The year 2012 produced highs and lows.

From Team USA winning 104 medals in the 2012 Summer Olympics, ofwhich 46 were gold – more than any non-boycotted Olympics since1904 – to the mega-disaster of super storm Sandy and the huge swathof destruction it caused in the northeastern U.S.  

Beyond the unimaginable costs from Hurricane Sandy with damageestimates ranging from $60 to $80 billion, of the 2,000 creditunions located in the path of the storm, 838 or 42% were unable tooperate to varying degrees in the difficult days that followedlandfall on Oct. 29.  A week after the devastationoccurred, 729 of the 838 credit unions were again fullyoperational. They opened not without some scars, includingfrustrated members who were unable to access their accounts, cashand direct deposits.  

Good 2012 lessons to carry into 2013

Well-prepared credit unions that had solid backup recoveryoperations and proven back-up call centers were able to continue toserve their members. Because of the stark differences in memberexperiences following Sandy, you can expect the NCUA will look atdisaster recovery plans much more rigorously.

Fortunately, as has been the case in several past naturaldisasters, CUSOs are available to help you. CUSOs have helped keepsystems up and running for credit unions in Sandy's path. Othersprovided call center back up and disaster recovery for creditunions in New York and New Jersey. Two of the industry's largestCUSOs were also on the forefront with comprehensive call centerservices.  

CU-owned collaborative solutions matter and theywork

In 2013, there will be a renewed emphasis on business continuityand disaster recovery. The good news is you don't have to startfrom scratch and build these capabilities yourself. CUSOs areavailable that are prepared to help you strengthen your plans andensure your members continue to have access to their accounts whenthey need them the most.

Other areas where CUSOs helped credit unions deliver betterservice and product value to their members in 2012, and will beeven more important in helping credit unions compete in 2013,include:

Operational CUSOs that help provide cost savings that allows thecredit union to provide best value loans and deposits, along withoutstanding service.

IT CUSOs that help provide cost savings and expertise a creditunion might have trouble obtaining on its own. 

Lending CUSOs that not only help credit unions with thenecessary expertise, but also help members find the right indirectauto loan or secure the proper underwriting to help credit unionsmake indirect home improvement loans.

Compliance CUSOs not only help credit unions with hard-to-findexpertise, they help keep the them compliant with theever-increasing burden of new rules and regulations as a result ofthe Dodd-Frank Act and the plethora of new rules the ConsumerFinancial Protection Bureau is preparing to issue.

Shared branching & ATM services that help credit unions havethe same geographic reach as the biggest banks.

CUSOs make a difference

Speaking of competing with the nation's biggest banks, it's notjust the number of convenient branches and ATMs that members want,credit unions who have not already implemented a mobile bankingsolution for their members are facing that issue head on in 2013.The market is expecting it, and members are asking for it. A newdelivery channel that allows a member to pay bills, make depositswith remote deposit capture photo images of checks, and checkbalances is the most in -demand new feature among financialinstitutions of all sizes and types.  

Again, there are CUSOs that can help you provide these solutionsall the way to the most advanced mobile banking applications suchas mobile wallets.  Other CUSOs have additional innovativesolutions ranging from payment solution to comprehensive checkimaging solutions.  

CUSOs remain on the front lines and we want to see them staythere without unnecessary regulatory or supervisory burden.

Potential CUSO issues

Along those lines, another development that started in 2012 andwill certainly accelerate in 2013 is CUSO reviews from the NCUA.Last year, CUSOs across the country were contacted by the NCUAadvising them to prepare for a CUSO review.  Some of thosewho have already gone through their reviews in 2012 have some tipsfor those who want to prepare, including:

Know what to expect during the CUSO Review, and be prepared. Youcan see what the NCUA expects in chapter 7, starting on page 167,of the NCUA National Supervision Policy Manual. Go to http://www.ncua.gov/legal/guidesetc/guidesmanuals/supervisionmanual.pdffor the details.  

One of the things that we discovered while talking with thosewho have been through the CUSO review process and we have confirmedwith NCUA senior staff is there are no established CUSO reviewguidelines for NCUA examiners to follow. In order to ensure thatCUSO innovation and development is not stifled, such guidelines areneeded.  Therefore, working with the NCUA, NACUSO isassembling a working group to coordinate with the agency in thedevelopment of these guidelines.  

One last trend that we noticed from the NCUA in 2012 and islikely to continue into 2013 is requiring credit unions to havecertain specialized lending expertise in-house, rather than relyingon a CUSO that credit unions have invested in to have theexpertise.  

This has been most glaringly apparent in the member businesslending area. Because of the 12.25% MBL cap, many smaller creditunions could not afford or obtain the necessary expertise to builda profitable portfolio, due to size limitations. So, they did thenext best thing. With the blessings of the NCUA, several creditunions started a business services CUSO to help them find,underwrite, properly document and service MBL loans.  

NACUSO is concerned that after encouraging the use of CUSOs tohelp smaller credit unions acquire the expertise necessary toproperly originate and service these more complex loans, it is nowforcing these same credit unions to increase their costs byrequiring them to have this expertise in-house.  

The primary advantage that the credit union movement has hadwhen competing with their much larger bank competitors is theability to work collaboratively through CUSOs, and share the costsof developing new products and services that would be costprohibitive for a single credit union on its own. If the NCUA isgoing to undermine the use of collaborative CUSO solutions, thefuture of credit unions will be adversely affected.  

Along with the credit union community, NACUSO will continue towork with the NCUA to encourage their ongoing support of CUSOs. Avibrant and vital CUSO system is, in our view, critical to thesurvival of the credit union movement. This safe and logical formof collaboration through CUSOs is a cornerstone of the moderncredit union and an important competitive advantage. 

Jack Antonini is president/CEO of NACUSO. Contact713-208-0989 or [email protected].