For Jon Jeffreys, president of Credit Union Student Choice,credit union survival boils down to value and collaboration.

“I think they need to continue to embrace the fact that creditunion means something different–a financial cooperative focused onmember value and differentiation,” said Jeffreys, who is also vicepresident of Callahan Financial Services, a subsidiary of Callahan& Associates that provides expanded investment alternatives tocredit unions.

“Many credit unions, maybe it's because of bank envy, try to dowhat banks do but cheaper and [with] a little tweaking. I think ifyou step back and look at how we can really deliver value tomembership, there's so much opportunity out there. Credit unionscan compete by staying true to their roots and remembering who theyare.” 

He added that today's marketplace presents many opportunitiesfor credit unions to shine from touting free checking to helpingmembers refinance their loans.

“If you can help a member save $1,000 a month, that's real moneyback in their pockets,” said Jeffreys. “Look for ways you canbetter align with your community. Partner with groups ororganizations that are pillars of the community like schools,colleges and hospitals. Companies may pick up and move or go out ofbusiness.”

He advised credit unions to take a strategic annual view of thecommunities they serve.

“Ask yourself, if our credit union didn't exist, what wouldmembers do?” said Jeffreys. “If the answer is go down the street,then it's time to rethink your current strategy. You want yourmembers to feel like their credit union is the lifeblood of thecommunity and talk about the programs provided like financialeducation, local business opportunities, employment, etc. Yourmembers should be saying don't take my credit union away fromme.”

He added that kind of advocacy for credit unions doesn't happenovernight but is something that has to be earned generation bygeneration.

“The biggest advantage cooperatives have is the fact that theytake the long view, there's no quarterly shareholder profit,” saidJeffreys. “So a simpler way to put it is if your credit uniondidn't exist, would members of the community recreate it and riseup and say we need this.”

According to Jeffreys, there no shortage of good ideas andopportunity in the industry, the real challenge becomes what totake to the market. As part of his role at Callahan FinancialServices, he is continuously looking for ways to create newbusiness opportunities, and in 2004, he started looking intogovernment-guaranteed student loans.

“We couldn't figure it out for two years, there were too manybarriers to entry and really we couldn't figure out the value forcredit unions or members, so we backed away. In the summer of 2007private student loans were growing and we asked how can we offerbetter economic value,” said Jeffreys. “Once we framed it that way,it took us down a certain path to find out where the market is andif we were to build our own what would be the economic value to thecredit union and member and how would we go about executing thatmission.”

Driven by a passion to help members of all means have access toeducation and a strong belief in the network business model ofinnovation through collaboration, Jeffreys focused on buildingstrategic partnerships with such firms as PSCU, CUDL and DigitalMailer to launch Credit Union Student Choice. The concept was asimple one. With education costs continuing to rise, millions ofstudents rely on loans to pay for college. According to Jeffreys,while federal student loans provide the best financing option, manystudents also rely on private student loans to fill funding gaps.The Student Choice network would enable credit union partners toprovide schoolcertified private education loans to students in needof additional financing options, while also providing keyinformation to help families make responsible decisions on the bestways to pay for college.

“We launched in four months and got off to an okay start withall the growing pains that first season. Then in 2008, thefinancial market imploded so we were fortunate because all theseopportunities came our way and accelerated growth,” said Jeffreys.“It was the classic economics 101 of supply and demand–the amountneeded to finance education was going up but not as much capitalwas available so those financial institutions like Citibank couldcharge what they want, in some cases well over 10%. We were nowable to offer superior value an average yield a little over6%–that's a four point difference in real money. So it might not bea better mousetrap, but one that was reasonable and fair toconsumers today.”

It was also important that the loans could be offered by smalland medium-sized credit unions. Jeffreys said the success of CreditUnion Student Choice has been a combination of timing, opportunity,value and collaboration. The CUSO helps credit unions

by managing many of the challenges and risks commonly associatedwith student lending. He added that with 80% of its businessconducted during 10- to 12-week periods primarily during summer andbetween Thanksgiving and Christmas, having partners has beencritical. Since its launch in May 2008, CU Student Choice has grownfrom seven credit unions to now helping some 200 credit unionsserve over 21,000 families, representing a member savings of over$1 billion compared to other student loan providers. According toJeffreys, the network puts credit unions in full control, focusessquarely on member value, and allows credit unions to serve theirmembers and communities in another powerful way.

Today, the organization has partnerships with such state leaguesin Pennsylvania, Ohio, Michigan, New York and Texas. In addition,credit unions have formed strategic relationships with educationalinstitutions like MIT, Harvard, the Wharton School and Stanford. Headded that with the industry focus on reaching the next generation,collaboration will need to continue to increase outside the creditunion industry.

“I think it's a question of course adjustment, we've got to lookat how we can continue to collaborate to add value to the market,”said Jeffreys. “What scares most is the idea of becoming irrelevantor worse the industry dying a slow death. Running a financialinstitution today is different than five to 20 years ago. There'smuch more competition a different regulatory environment and a newmindset where technology plays a huge role today. I think we needto stay on top of the technology changes and trends from thestandpoint of how we can make it easier for folks to do businesswith us.”

He added that credit unions need to get more young peopleinvolved in the industry to help the industry as a whole do abetter job of identifying not only the financial products that thenext generation needs but how to tailor them across deliverychannels based on how they want to do business with the creditunion.

“My wife and I got our mortgage through our credit union, and Idon't even know where the branch is. We only met at closing, and itwas the easiest process that was only on the phone or via email. Itwas a huge time saver,” said Jeffreys. “It's not a one solutionfits across all markets. You've got to identify where the consumersare in your market, what they need, how you can simplify theirfinancial lives across the delivery channels they prefer.”