Transactional CUSOs Search for Better Ways to Help Member CUs
"At a time like this, when so many of our member credit unions are struggling, as a CUSO we see our primary challenge is finding ways to better help them," said Stan Hollen, CEO of CO-OP Financial Services, the parent CUSO of the CO-OP Network and CO-OP Shared Branching.
Hollen explained that CO-OP sees itself as being able to offer individual credit unions help in key areas of member service-members access to cash and branches-as well as to the credit union industry overall.
"Credit unions represent about 7% of the overall deposit volume in the U.S.," Hollen observed. "Credit unions have to continue their tradition of cooperation and consolidation of resources if they are going to be able to compete," He added that after the latest round of bank mergers, only three banks with nationwide branch networks will exist. "Shared branching," Hollen pointed out, "is one way credit unions can compete with that."
Hollen also noted that some changes CO-OP had already begun to make had positioned the CUSO well for the current environment.
"The feedback from our members we have received indicated they really appreciate the changes we have made to add more value to their member relationships and member access," Hollen said.
Hollen stressed that CO-OP strives to help its member credit unions not just survive the current difficult times but come out of them stronger. "The things that are happening now are the short term," Hollen said. "We want to keep our focus on the longer term and how we can help credit unions get ready for the longer term and not just to focus on the shorter term."
Jim Park, CEO of Credit Union 24, a national ATM and transaction CUSO, echoed Hollen's remarks, noting that the payments CUSO has been pushing forward to help its participating credit unions both take advantage of changes in the CUSO's pricing and to re-think some of their ATM and EFT strategies.
"We have a nationwide ATM network, which is surcharge free to credit union members for credit unions that opt to join it," Park noted, "and that can definitely help them compete. We also have a lot of free advice on how they can better structure their ATM and EFT networks to better serve their members."
Park was referring to the network's relationship managers, who will meet with credit union executives to review their options in everything from ATM placement to how to improve CU branding at the ATM to how to get more members to use the cash-back option at point of sale terminals for their cash.
The latter course is often overlooked but effectively brings credit unions a higher interchange rate by tacking cash back onto the retail transaction.
When it comes to credit and debit card programs, CUSOs that help credit unions process and manage those transactions also reported trying to help their participating credit unions face the short-term challenge while planning for the longer term.
"One of things that struck me coming out of the GAC [CUNA's Governmental Affairs Conference] this week was the number of executives I talked to who are fundamentally optimist and forward looking about the situation," said Mark Fenner, the national sales manager for TNB Card Services, the card processing arm of the credit union-owned Town North Bank.
Fenner related the comments of one credit union executive who compared the current controversy over the possible NCUSIF premium to unexpected service in the National Guard. "This was something you didn't see coming but you prepared for and once it was here you did your duty and moved on," Fenner said.
TNB sees itself as playing a key role for credit unions right now since credit cards remain credit union's best performing asset, Fenner explained, adding that TNB has been trying to help its member credit unions on both sides of the card relationship.
"We're hearing a lot from our members who want help in bringing any extra costs of managing their programs under more control," Fenner said, "and that is sort of one side of what we are doing. We are also hearing from members who want more help in promoting their cards and card use to their members."
One key part of that, Fenner explained, has been helping credit unions market their cards more extensively in their own branches. "We have been helping take advantage of these branch assets that are already in place and that they have already paid for," Fenner said. "We are helping them train their tellers to offer cards routinely as part of their normal operations and service."
Vicki VannBerstein, chief financial officer for PSCU Financial Services, a payment processing CUSO for more than 500 credit unions, said PSCU was focusing on helping member credit unions avoid retrenching in the face of the economic pressure.
"We want to be there for our members and definitely help them grow their businesses, just very carefully," VannBerstein said.
VannBerstein pointed out that credit cards still have a spread of between 300-400 basis points, significantly higher than other products and that CUs can use them to both improve their bottom lines and win support of members.
"This is a time when banks are cutting back, lending less and are having a real reputation problem with consumers," VannBerstein said. "Now is the time for CUs to move forward."