Multi-owned CUSO Leaders Share Perspectives on Key CUSO Issues, Challenges

KANSAS CITY, Mo. – Credit union service organization managers face critical and unique challenges in running their businesses, regardless if it’s a wholly-owned or multi-owned CUSO. CEOs from CUSOs around the country came to U.S. Central’s headquarters Sept. 19-21 to network on these issues at NACUSO’s first CUSO CEO Collaborative, and among those they heard from were three well-known multi-owned CUSO leaders who participated in a panel discussion on some of these issues. Sitting on the panel moderated by Member Gateways LLC President and Chief Operating Officer Vic Pantea were Dave Serlo, president/CEO, PSCU Financial Services; Tony Boutelle, president/CEO, CU Direct Lending; and Randy Karnes, president/CEO, CU*Answers. Asked their opinion on the one thing that’s needed to build a successful CUSO, Serlo and Boutelle agreed that scale – or as Boutelle put it, “aggregation” – is key to building a successful CUSO. “Once the scale is established and you’ve created your economic model, you can acquire the technology and expertise you need to develop your business,” said Serlo, emphasizing that establishing scale needs to be done as quickly as possible because of how fast the environment is moving today. Boutelle concurred that speed is key to establishing scale. “You want to get to the point where you can impact the business model. You want to get to a place where you can impact your pricing and bring value to your customers,” he told the audience. Boutelle and Serlo admitted that their CUSOs which have been around since 1994 and 1977, respectively,probably had an advantage building scale and mass because the environment was moving slower then. But that shouldn’t deter CUs. “Dave is right,” said Boutelle. “The world is moving a lot faster today, so it may be harder to get to some local or regional scale, but the opportunities are still there.” Karnes preferred to come at the issue from a different angle. He said CUSOs have to stop seeing themselves as being just a vendor or an appendage to a credit union. “We have to start saying how do we deliver direct to opportunity? .Every time we get together today we need to say, how is the CUSO going to play a role in raising the awareness of what the CUSO industry can do..” On the subject of regulatory challenges facing CUSOs, Boutelle advised CUSOs to keep their eye on CURIA because it raises the amount of investment in CUSOs from 1% to 3% of a CU’s assets. Serlo recommended CUSOs should be more proactive in supporting certain regulations. We can’t rely on chance, he said, and cited by example CUSOs not being permitted to buy a credit card portfolio. “We have to deal with restrictions at MasterCard and Visa, so we need to look at more than one avenue of involvement, say a joint venture with another financial institution,” he suggested. Serlo and Karnes both also shared their thoughts on what CUSOs can do to be attractive to larger CUs. “Our CUSO has been in business for a good long while and we have the scale, but even large credit unions have to manage margin. I would say that once you reach that certain mass, you can begin negotiating on behalf of your group, even those large credit unions. That’s a definite benefit, even to a large credit union,” said Serlo. Karnes took a different approach and told the audience, “The only way to show credit unions that they need to participate in CUSOs may be to jump the track. To show them that other models are working,” he said. “.The biggest credit unions in this country will take care of themselves for the next two, three and five years. But if we can show that 5,000 credit unions create an opportunity for their balance sheets as good as the balance sheets of those large credit unions, then the CUSO industry will help to build a different kind of credit union, and big credit unions will be attracted to that model, and we’ll need their balance sheets to fund that model.” he said. The three panelists also had the opportunity to share their thoughts on other topics including bridging the gap in multi-owned CUSOs and what CUSOs can do to help sustain smaller CUs. -