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The credit union industry has always been unique in its willingness to cooperate, but the need to collaborate today is undeniable. Beyond just sharing success stories and informal networking, there are tremendous advantages to operational collaboration. Lower costs, increased efficiency and a better, more comprehensive solution are just a few of the advantages for credit unions that choose to collaborate. With expense ratios on the rise and interest margins challenged, collaboration is a key way to compete with large financial institutions and increased regulatory scrutiny.

We regularly hear credit unions talk about collaborating to gain economies of scale. However, I often think we are naove about what this will really accomplish. Our experience at Ongoing Operations and my personal experience as a credit union chief technology officer has convinced me of two things. First, scale is not about a 20% savings?it is about fundamentally changing the business model such that the relevancy of a large expense is minimized. Second, no matter how many credit unions work together, scale is not attainable in the IT area of credit unions without large numbers. The need to collaborate within the industry on back office operations is key to carving out the additional expense savings needed to survive and thrive. However, finding partners (perhaps outside of the credit union space) to bring scale is equally important.

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Peter Westerman

 

Credit Union Times

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