When I first heard the news that Wells Fargo employees fraudulently opened two million unauthorized or fictitious customer accounts in an effort to meet sales goals, I could hardly believe that such a fraud could occur.  Then as I learned that this happened over a period of several years, dating back to at least 2011 and that Wells Fargo continued to pressure employees to “cross-sell” (i.e. open new accounts), even after they became aware of these egregious acts, I was outraged.

At the Senate Banking Committee hearing this week, The Wall Street Journal reported that Senators “accused [Wells Fargo CEO] John Stumpf of fostering a culture where low-paid branch employees were pressured to meet impossible sales quotas to keep their jobs, and so signed up customers for products without their knowledge. As the employees sold more products, Wells Fargo shares rose and bigger bonuses flowed in for the top executives.”

How could this happen?  In a well written article on “How Wells Fargo’s High Pressure Sales Culture Spiraled Out Of Control” the WSJ summarized it this way: “Hourly targets, fear of being fired and attractive bonuses kept employees ‘selling’ even when the bank began cracking down on abuses.”  The article went on to say: “For five years, Wells Fargo conducted investigations into improper practices, hired consultants and tinkered with sales and compensation incentives. Questionable sales tactics persisted, though, and were an open secret in Wells Fargo branches across the country … branch managers routinely monitored employees’ progress toward meeting sales goals, sometimes hourly, and sales numbers at the branch level were reported to higher-ranking managers as many as seven times a day. Tension about how to meet the sales targets was common. Former employees reported that managers asked employees who had fallen short of the targets if they could open accounts for their mother, siblings or friends.”

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I learned a few things along the way about credit union collaborations that jointly supply back-office operational services, e.g. IT support, lending, collections, compliance; etc.   Below are some common lessons learned.

1. Scale alone is not enough. If two credit unions merge or two credit unions collaborate through a CUSO there will be an increased scale in the operation. But if there are no other changes and the credit unions continue to operate in the same manner with the same number of people, there are no savings other than perhaps through additional bargaining power with vendors.    If the processes and people issues are not addressed, a merger of credit unions or a CUSO collaboration can actually add costs.

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Today, let’s consider a new concept for disruption and collaboration. Let’s change the entire paradigm of the core system technology platform and build that model in collaborative CUSOs.

Core systems in credit unions have been a material advantage for credit unions over all size banks for decades. Our business developed as full service institutions at the same time significant new technologies came to the market – specifically mini computers and integrated data bases. We also had the added advantage of very centralized operations, which allowed us to have a consolidated technology platform. We entered the full service retail banking world at the same time that there were technology platforms geared toward our size institutions. Allowing us to connect all loan, savings and transactions accounts into one record and to provide online, real time operations. We leaped over banks in our use of technology and were leaders in on line ATMS, audio response systems and online banking platforms. We were the innovators and the disrupters. We had members using those services long before the average bank.

Our core vendors, companies like DNA (FiServ) and Symitar (Jack Henry) supported our tech leadership positions with integration into lending platforms, collection systems, card subsidiary systems, etc. They have been very good partners and we would not have grown to the extent we have today without them.

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Let’s face it – credit unions are generally not known as innovators. At our best we are fast followers. Except when it comes to CUSOs. The CUSO model is brilliant in that it lets credit unions that have expertise in an area provide quality services to other credit unions. In other words, when one credit union “figures it out” they can share the love by bringing in other credit unions either as investors, customers or both.

I read a Forbes article written by Larry Myler recently that talks about the 4 levels of innovation and it got me to thinking about the different CUSO models and how they fit his categorization.

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Jay having a “ball” on his birthday!

Each month we are highlighting at least one NACUSO member by interviewing one of their executives. The format is meant to be fun and informative. This month we are excited to share the story of our new NACUSO member HealthPlan Services, by asking Jay Mclauchlin a few questions about himself, how he came to work with credit unions and how HealthPlan Services can benefit our members.

What’s your current position and can you give me a brief overview of what it is you do in your work?

As the Senior Vice President of Consumer Sales for HealthPlan Services, I oversee the management of our multi-threaded distribution strategy that includes sales through insurance agents and brokers as well as direct to consumers via our private exchange platform.

What would you say most motivates you to do what you do? What are you most excited or passionate about?

I love working in a team environment and solving a problem.  More importantly, I like an environment where the group trying to solve a problem has fun doing it. It’s not just about delivering the finished product or solution—it’s the excitement and joy of the journey that motivates me.

I want to hear the story of how you came to work with credit unions. What attracted you to work for HealthPlan Services?

HealthPlan Services developed its private exchange platform with the advent of the Affordable Care Act. We felt that by providing a robust shop/compare and enrollment tool for medical insurance, we could attract and add value to organizations that already had a strong affinity with their membership base. Providing a private exchange platform solution to members of a credit union made perfect sense.

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This month we are doing something a big different for our Spotlight series. NACUSO welcomed Frenchtown Financial Opportunity Center, LLC (FFOC) to the family. This is a unique CUSO model, one we’ve never seen before so I know you’ll enjoy reading about Chuck Adcock and how he came to help build FFOC.

What’s your current position and can you give me a brief overview of what it is you do in your work?

