"Those are the kinds of credit unions that are growing and producing some of the best numbers, and so they have leadership roles in their state leagues and in the national trade associations," he said.

Credit unions that invest in a CUSO often develop a constituency outside their own walls, Dollar explained.

"It is a growing constituency of influence in the credit union community," he said.

Dollar predicted, based on current credit union merger trends, that mergers could diminish the number of credit unions from the nearly 6,000 in existence today to 4,000 by the year 2020.

Further, he said the number of CUSOs could surpass the number of credit unions as early as 2020.

Dollar noted the trend of more CUSOs is the result of relationships being built between struggling credit unions and stronger credit unions, in which the stronger credit union helps the struggling credit union through its own CUSO.

Merging credit unions often merge into more progressive, growth-oriented credit unions, many of which invest in CUSOs, he added.

As they fulfill a need in the credit union space, CUSOs are formed for a plethora of reasons, including helping with collections, core processing, marketing, mortgages or business lending. While developed with the intention of saving credit unions money in these areas, some CUSOs have even been able to provide dividends back to credit unions.

"If you combine those two together, it's a growing trend that has a growing promise in a cooperative movement," Dollar said. "Let's face it, we are a cooperative movement, and if we don't cooperate, we are going to have a hard time competing with institutions that are so much larger."

He cited some of the largest CUSOs – such as PSCU – are the ultimate reflection of collaborative efforts.

"Credit unions have to find ways to collaborate with each other, instead of reinventing the wheel all over again," he said.

Collaborative efforts, such as those involving PSCU, enable credit unions to compete with larger competitors. PSCU has more than 820 credit union owners and more than 18 million accounts, and is primarily focused in the payments area.

"It allows us to provide economies of scale," Merry Pateuk, vice president of corporate communications for PSCU, said.

A high number of credit union owners and large number of accounts helped PSCU negotiate better pricing for its members.

"They allow credit unions to do in scale something they couldn't do on their own," Dollar said of PSCU. "PSCU is what every CUSO wants to grow up to be. They are a larger scale version of a collaborative model."

Other versions of the model use innovative technologies.

CU Revest, for example, was developed in 2013 to help credit unions collect on cold delinquency cases. In addition to collecting funds on older delinquencies, the CUSO helps pull the former credit union member back into the fold and reinstate them as a member. The company has recovered approximately $3 million in previously charged off loans and returned 1,600 members back into their respective credit unions.

"That's innovation," Dollar said. "I'm not sure that any credit union could do that on their own because they couldn't afford the costs of setting up those systems."

Some credit unions fear, however, that the CUSO model could be a backdoor for a takeover mechanism, according to Dollar, who noted that fear is one of the industry's greatest challenges.

There is a tendency toward suspicion for smaller credit unions that prefer to struggle rather than give up part of their ownership or control to work with someone else, he said.

He called the notion shortsighted, as the smaller credit unions that need collaboration the most are often suspicious of credit unions that form a CUSO and ask the smaller credit unions to join.

"It's the business of the larger credit union that built the CUSO that needs to find more customers," Dollar said. "Where are you going to find more customers? Credit unions that are smaller than them."

Jack Antonini, president/CEO of NACUSO, said he constantly fields calls from credit unions that are looking for the type of partnership CUSOs offer.

"Finding other credit unions to partner with is a challenge," Antonini said.

He added that he often plays matchmaker for credit unions seeking such a partnership, but keeps the name of the requesting entity close to the vest until both credit unions feel comfortable to reveal themselves.

Still, the industry's CUSO-related challenges are not limited to the credit union space itself. The NCUA has been positive on the CUSO model in the past, but in recent years has sent mixed signals that have made some credit unions hesitant to invest in CUSOs. The agency passed the CUSO rule in 2013 and later the CUSO registry – which required credit unions to provide information on CUSOs they made loans to or invested in by March 31.

Some credit union leaders balked at the NCUA's request for information from any credit union that has an investment in or loan to a CUSO.

At press time, the NCUA reported 738 CUSOs had filed with the registry. If any CUSO has not completed the annual registration requirement within 30 days of being alerted, the NCUA will halt any new investments in and loans to the unregistered CUSO as impermissible.

Antonini said CUSOs are registering despite pushback at the onset of the CUSO registry.

He added CUSOs are concerned that the information contained in the registry could be subject to Freedom of Information Act requests, even though the NCUA said certain information would not be subject to FOIA requests and would be treated as examination materials. In part, CUSOs said they could be at a competitive disadvantage if the information is leaked in a FOIA request, according to Antonini.

NACUSO maintained the NCUA can get the information it needs on CUSOs from credit union Call Reports.

Dollar cautioned the NCUA could be laying the groundwork for an expansion of agency authority over CUSOs.

"A cynic might say that with the number of credit unions falling from 12,000 to 6,000 over the last 10 years, an agency with an ever increasing budget is looking for other entities to oversee," he said.