CUSO leaders explain how collaborative model helps credit unions compete and improve the industry.
“Credit union service organizations play an integral role in the CU system by facilitating collaboration among CUs, which is a key cooperative principle,” says Dean Young, chief experience officer at CUES Supplier member PSCU, St. Petersburg, Florida. “CUSOs deliver incremental benefits to their CUs through scale buying power, partnerships with payments industry leaders and direct access to the services and solutions they need most to compete, all of which would be difficult to attain outside of the CUSO framework.”
“Within the CUSO model, CUs are leveraging their collective resources to build a better industry,” says Jane Hammil, VP/advisory service at CUES Supplier member CU Direct, Ontario, California. Her group offers decision engine and system optimization services, benchmark reports, peer and market analysis, customized lending programs and consulting. “One of our missions is to help our CUs become better lenders,” she adds.
“The CUSO structure enables CU Direct to outperform the largest banks by providing technology that funds more auto loans at dealerships than any other lender in the country,” Hammil says. “Last year, we funded over 1.5 million loans for a total of $45 billion for CUs.”
Indeed, by pooling their resources, CUs can better compete with big banks. “At its core, PSCU helps owner CUs take advantage of opportunities and solve problems,” says Young. “By helping CUs gain access to payments solutions, technology and functionalities that might otherwise be cost-prohibitive, PSCU saves owners substantial operating costs, provides them access to higher levels of expertise and adds alternative streams of income.”
The CUSO benefits don’t stop at technology. Many CUSOs provide industry benchmarking and consultative services.
Hammil shares an example of a CU that’s working with her group at CU Direct to improve its loan decision engine, enabling automated loan approvals. The CU has plans to put off hiring a new underwriter, at a cost savings of about $80,000 in salary and benefits expenses. Plus, CU Direct has found that loans are up to 63 percent more likely to be funded when approval is instant.
Business intelligence is a third way CUs can benefit from working with CUSOs. At PSCU, “business intelligence and insights, curated from data and analytics, and consulting expertise that enables CUs to serve members with targeted promotional efforts, ensure that marketing dollars are invested where they are likely to see the highest return and success,” says Young.
Alone, “CUs may not have the expertise and technology at their disposal to perform the deep analysis that drives their decisions,” says Hammil. “Our clients use us as a business intelligence department because we have the hands-on expertise to help them execute their business plans.”
Finally, many CUSOs, like CUs, offer patronage dividends to their owners. PSCU owner CUs earned a $24.2 million dividend in 2018, 25 percent of which was an immediate cash payment.cues icon
Theresa Witham is managing editor/publisher at CUES.