The idea of league collaboration, which goes way beyond web-based forums to share ideas and information, is simple, Kitt and Kordeleski said. Consolidate common back-office operations – finance, HR, IT and other functions – to create scale that will substantially cut the costs of these operations for all leagues in the partnership. Those savings, presumably, will enable leagues to plow more resources into their mission of advocacy to protect and grow the credit union industry.

“My take is that the collaboration bug has kind of stuck and that is a good thing,” Kitt said in reaction to the Florida/New York announcement.

He said he doesn't view the Florida/New York project as a looming competitive threat for Plexcity, even though both organizations will be vying to attract credit union leagues and other associations that are under greater pressure than ever before to cut costs and raise revenue.

“I don't see this as a competitive threat. I see this as a positive,” Kitt said. “The most important point is the fact that collaboration is real and it can work. The fact that New York and Florida are doing this and the fact that we put Plexcity together just shows leagues really want to focus on delivering value back to their members versus doing things that really don't have much to do with that.”

Kordeleski added, “Plexcity is a really good model, but LSCU and New York had good reasons to choose their own path.”

During Plexcity's first 11 months of operation, Kitt said the collaboration saved each league partner about 10% in back-office operational work. Plexcity has fully integrated the leagues' HR and finance areas onto one technology platform and expects to combine all of the leagues' IT data onto one system by 2016.

Standardizing all of the leagues' HR, finance and IT processes is the key to significantly reducing costs because variations in any process create inefficiencies, Kitt said.

“We've been able to standardize all of HR and we've standardized all of accounting,” Kitt said. “We are very proud of that. And believe me, that was no small feat.”

The founding league members – California, Nevada, New Jersey, and Maryland and the District of Columbia – each made a $30,000 investment to start Plexcity, which is based on a collaborative model and its principles, including one member, one vote. The Hawaii Credit Union League made the same initial investment when it joined Plexcity in August, and NASCUS also joined as a non-owner client.

However, how much each league or organization pays for Plexcity's ongoing operations is its distinguishing feature.

“How much they [leagues/organizations] pay is determined on how much they use Plexcity,” Kitt explained. “How we determine that is the percentage of usage [based on hours and people] that each of the members use Plexcity's services, and that determines how much their bill is every month.”

If Plexcity is successful in attracting more members – something that will create more scale – Kitt said the savings should far exceed the 10% seen in the organization's first year of operation.

The secret sauce to Plexcity's success has been open and honest communication among the senior managers of the leagues, NASCUS and Plexcity.

Kitt said Plexcity set up a system that enabled his team to evaluate how every step in the process of setting up the back-office functions could be done better. That system helped open a dialogue among members because it led them to discuss how a proposed process improvement would affect their organizations and whether it should be implemented.

Kordeleski was one of the first in the credit union industry to find out how collaboration affected credit unions. While serving as president/CEO of the $6.1 billion Bethpage FCU in Bethpage, N.Y., he formed a collaborative partnership with the $2.8 billion Bellco Credit Union in Greenwood Village, Colo. and the $2.9 billion State Employees Credit Union in Linthicum, Md. to create the Denver-based Open Technology Solutions that's been running for more than 14 years. This project allowed credit unions to consolidate their technology solutions to operate their respective home banking, telecommunications, security and help desk functions.

According to Kordeleski, the collaboration was successful and saved millions of dollars annually. Bethpage FCU, Bellco CU and SECU also founded the Baltimore-based S3 about five years ago, which combined the credit unions' back-office deposits, collections, call center, card services, mortgage and consumer lending operations.

The areas of collections, deposits, and credit card services operations became fully operational about two years ago and have reached or exceeded their goals, meaning those consolidated divisions are saving the credit unions more money than anticipated, according to Kordeleski. The consumer and mortgage lending areas won't become operational for another six months.

To facilitate the Florida/New York collaboration, Kordeleski's consulting firm used its assessment tool to clarify a vision, priorities and values for the proposed collaborative entity.

“The really hard part for not-for-profit associations is that the partners really have to come to an agreement to make decisions and to see things in a pretty common light, or there will be disagreements,” Kordeleski said.

The assessment also takes a deeper dive into each organization's financials, data and personnel to determine if sufficient savings can be achieved.

“We then bring the partners back together with the key employees and have them develop and agree to a business plan that helps build trust,” he explained. “At that point, the partners know how much they are likely to save and then they decide whether to go forward with the plan or not. In the Florida/New York case, that process went very well.”

The two trade organizations plan to establish a jointly owned subsidiary to consolidate their back-office operations and other services that are not state specific.

“We have all kinds of numbers and projections, but we feel pretty comfortable that over a three year period we will be saving each entity in excess of millions of dollars on either side of the partnership,” Bill Mellin, president/CEO of the New York Credit Union Association, said.

Patrick LaPine, president/CEO of the League of Southeastern Credit Unions, said the strategic collaborative partnership is different and unique.

“What we are also doing here, which is unique, is that in addition to traditional back-office functions, we're also looking at anything between our organizations that doesn't have to be state specific,” LaPine explained.

Future plans also include opening a new service corporation that would be jointly owned and governed by both leagues to develop new products and news services for credit unions.