LAS VEGAS — Data show that credit unions that have invested in a CUSO have a competitive advantage over those that have not.
That was the sentiment expressed by Jay Johnson, senior vice president of Callahan & Associates. He said there are about 700 CUSOs. In 2010, credit unions invested $2 billion in CUSOs with one-third of CUs having a CUSO tie, according to Johnson. Nearly 93% of credit unions that use CUSOs have assets over the $1 billion mark. Nearly 70% in the $100 million to $250 million range work with CUSOs.
Johnson said that credit unions active in the CUSO network post higher member growth, are moreproductive and have a stronger lending profile. The percentage of members with checking accounts at credit unions that have relationships at CUSOs indicated that their credit unions are their primary financial institution. Johnson also demonstrated that credit unions that use CUSOs have more accounts per member.
Johnson said operating expenses are also higher for credit unions that use CUSOs but the benefits abound. "The question is, what value do members see. Member revenue is the payoff," he suggested.
Johnson pointed to several CUSOs that have inroads for providing solutions to credit unions that led to growth for both entities. Arcuso, an indirect lending CUSO formed in 2008 by 29 Arkansas credit unions, grew its portfolio from 7.7% since launch to 59.2% in 2010. My CU Mortgage, a subsidiary of Wright Patt Credit Union, generated $1 billion in loan volume last year and is looking to grow even more through a partnership with CU Alliance.
Other CUSOs that offer services such as information technology, mobile banking and student lending are also poised for growth. Johnson pointed to CU Student Choice's growth as an example of the demand the CUSO is meeting.
"The challenge is to transform the credit union industry by harnessing the power of your peers," Johnson suggested.