Hofheimer, chief research officer at Filene Research, pointed out the need for studies to shine light on the subject. "If we lived in a logical and rational world, we could present these facts, and credit unions of all stripes would come together in a rainbow of cooperation. Market share would go up, operating expenses would moderate, consumers would flock to your doors, and we'd hold hands by the campfire and sing 'Kumbaya,' said Hofheimer. "Regrettably, this scenario is unlikely to play out in the next few years unless we study the subject of collaboration."

One issue that Colby pointed out with the report was the fact that the report had no conclusion. "I got to the end and was like, okay, now what," Colby said. "No one could collaborate on a conclusion. I think it's pretty telling of the issue that we all know we should collaborate but we can't."

Davis, however, said for him the conclusion was clear. "For me the conclusion was: Here is a great strategy that credit unions should embrace if we're going to grow and survive, and it's collaboration."

After years of pain and upheaval, credit unions are at a crossroads, according to the report. Credit unions can cling to what has worked in the past and hope for the best. Or they can meet the threats to survival head-on and adapt to the changing environment by embracing news ideas, promising practices, and a certain amount of risk.

"One of the most critical needs for collaboration is the need for new products development and market channels because that's where we interact with members," Colby said. "If you have a service that's only open nine to five instead of 24 hours you're going to lose members that are going to go to places that have those hours."

One issue at the core of any collaborative effort is the unsettling concept of giving up control. "Hopefully, the more we study, understand, and share successes (and failures) on this topic," the report said, "the more comfortable credit unions will become with collaboration."

SchoolsFirst Federal Credit Union, formerly Orange County Teachers Federal Credit Union, successfully collaborated with other credit unions on a project to open Comunidad Latina Federal Credit Union. "In 2005 we reached out to a number of large credit unions and got an incredible response," said Terry Agius, vice president of advocacy at SchoolsFirst FCU and CEO of Comunidad Latina FCU. "A total of 18 credit unions contributed $100,000 a piece over a three-year period."

The Filene report emphasized the importance of IT in collaborative plans. Technology has become completely woven into the fabric of business practices. Those that have initiated major initiatives said that a common IT platform is critical to large-scale collaboration.

Bethpage Federal Credit Union President/CEO Kirk Kordeleski was a presenter at the colloquium and presented Open Technology Solutions model. OTS is the IT platform collaboration of Bethpage FCU, Bellco Credit Union, FirstTech Credit Union, and State Employees' Credit Union of Maryland.

Together the four credit unions have grown to 700,000 members and nearly $7.6 billion in assets, achievements that they could not have made their own. The group of CUs would be the fourth-largest credit union in the country if they were a single entity.

"One of the things that collaboration allows is for us to gain access to expertise," Davis said. "All of us are smarter than any of us."

But for executives to be willing to merge their IT systems with that of another firm and share data requires a level of trust that does not come naturally in the business world.

"The number one factor when looking at an alliance is trust," Meyer said. "It brings up the question do we trust one another enough to increase interdependency in the back office."

This kind of trust cannot be built overnight, said the Filene report. Therefore, a viable strategic alliance often starts with one small collaborative project and partner that can then build on the success of smaller efforts.

Another driver of collaboration is low-cost services. By making collaboration very attractive from a cost standpoint, credit unions can be drawn into small-scale collaborations that can later be leveraged into broader initiatives.

"By offsetting operational costs collaboration provides more resources to apply toward becoming more relevant and innovative to members," Meyer said.

Colby recognized the need for collaboration but is skeptical about it actually coming to a head.

"Collaboration is clearly needed," Colby said. "But will it happen? I'm not entirely certain."

One major obstacle is lack of willingness among organizations to be the junior partner in an alliance when they are accustomed to being the top dog in any group of their peers, said Harbire Singh, a professor of management at the Wharton School, in his presentation at the colloquium. "CEOs must shed this mindset and replace it with one that embraces collaboration and recognizes that successful collaborations result in stronger individual unions. The pay for the willingness to temporarily check one's ego is a bigger bone for every dog in the pack."

Other obstacles to collaboration are related to habit, rigidity, and attitudes. Many mangers are not comfortable ceding even a small amount of control over a project to another organization, according to the Filene report.

One colloquium participant observed that change needs to emanate from the boardroom because CEO egos often get in the way. But the governance structure of credit unions may itself be a roadblock to innovations and collaboration.

"One of the most important issues that was raised in the study was the talk about boards being risk averse," Colby said. "Right now there is the short-term thought to protect capital when the bigger picture is we're becoming obsolete."

When presenting the prospect of collaboration to the board, Kordeleski said Bethpage FCU always made collaboration come first, not second and always framed it in achieving growth and service to give back to members.

Once an alliance has been formed it cannot just be left to succeed or fail as though one or the other were inevitable from the start. Partners in a strategic alliance must engage in an ongoing process of monitoring and reevaluating. The quality of the relationship should be assessed periodically. By identifying potential sources of conflict, problems can sometimes be avoided.

Another key is to place a time limit on the alliance. If it is working well, the Filene report said, establish it anew under terms appropriate to the new situation, with a redefined focus if necessary.

"We're now looking to take OTS and use that model to see what other opportunities we have that we can work together on to lower cost and to compete better in the marketplace," Kordeleski said.

Davis said he took great interest in the part of the study that discussed the barriers to collaboration and found that while the issues are real and need to be addressed the good thing is that they can be addressed.

"Collaboration will not descent upon credit unions of its own accord," the Filene report declares. "It must be proactive. [The colloquium] barely scratched the surface of what can be accomplished through ambitious collective brainstorming and prudent risk taking. Creative thinkers and innovators within the credit union movement must seize the initiative and do what builders of movements have always done: Grab the tool bag, rally the crew and start building."

Colby stated that in his opinion there will not be one dominant collaboration solution. "You can't say that one model is going to work and one isn't going to work. There will be multiple collaboration solutions."

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CU Times Managing Editor Donald Shoultz contributed to this article.