In a move which some have seen looming for years, CO-OP Financial Services and Financial Services Centers Corp. have signed a letter of intent to merge their shared branching operations.

According to the firms, that combined network will involve 1,700 credit unions with more than 4,300 branch locations and 2,200 kiosks located in 7-Eleven stores.

The agreement provides for FSCC CEO Sarah Canepa Bang to become chief operating officer at FSCC and chief strategy officer at CO-OP Shared Branching, a division of CO-OP Financial Services.

“I am excited for the credit union movement as this combination will advance the vision of FSCC to have every branch of every credit union an outlet,” said Canepa Bang. “There's no denying that FSCC and CO-OP have been terrific competitors–imagine what we can do together. CO-OP and Stan Hollen personally played an historic role in the creation of FSCC, and now with the combining of the two companies, it is very much a case of our business coming to a logical full circle.”

“The combination of CO-OP and FSCC will blend the strengths and value of both companies, creating a more tightly integrated and efficient shared branching network for our movement,” said Stan Hollen, CEO of CO-OP Financial Services. “With more than 4,300 branch locations, credit unions have at their disposal the fourth largest network in the country, behind the three largest national banks. This truly enables credit unions to compete and win against banks in terms of the access and convenience they can offer their members.”

“We are looking forward to Sarah Canepa Bang and her team joining CO-OP and to the critical role she will play in working with all shared branching leadership to develop and move a unified strategy into the future,” said Hollen.

The move requires an approval vote by FSCC's 125 shareholding credit unions but no similar vote on the CO-OP side. Bang said the enthusiasm the network experienced after it told the credit unions led her to believe there would be a positive vote.

Jointly interviewed by Credit Union Times, both Canepa Bang and Hollen emphasized the different ways this move will, they believe, better serve credit unions, both those that already participate in shared branching and those that do not.

One particular goal is to at least double the number of credit unions participating in shared branching.

“I will be ashamed if we don't at least double the numbers of CUs in shared branching,” Canepa Bang said. “We have spent years beating down the obstacles and objections, reducing the costs of getting involved, showing that shared branching does not lead you to lose members–it retains them.”

Both executives attributed the delay in recruiting credit unions to shared branching, in part, to the energy, attention and resources each organization has often plowed into competing with the other.

“Stan and I have always been fierce competitors,” Canepa Bang said. “But I think it's important to say that Stan has always kept the focus on where it should be, on the big banks and how shared branching helps them compete with the big banks.”

Canepa Bang also said it would not be too much to expect a nationwide advertising campaign in the future about shared branching or touting shared branching as a credit union attribute.

Hollen agreed and noted that with more than 19,000 credit union branches in the country, shared branching has plenty of room to continue to grow and expand.

The merger was also helped because, even though they competed, shared branching organizations have always kept close technical links and allowed members of credit unions in the other organizations to conduct transactions in their branches.

This effectively meant that members of shared branching credit unions had shared branching outlets available across the U.S., and Hollen said the new organization would build on that history to get to where it could rival Bank of America for the most bank branches in the U.S.

Bank of America currently claims to have 5,700 branches.

Hollen and Canepa Bang said that for the foreseeable future credit unions in each network will continue to use the same shared branching platforms they do now. These are similar in many way, but not the same, and changing would generate unneeded expenses, they said. They also explained that the merger would allow the new organization to approach certain vendors, like FIS and 7-Eleven, that they already have in common with increased clout from greater volume.

The merger is the last in what has been 10 years of shared branching consolidation. Ten years ago, there were three shared branching organizations and CO-OP Financial Services (then known as CO-OP Network) had not direct role in any of them, though it had helped to manage FSCC soon after the network was launched.

The oldest of the three was the Service Centers Corp., the original shared branch network that was headquartered in the Midwest and emphasized building shared branching centers that were standalone centers that more than one credit union would use. CO-OP Financial Services bought SCC and entered into shared branching directly in 2002.

The second of the three was the Credit Union Service Corps. It was headquartered on the East Coast and deployed a strategy through which credit unions would affiliate with it most often through relationships with shared branching organizations run by their leagues. In 2007, CO-OP Financial Services and CUSC merged operations with CUSC becoming CO-OP Shared Branching.

The youngest of the three was FSCC, headquartered on the West Coast, with a strategy that emphasized using credit union branches as outlets to build the network.

Instant Insights /

CO-OP, FSCC To Merge Shared Branching

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