Outsourced CU

Back in September, Filene issued a call out to the industry for assistance in creating what boils down to an Applied Research division.  So far, we’ve already seen the CU Water Cooler come out of Matt Davis and I know we’ll be seeing some good stuff from Brent Dixon shortly.

I’m going to take  a gamble and put my more detailed response out for comment.  I feel very strongly that by collaborating and removing operational barriers to success, credit unions can bust out of the funk we’re in and take it to the next level.  I’ve put together a rough draft white paper on what I call the Outsourced CU.  I want to use the many Filene collaboration initiatives to make this happen.

If you’ve got a few minutes, give it a read.  If you love it, email George Hofheimer at Filene and let him know what you think.  If you think I’m crazy, well, just go easy.

2 thoughts on “Outsourced CU”

  1. This is very similar to what we are currently working on in NACUSO’s “Collaboration 3.0 – The Network – The Next Generation of CUSOs” program. In an environment where the average net interest margins are less than the cost of running a credit union, collaboration is the only way to generate enough scale to remain profitable. Similar to what you are saying, the NACUSOs concept is to form CUSOs which make up fully integrated network where credit unions provide services to other credit unions through the network and get paid for it. But it is not only about scale, in order to save money; credit unions need to manage capacity too. The “network” would create an environment where one credit union with temporary excess capacity could sell that capacity to a credit union who is temporarily short on capacity. This would save the cost of either idle employees or having to hire and re-train employees. NACUSO estimates that the aggregate cost of running credit unions in the United States is $28 Billion, collaboration enables credit unions to get a piece of that with assets they already have.

    Great white paper Robbie.

  2. I was skeptical about reading your white paper. Lately, I’ve been turned off by the idea of consultants coming in to save credit unions. I’m glad I looked past my skepticism.

    Moving from a trade association to a credit union has been an eye-opening experience. Prior to being in the trenches, I was guilty of something that now drives me crazy. I thought I knew how to collaborate and I didn’t understand why credit union execs couldn’t just give up a little bit of control to achieve economies of scale. Then I started working at MaPS and I realized the error of my ways.

    The problem with so many champions of collaboration in the credit union movement is many have never actually worked in a credit union and they are not looking at the items you address in your white paper. Instead, they look at highly visible things like recruiting, sales training, and the ever-popular national brand. As credit union executives, we aren’t bogged down in dealing with those things. We’re bogged down with core systems, compliance/regulatory issues, business continuity planning and other decidedly un-sexy issues.

    A true champion would be the collaboration consultant who can find a way to deal with those issues that bog us down, leaving us to focus on providing truly differentated benefits to our members. Your white paper does an excellent job at making this case and while it’s not as exciting to talk about all that less visible stuff, if that type of collaboration can be achieved, it will be exciting to see what it frees up this industry to become.

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