Redstone's CUSO Network Generates Success-Boosting Synergy

Just as investors should diversify their portfolios, the same can be said for credit unions as we look to establish credit union service organizations, or CUSOs. Diversify and grow should be our mantra!

Redstone Federal Credit Union’s CUSOs branch out in unexpected, yet intertwined ways. Our subsidiaries include Redstone Insurance Services, Redstone Consulting Group, Redstone Title Services and Redstone Family Realty. All are wholly-owned by Redstone and serve a wide range of members, non-members and other credit unions.

It was important for us to build a network of CUSOs that could stand alone, but become stronger and even more successful when working in concert with one another to meet members’ needs.

It began with our first CUSO, Redstone Insurance Services, which became the hub as others began to sprout around it.

As an independent agency, Redstone Insurance Services shops for the best coverage and price for members or clients across multiple carriers. It has become a flexible and worthy companion to the credit union’s other high-earning products. Car buyers, new homeowners and the general membership all need insurance coverage. The insurance CUSO has grown to nearly 10 employees this year with a net worth of more than $4.8 million.

One-Stop Shop

Our members can now find a home using Redstone Family Realty and pay for it using a mortgage from Redstone. They can close the home loan using Redstone Title Services and protect it and its contents through a policy from the insurance group. We have created a true one-stop shop for key real estate needs.

Todd Howard, president of Redstone Family Realty and Redstone Title Services, said it’s about choices: “We know that our clients have choices. For that reason, we created a one-stop shop that gives them quality choices, plus significant discounts and convenience when they use these services together or separately.”

The CUSO’s clients reap the benefits of this synergy. Knowing the organizations are under the umbrella of a respected and strong parent company builds member confidence. When used together, members can save hundreds or thousands of dollars and time.

The realty agency was added to the mix in late 2019 after we purchased a longstanding agency, retained its Realtors, and relaunched it as Redstone Family Realty. The pandemic struck just as the agency begun its rebranding in the market. However, with a booming real estate market, there has been lots of activity as the agents learn what new products and services are now in their arsenal.

Howard believes the agency is an “absolute game-changer” in this competitive real estate market. It’s a solid business model that is built on the reputation and integrity of two time-tested organizations. It’s a service and relationship that makes sense for our members.

The title company started from the ground up in 2013 and has grown to 23 employees who are on track to process more than 3,800 title searches this year. Over the past five years, it has saved members an estimated $1.5 million in closing costs.

Redstone heightened its unique selling proposition for its one-stop real estate shop by offering an $899 flat mortgage origination fee starting in January 2020, which increased members’ savings even more. Our executive team and the CUSOs are routinely looking for new ways to synergize one another’s products and services while adding value for our members.

In some ways the joint branding – which targets members of the Redstone Federal Credit Union family – has been both a benefit and a challenge.

When marketed together, members sometimes have a difficult time differentiating between what represents the credit union and what represents its subsidiary. Either the public thinks the CUSO services are only for Redstone members, or members call the CUSO for actions that must be handled by the credit union.

Cohesive branding across the credit union and CUSO takes advantage of a member’s loyalty to the credit union brand. However, because most of our CUSOs serve the community at large, they must also market to the entire community – not just to credit union members.

Redstone Consulting Group

Co-branding is not an issue for Redstone Consulting Group. It is the only business-to-business CUSO on our list, providing software and service solutions for other credit unions. Its four-person development team is complemented by business operations and sale expertise. Since 2017, its clientele has grown significantly – from 10 credit unions to more than 50 credit unions and community banks today.

Meeting Challenges

The consulting group has a unique set of challenges: ­Marketing to an entire industry and not a set membership or geographic area, and hiring and training developers who are fluent in working within Fiserv’s DNA core.

Its leaders attended industry conferences and trade shows to mitigate those hurdles in the past; however, with the pandemic shutting down in-person events, they were sent back to the drawing board.

Hiring the right people is a challenge faced by all our CUSOs.

Kevin Carroll, president of Redstone Insurance Services, said his team must have a mix of industry knowledge, all the required professional designations and certifications, and the ability to adapt to working for an agency that is affiliated with a credit union. That’s a tall order!

It can also be difficult for leaders of larger financial institutions to remember that their CUSOs are actually small businesses where flexibility is necessary to pivot quickly to address an issue or jump on an opportunity that presents itself.

Making It Work

Despite the challenges, I know that CUSOs provide an excellent vehicle for credit unions to expand their products and services to meet their members’ financial needs, and to increase their efficiencies through relationships with other cooperatives. They also generate noninterest income for the credit union.

Here are some best practices to keep in mind: • Narrow your ambitions to what you do best and can execute successfully with the team you have in place. • Identify your clients and know how to communicate with them. • Engage an industry expert early on in the process. You don’t know what you don’t know. • Leverage the knowledge, skills and insight of credit union staff and management, but do not rely on them to fully understand your business.

Wayne Sisco Senior EVP and CFO Redstone FCU Huntsville, Ala.