By Kevin Mummau
For many years, the raison d'etre for credit union service organizations (CUSOs) traditionally revolved around their investment programs. But that changed several years ago following a
Securities and Exchange Commission ruling that eliminated license exemptions for CUSOs. That ruling brought many investment programs out of the CUSOs and into the credit unions, where license exemptions for networking arrangements with broker-dealers remain intact.
Overall, the credit union industry today is, unfortunately, not at its zenith. Credit union growth is down nationwide, as evidenced by stagnant membership numbers, lackluster growth of deposits, and the fact that there have been only about 100 new credit union charters issued in the past 10 years.
Taking notice of this disturbing trend, the leaders of the National Association of Credit Union Service Organizations (NACUSO) have spent the past year examining the underlying causes of these issues and redefining the CUSO's relevance in today's highly competitive marketplace. NACUSO discovered that traditional methods of conducting business simply aren't working effectively, that credit unions should recognize the formidable competition from banks and other financial institutions, and then take actions that address these issues if they want to survive and succeed.
The message that emerged from NACUSO's analysis was that credit unions have a long history of cooperation and collaboration. They would be wise, and likely more successful, if they began approaching their business that way again instead of attempting to blaze their own trails.
CUSO Financial Services LP (CFS) is a perfect example of the success that can be achieved through the collaborative efforts between strategically chosen partners and credit unions. Understanding that few credit unions have 'organic' expertise in building an investment program, CFS offers credit unions turnkey programs that feature superior, cutting-edge technology, the application of specialized industry knowledge, effective marketing and rep support, and an innovative, well-conceived business model.
Through the power of collaboration, many credit unions working with CFS have enjoyed success in terms of both annual investment program revenue and year-over-year growth. In 2005, 20 of CFS'
100-plus credit union programs produced more than $1 million in revenue, seven produced more than
$2 million, and four generated more than $3 million. Twenty-six of its programs saw a 50% or greater increase in production in 2005, and 10 increased production 100% or more. These kinds of numbers are indicative of a broker dealer that understands the power of a collaborative effort in building successful investment programs and supporting credit unions in their efforts to provide them.
CFS introduced its credit union clients to a business model that emphasizes three keystone components--awareness, integration, and credibility--that it considers to be the fundamental elements of a successful investment program. Working in tandem, CFS helps its clients make staff and members aware of the existence of the program and fully integrate it with other core offerings. This builds credibility for the program and encourages increased participation.
In addition to providing state-of-the-art technology solutions and marketing support, CFS helps credit unions understand how to execute these strategies, provides them with resources to tap into, and lends industry knowledge and expertise to help grow their programs.
They have set their programs up for success by creating a program development group, promoting the importance of communication by making annual visits to each credit union program, meeting periodically with program managers to discuss best practices, and by holding an annual national conference to ensure that all program participants are on the same page. And they're involved in training reps and providing them with tools that will deliver higher quality service, better performance, and improved member retention.
'CFS is successful because we work in partnership with credit unions to show them how their programs can be structured to maximize productivity for both' said Kevin Mummau, CFS' senior vice president of program development at CFS. 'In true collaborative fashion, the success of one becomes the success of others. As a result, CFS has seen steady growth in revenue, profits and partnership distributions.'
Rather than go it alone in introducing new products and services designed to better compete with other financial institutions, it may behoove credit unions to seek the assistance and guidance of a qualified, experienced strategic partner that knows the ropes and can leverage that knowledge and expertise to show them the way to newfound growth and success.
Kevin Mummau is senior vice president of program development, CUSO Financial Services LP, San Diego. Contact him at 858-530-4480.