Anyone who thinks U.S. credit unions have only two shared branching networks from which to choose has never met Scott Collins.
Collins is the president of Xtend Inc, a CUSO headquartered in Ann Arbor, Mich. that, among other things, provides what he says is a significantly lower cost shared branch network that can compete very well with the national networks on the local level.
Xtend Shared branching provides a shared branch alternative for CUs whose members primarily will use another CU for transactions across town or across the state, Collins said.
The service is free, but to participate, a CU has to use the CU*Answers data processing program, CU*BASE. It's that participation that cut the network's cost and made it possible, he said.
"Our network really began out of the opportunity our member CUs took to be able to conduct transactions through each other's branches and systems if they needed to," explained Collins. "It was initially popular as a way credit unions could continue to serve their members if one or more of their branches went down or had some other sort of problem."
Now 94 credit unions, concentrated primarily in Michigan but with a few on the West Coast, use Xtend Shared Branching. Xtend Shared Branching offers 200 shared branching outlets in 10 states.
Collins explained that Xtend Shared Branching, like other Xtend services, tends to work for smaller, lower income CUs whose membership is less likely to need nationwide shared branching. He pointed out that Xtend more closely mirrors what the CUSO sees as one of the strengths of CUs, the ability to cooperate among themselves to tackle problems that would be too big for any one of them on their own.
"I know the folks at CUSC and FSCC both," said Collins, referring to Credit Union Service Centers (it has since become CO-OP Shared Branching) and Financial Service Centers Cooperatives. "They're great and I don't think we are really in competition with them. We just think CUs should be able to do shared branching without a middleman or the additional fees a middleman charges."
Although more prevalent in ATM deployments than in shared branching, Xtend resembles some of the local and regional ATM networks where a few credit unions will offer each others' members surcharge-free ATM access to increase their surcharge-free footprint.
Collins said this even though he acknowledged that both nationwide shared branching networks have to charge the fees they do, in part, because they are nationwide networks that offer shared branching services across a number of different processing platforms.
He also acknowledged that there can be benefits to belonging to one of the nationwide networks. Just this month, the Xtend network had to adopt additional member privacy and authentication procedures that both the nationwide networks would have already accomplished.
Collins said that while FSCC permits his shared branching credit unions to participate in its network, CO-OP Shared Branching has not allowed this.
Craig Beach, senior vice president for business development, disputed this, asserting that simply using CU*Answers data processing would not be enough to prevent a credit union from joining CO-OP Shared Branching. But Beach also acknowledged that it was the participation in Xtend Shared Branching which proved the stumbling block.
Shared branching is the only Xtend product that requires a participating credit union to use the CU*Base data processing system, Collins said. The CUSO’s shared branching membership has grown slowly, particularly through the latest economic downturn, which Collins said has drawn more attention to using cooperation to increase efficiency, particularly in the back office. Other Xtend products include bookkeeping services, member contact services including a call center, back office mortgage services, compliance monitoring and insurance services.