Conducting thorough, up-front due diligence is critical for ensuring a smooth and beneficial working relationship with a lending credit union service organization (CUSO).
Here’s where to start:
1. Investigate the CUSO’s track record and lending philosophy
In your earliest conversations with the CUSO’s management, you’ll want to ask some probing questions, such as:
It is important for your credit union’s lending philosophy and risk profile to be in line with the CUSO’s. Otherwise, you’re asking for trouble.
Compare your policies and procedures with those of the CUSO before you sign on the bottom line, and ensure that your general approach to risk is compatible.
2. Interview the staff
Treat the due-diligence period of vetting a new CUSO, or any vendor, as if you were hiring a new employee.
Interview the staff of the CUSO like you would any new hire. The CUSO will be working for you now. Does it have the necessary expertise, as well as mindset, to be a good fit with your organization? Or will you be butting heads at every turn?
3. Check references
Ask for references up-front. If a CUSO is reluctant to provide them to you, that is an obvious red flag.
But don’t just file the references away in a drawer. You can learn a lot by speaking with a CUSO’s clients.
Ask questions such as:
4. Realize that size matters
CUSOs don’t need to be huge to be effective. In fact, a small company is more likely to provide personal service, and the CEO will likely be intimately involved in every engagement.
However, the CUSO should be large enough to have multiple lending experts available to serve your specific needs. Consider it as a form of succession planning: If your engagement lead becomes unavailable for any reason, someone else with comparable skills should be available to step in.