Through collaboration, credit unions can “outpartner the competition” in bringing state-of-the art digital services to their members at reduced cost, according to panelists who spoke at a breakout session during the 2021 CUNA Finance Council Virtual Conference.
Willis Chang, enterprise architect at $5.2 billion asset Kinecta Federal Credit Union in Manhattan Beach, Calif., explains how a collaborative initiative gives Kinecta Federal access to an open banking platform and connections with fintech companies that can deliver new digital content. Kinecta is an investor in Constellation, a credit union service organization (CUSO) that offers access to these services.
Access to fintechs allows Kinecta to offer out-of-the-box digital solutions and the ability to “go further faster,” Chang says.
Collaboration with other credit unions also creates efficiencies.
“We’re getting metrics and data points on how they’ve approached things,” Chang says. “Even the time savings of not going down the wrong path and having to change course is tremendously advantageous.”
Chang also notes that collaborative arrangements drive down costs because of their size and scale.
Economic efficiencies, as well as the ability to shape developmental changes, were among the reasons Directions Credit Union and five other credit unions formed a CUSO 25 years ago to drive their common core system, according to Julie Linch, senior vice president, retail delivery at Directions. With $1.1 billion in assets, the Toledo, Ohio-based credit union represents more than half the assets in the relationship.
“There’s always some give and take,” Linch says.
That “give and take” can be a challenge, even with the best of intentions, says Eric Starkey, chief information officer at $348 million asset Louisiana Federal Credit Union in La Place, La.
“I think for a credit union our size, it’s just hard to practically do it,” Starkey says. “You really need a strong leadership presence to put all the pieces together and get it off the ground and make it work.”
At the same time, Starkey says Louisiana Federal has had success with informal collaborative efforts. Starkey describes those efforts as “very organic and conversational.”
“Getting those relationships to a long-term, formal arrangement is where our struggles are,” Starkey says.
Every CUSO battles with the “unique” or “special” needs of member credit unions, says John Best, CEO of Best Innovation Group and moderator of the panel discussion.
Chang says it’s important to negotiate “common beliefs” to breakdown any barriers. “Then an out-of-box approach can fit everyone’s needs as long as certain things are configurable and you can adjust nuances,” he says.
Reliant Federal Credit Union joined the Open Your Eyes to a Credit Union Campaign, a collaborative effort, led by CUNA, to build credit union brand awareness, says Brandon Smith, chief financial officer at the $164 million asset credit union in Casper, Wyo.
Collaboration, whether through branding or scaling of digital services, allows Reliant Federal to reach individuals throughout Wyoming, one of the least populated states in the country. “If by working together we can provide access to more services than we can on our own, all the better,” Smith says.
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