HIGHLANDS RANCH, Colo. — Just as many observers say the nation's economic woes spell opportunity for credit unions in general, Tom Davis believes it's a great time to beat the drums for CUSOs.Davis is president/CEO of Davis & Co., which offers research, strategic planning and other services to credit unions and CUSOs. He's also president/CEO of NACUSO as well as its vice chairman and a CUSO director."Now is the time to get the word out," Davis stressed. "The whole financial services industry in general, with all of the economic meltdown and subprime lending problems, has created a substantial lack of credibility. There is a phenomenal opportunity for credit unions and their CUSOs to say, 'We are safe and sound. We are offering products and services that others have pulled back on or tightened credit.'""We are still a liquid industry and have the ability to make lending decisions with solid underwriting criteria, and while some of the banks have pulled back, we are doing it. Now is the time to really get the word out that we are not only offering the products and services but have expertise and are credible."Davis noted that he has seen CUSO activities and functions change over the years. When NCUA first granted powers to CUSOs, those CUSOs tended to get into investments, securities and other products related to financial planning. Then three or four years ago, when credit unions were granted incidental powers, many credit unions folded such investment services back into the credit union.Has this had any impact on member perception?"Quite honestly, even though it was disclosed in great detail that investments, for example, were handled through a CUSO, the perception of the member was that it was handled by the credit union," Davis said.However, "I think CUSOs themselves need to do a better job of integrating their operations and their brand with the credit union because as we all know it's the credit union that has the leverage with their relationship. The member doesn't really care. The member simply wants to get the greatest possible value.""Another major change over the years has been that, instead of the totally owned CUSO, we have started to see multiple credit unions coming together to own a CUSO. That certainly mitigates risk, provides intellectual capital and creates greater scale."The economies of scale show up, he added, when a CUSO handles backroom operations such as core IT processing and call centers for several credit unions joined in a collaborative or networked business model.The multiowner model has expanded the CUSO menu to include items such as business services, payday lending, check cashing and mortgages.If starting a CUSO sounds like a slam dunk, Davis suggested credit unions need to ask a few questions. First, why do I want to start a CUSO? Do I have a solid business reason? What can I do with a CUSO that I can't already do? Then it's time to investigate opportunities to join with existing CUSOs that have proven themselves instead of actually starting one.He added that, on a per-unit basis, the revenues of multiple-owned CUSOs are higher than those of single-owner CUSOs. Multiple ownership spreads the cost, and a larger, more successful operation is likely able to recruit more talent."A common error when putting together a CUSO business plan is that although people get the expenses pretty close, they tend to inflate the level of penetration and usage and the revenue they can expect," Davis said.Looking ahead, he said it isn't just a question of CUSOs growing and surviving, it's also a matter of credit unions growing and surviving. The number of CUSOs is expanding, and at some point the number of CUSOs may equal the count of credit unions.Davis also expects to see more of the networked business model some into play, with multiple-owned CUSO performing many different functions. In fact, he predicted "an explosion" of the networked model.–[email protected]