It's Not Just About Philosophy Anymore

In my last Op-Ed in Credit Union Times, which ran on October 19 2005, titled “Facing up to the Benefits of Collaboration,” I laid out a strong case for credit unions to take another look at the advantages offered by collaboration in CUSOs. I told you of the “new” NACUSO, and how we’re not just about the “for profit” side of selling nontraditional products and services like investments and insurance, but also about operational services, back-office procedures, data processing, human resources, shared branching, business loans and much more. I made the case for how cooperation could overcome internecine competition if we looked within ourselves and made a compact to stay true to our time-honored tradition of sharing and working together. I’ve learned since that it is a tougher hurdle than I thought. Putting aside our fear of getting “one-upped” is much harder than I realized. Teamwork, real, honest-to-goodness teamwork, the selfless kind, is rare. And believe me, I don’t just say that – I didn’t get where I am by being gullible. I understand competition. The business world today has been likened to conducting a war. My view is that it can be, if that’s the way we want to look at it. But credit unions historically represent something totally different than that. There are some who think our structure is “quaint” today, a disappearing anachronism and a movement in its last throes. It is shrinking and will succumb, they think, from the pressure of its own hot air, lugubrious methodologies and old-style philosophy. Let me begin by saying a few glaringly obvious things that some folks will think of as bomb-throwing statements, but I believe them to be true. There are credit unions that do not to respond to other CU people inquiring about programs that work well, strategies that sell, methods that make money. And there are credit union officials and board members who are willing to merge their CU in order to be big, because they think big is better. Maybe they are tired, been on the job a long time and have used up their imagination. Maybe they are bereft of ideas to create new opportunities. And there are CU officials and boards willing to convert to mutual banks, maybe they are near retirement and think they deserve monetary gain for their long years of service. Maybe they are just plain greedy. It doesn’t matter anymore that these individuals have given up on the general welfare of the credit union movement. What matters is that those of us remaining use our wits to appeal to the new line of CU leaders who are not steeped in philosophy as much as practicality. While the realization is true that competition drives credit unions to form CUSOs, it’s the assurance of mutually-arrived at contract terms, responsibilities, shared risk and the expectation of solid returns that underlies the feel-good nature at the surface and makes it work. The “warm fuzzies” of the philosophy surrounding credit unions has suffered in today’s cutthroat market. There is a way to combine the best of both worlds: To embrace hard-nosed business choices and preserve the basic goodness of the not-for-profit financial institution for the next generation of Americans. There is genuine appeal in doing something slightly revolutionary. Making money while doing good is one of them, as long as it’s done without being smug. In a play on Michael Corleone’s modus operandi, “It’s not personal, it’s business,” we can claim, “It’s not philosophy, it’s business.” The best negotiations are those wherein all sides feel they have won, and in our financial services sector, multiply owned CUSOs represent that approach. They support the CU industry by keeping the business within it, they provide value-added strength through shared knowledge of various demographic groups (each CU has its own membership) which can be useful to growing member relationships in others, they can reduce expenses through streamlining and assigning tasks to those most qualified to do them and finally, they pay dividends to the bottom line. My own experience and involvement in several CUSOs bears this out. Just as it is wise to know yourself, it is beneficial to know your CUSO partners, what they bring to the CUSO and what they expect from it. Multiply owned CUSOs take a lot of work and commitment. Not all credit unions in a CUSO want the same level of involvement. Some may see it purely as an investment. Some want to make full use of the services offered, some want both. Others can’t make the time commitment required for operational decisions but still want a say in governance. In a multiply owned CUSO, credit unions are free to make those choices themselves, and there is safety in numbers because the partners complement each other. The value proposition is in seeing the business from an owner’s perspective and all the CUs involved do that. CUSOs such as PSCU, CUSO Financial Services, Members Development Company, the CO-OP Network, Member Gateways and CU*Answers are examples of just how well this works. These CUSOs also provide another much-needed commodity, but it is far more difficult to measure except in the long view. They are providing a research and development capability that will inform and educate the entire CU world. They try new things, expand boundaries and risk shared capital to find what works best. So I would ask all CEOs to consider the CUSO option when they are looking to enter a new line of business or make a change in a current provider. There may be a credit union owned answer already waiting for you.