The flip side
The control aspect, however, has a flip side. Credit unions sometimes feel reluctant to collaborate through CUSOs for fear they’ll have to relinquish control over how they conduct business and serve their members.
“Credit unions want to do the right thing for their members,” Antonini says. “But doing the right thing for members often means collaborating to lower your costs or to get a higher level of expertise than you could get on your own.”
Still, collaboration is much easier to talk about than it is to do, Zook concedes. He sees a shifting mindset in the movement, however, toward collaboration driven by necessity.
As smaller credit unions vanish for a variety of different reasons, remaining ones look for ways to join forces to survive and thrive. Larger players also seek solutions as they’ve watched their margins get ever thinner.
“We’ll need to look further for opportunities to unite,” Zook says. “That’s true on the cost-saving side, but it’s also true for technologies and potential revenue generators in our future. If we collaborate, we can build those solutions together.”
For credit union executives and boards struggling to decide whether or not to collaborate, Messick offers a bit of advice.
“First, determine what you will not collaborate on,” he says. “That’s often the member-facing services. Credit unions want to handle those themselves. But for everything else, consider collaboration.”
Whether that collaborative effort results in joining an existing CUSO or forming a new one, the essential ingredient is trust. You have to trust in your partners and in what the collaborative process can deliver.
“Short-term setbacks do occur when you come together to try to build a relationship,” Messick says. “It takes vision to see the long-term benefits.”
SIDEBAR: Coming Soon: New Cuso Reg
CUSOs and trade associations have voiced their concerns and sent in their comments. Now, they’re in wait-and-see mode regarding NCUA’s proposed revision of its CUSO regulation. Originally, the revision was supposed to take effect in February. It could now emerge in final form this summer.
Jack Antonini, president/CEO of the National Association of Credit Union Service Organizations (NACUSO), sees the delay as a positive sign. It means NCUA is taking its time and reading through nearly 300 comment letters.
The agency is thinking about this, he says, “and trying to do the right thing.” He also is encouraged in the wake of discussions he and other CUSO leaders had with NCUA staff and board members during CUNA’s recent Governmental Affairs Conference.
As first presented months ago, the rule requires CUSOs to file financial reports with NCUA and allow access to their books and records. NCUA views this as way to safeguard the credit union movement from financial losses.
CUSO advocates caution that unnecessary regulatory burden could stymie innovation, which would diminish CUSOs’ ability to compete with nonindustry firms and discourage credit unions from forming CUSOs.
And under the Freedom of Information Act, nonindustry competitors could request access to CUSO financial data and other records submitted to NCUA. It’s safe to say CUSOs wouldn’t want that information to land in their competitors’ hands.
Still, the debate over the new NCUA regulation is an opportunity, says Guy Messick, a Media, Pa., attorney and NACUSO’s general counsel.
“People get concerned when the regulator comes knocking at their door,” he says. “But it’s not all bad.
The regulators need to know more about what CUSOs do. CUSOs can tell their story, and the regulators can come to appreciate that CUSOs are not a systemic risk to the industry. Rather, they’re essential to credit unions’ future.”