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While Credit Union Service Organizations (CUSOs) have become more visible and integral to the credit union system, the trend towards multi-owned CUSOs brings a new set of drivers that determine operational success. Some of the success drivers are germane to both single and multi-owned models, for example good product(s), skillful management, and a robust business model. However, the nature of a partnership, with its reliance on collaborative efforts and interaction amongst participants, demands additional factors to ensure a successful venture. Most of us are familiar with the major multi-owned CUSOs in the industry. To determine what factors are critical in achieving success in multi-owned relationships it is useful to look at one with a long history. Callahan’s Credit Union Financial Services Limited Partnership (CUFSLP) was formed in 1987 and has experienced the full range of results. The initial launch plans were derailed by the October 1987 stock market crash. The SEC prolonged the approval of new funds. The partnership’s capital was running low when the funds became available in April 1988. Market reaction did not meet plan goals. The original commitments had to be renegotiated while the partnership experimented with different marketing messages. A call on capital was made and several partners left. Their places were immediately taken by new credit unions, not because of the track record, but because of the promise. It took two full years of breakeven operations before the tide turned in mid-1990 and the balances began to grow. Five additional partners joined and record performance was turned in the next several years. Now the largest credit union mutual fund family, the genesis of CUFSLP was to provide investment opportunities exclusively for the credit union community. To build an investment solution CUFSLP partnered with Goldman, Sachs & Co and their credit union partners to shape a product that would meet credit unions’ needs. The product became the Trust for Credit Unions family of mutual funds. Initially the only offering from the Trust was an institutional money market fund, but more followed. The Trust’s history shows a confluence of critical success factors for multi-owned CUSOs. Five key drivers stand out. Through collaboration, common business needs and solutions are easier to define – and validate – versus organizations conducting this research on a “one off” basis. In the case of the Trust, collective experience defined the need – “too much liquidity” – and created the solution – “we need more investment options”. For a credit union evaluating new initiatives, it is invaluable to vet ideas against a peer group with similar requirements prior to making business investments. Collaboration demonstrates the real power of a partnership, the opportunity to exchange ideas and information that result in new and better solutions than can be developed on an individual basis. Strategic Partners CUFSLP had two objectives in selecting Goldman, Sachs as the investment manager for the Trust. The first was to ensure the requisite financial market expertise to complement the existing capabilities in credit unions. The second objective was to gauge the willingness of an investment manager to work with a strategic partnership, aligning them with CUFSLP. Fundamentally this relationship would place the investment manager alongside other partners in determining industry needs and trends and providing the relevant solutions. Investment and business strategies often focus on how to maximize return while minimizing risk. Through a networked strategy approach, it is possible to share the risk amongst partner participants and achieve better return as a function of scale. By successfully demonstrating to Wall Street firms the size of the opportunity associated with credit unions CUFSLP was able to achieve better terms than would have been otherwise possible. Demonstrating scale requires the existence of scale, so having a network in place is fundamental to this approach. Innovation for Breakthrough Results A natural corollary of collaboration and networked strategies is innovation. Unique solutions to existing problems often require the efforts of a group. The Trust for Credit Union funds was an innovative alternative product. Their uniqueness, in being the first mutual fund family created by and for credit unions, represents the cooperative nature of their creation. Additional investment offerings have been developed to meet the needs of credit unions, including targeted maturity, government securities and mortgage securities portfolios. Beyond the investment arena, CUFSLP has continued to build on this model by launching one of the first credit union Website design firms and introducing new products in the areas of account aggregation and on-line calculators. Responsive Governance It is important to recognize that from time to time partners will, for a number of reasons, decide to leave the partnership. This could be a result of a merger, leadership changes, or a change in focus. In the case of CUFSLP the partnership has grown from 20 to the current level of 40. Rotations amongst partners are not in themselves a bad thing. New partners bring with them a fresh set of ideas and energy that can be a real benefit to the group. Last January, Wescorp joined CUFSLP, adding an additional set of capabilities in the investment and asset/liability areas that compliment Goldman Sachs. Multi-owned CUSOs are dynamic in nature, so having a process for partnership change provides a healthy governance structure. Today, multi-owned CUSOs represent a new industry segment touching areas as diverse as shared branching, credit card, data processing and retail brokerage. Their geographic reach is nationwide, from indirect auto lender CUDL in California to CUFSLP in Washington, D.C. As credit unions continue to use collaboration as a competitive advantage in the financial services marketplace, successful multi-owned CUSOs provide important models for the credit union community. It is important to recognize the different keys to success associated with these organizations, and once a best practice has been established, to use it.

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