When two large credit unions proposed starting a technology CUSO in 2003, skepticism was rampant, recalls Mike Atkins, CEO of Open Technology Solutions. “Some consultants told us point blank that we were out of our minds,” he says, “and that large credit unions would never collaborate.”
Some years later, one of those consultants had a couple of clients who wanted to create something similar. He asked Atkins if he’d share his CUSO’s business plan.
“So we went from being complete lunatics,” Atkins says, “to being an organization that others wanted to mimic.”
Today, Open Technology Solutions has three credit union owners who are the sole participants, with combined assets of nearly $11 billion. These include the two founders—$2.3 billion asset Bellco Credit Union in Greenwood Village, Colo., and $5.5 billion asset Bethpage (N.Y.) Federal Credit Union—plus $2.8 billion asset SECU in Linthicum, Md.
During the CUSO’s early days, the company maintained and processed one core system for its partners.
“That’s all we did,” Atkins says. “Today we provide our partners anything a large credit union would need in the way of technology services.”
The partners reap huge savings and efficiencies. For instance, the CUSO has an information security staff of three people rather than the six required if each credit union were on its own.
“That gives us enough capacity and redundancy,” Atkins says, “and we can afford to hire better expertise than each credit union could afford alone.”
Other savings occur on the vendor side. The CUSO can negotiate better deals with third parties because of the aggregated volume the partners represent together. Atkins estimates that each partner saves about $2 million per year on the operational side plus another $2 million each per year on third-party agreements.
With that kind of track record, the three partners decided to start another CUSO called S3 Shared Service Solutions to create operational scale in the back office.
As of early 2014, it’s 50% live, with the remaining functions set to launch this year. Currently, the biggest challenge for Open Technology Solutions is establishing priorities.
“It takes a lot of dialogue,” Atkins says, to keep the partners headed in the same direction.
“We’ve created a fair amount of formal governance around the collaborative process,” he adds, “for us to be successful."