I am the EVP of FSU Credit Union along with the COO of our CUSOs iDriveLending, LLC and Frenchtown Financial Opportunity Center, LLC.  In my role for the credit union I oversee all areas of the credit union reporting to the CEO.  For both of our CUSOs, I function as the Executive reporting to the CUSO Boards.

What would you say most motivates you to do what you do? What are you most excited or passionate about?

The opportunity to serve people is what really motivates me.  Through my work at the credit union along with our CUSOs, I have the opportunity to serve a broad range of members along with other credit unions.  I began my career as a teller more than 20 years ago and have members that still call on me today for all their financial needs.  I spend an amazing amount of time teaching financial literacy at Florida State University, Tallahassee Community College, and most of the local high schools.  I love helping people gain success in their financial well-being.

I want to hear the story of how you came to work with credit unions. What attracted you to work for FSU Credit Union and Frenchtown Financial Opportunity Center?

I went to work for FSU Credit Union my freshman year of college.  As a kid, my father was a banker, so I literally grew up playing in a bank vault (you can’t do that nowadays.)  So, going to work for a financial institution was easy.  When the credit union offered to pay for the rest of my college through its education reimbursement program, I really began to love and appreciate the opportunities that the industry has to offer.  As someone, who loves to learn and to teach, a university credit union has been the perfect fit.  I was particularly interested in the chance to develop the Frenchtown Financial Opportunity Center because of the educational impact we are making on an underbanked group.

Now if we can go even further back, where did you grow up and what was it like living there? Where did you go to school?

I grew up in Eustis, Florida.  As a kid, the town was small enough that I once was pulled over for speeding to high school baseball practice and before I could get to the field my mother was waiting on me there because the police officer called my grandfather who incidentally was a retired deputy to let him know what happened.  I attended the same schools that my parents did even being taught by some of the same teachers.  Then, it was a very small town.

Who were your mentors along the way? People who deeply influenced who you are, what you believe in and what you’re committed to in your work and life? Tell me about them.

My grandfather was a very well respected law enforcement officer.  He was retired by the time I was old enough to fully appreciate his influence in the community.  He taught me a considerable amount about serving even those who don’t make the right choices with dignity and love.

Chuck Adcock with wife Kimberly and sons Collis and Eli

Finally can you share something interesting about you that would surprise our readers? It can be anything, a hobby, an adventure, sports, the most embarrassing thing that’s ever happened to you,

I am rather outdoorsy, active individual.  I spend a good deal of time on my boat with my wife and kids fishing the Gulf waters of North Florida.  When the weather gets too cold to fish, my boys and I spend many weekends in North Georgia hunting.  And, when I can squeeze in the time, I love riding my Harley through the canopy roads of Tallahassee.

PART TWO: The CUSO Business Story

Tell me the story of how your CUSO was created – the early days. Tell me about some of the memorable characters in the history, some that brought your story color, drama, comedy, conflict?

Frenchtown Financial Opportunity Center was originally the idea of Bethel Missionary Baptist Church under the leadership of Rev. R.B. Holmes.  Rev. Holmes hoped to create a credit union in an underbanked area of Tallahassee known as Frenchtown.  Frenchtown had once been a vibrant center for African American commerce and everyday life.  After desegregation, much of the affluence of the area moved to the suburbs leaving the residents and businesses of Frenchtown to support themselves.  Over time pay day lenders and pawn stores became the prevalent banking means of the Frenchtown residents.

Rev. Holmes and the church decided to apply for a credit union charter after many years of unsuccessfully seeking a bank to provide financial services to the area.  During the application process, the church suspended its efforts as the economy began to suffer from the mortgage crisis.  Continuing to desire to bring mainstream financial services and financial literacy to the area, a principal in the initiative, Keith Bowers, approached me about the credit union moving into a church owned facility that was already constructed to be a financial institution.  Initially, we were reluctant because of the proximity of one of our existing branches.  However, after more fully investigating the negative impact of payday lending and check cashing services in the area, we knew we had to do something.  We decided that we could make the initiative work with a partner.  We looked to our long-time collaborator and CUSO partner Envision Credit Union.  ECU saw the same value that we did in changing the way an entire community banks.  After a year of planning, which required teaching branch staff the products, services, and systems of both credit unions, we opened Frenchtown Financial Opportunity Center on June 10th, 2016.

Ribbon cutting ceremony

The Center is a CUSO run by the staff of FSUCU focused on establishing new members for both credit unions and educating these members to break the cycle of payday lending.  Many members of the church and surrounding churches are supporting the measure by moving their memberships to our credit unions.  The Center is located in Frenchtown and serves as the first financial institution to ever have a presence in that community.  Residents and businesses of Frenchtown have a sense of ownership and pride surrounding the initiative.  Additionally, both the city and county fully support the measure as it furthers their efforts to revitalize the area.

What were the key relationships that mattered most? What were the key sources of support or resistance you encountered?

Partnering with the church was a critical step in making this initiative successful.  Bethel Missionary Baptist Church and other surrounding churches in the area promote the services of the CUSO as an extension of their ministry leveraging the CUSO’s expertise in financial literacy training.  Additionally, having progressive Board members that strive to embody the philosophy of the industry has been paramount to this initiative.  Also, gaining support from local officials has helped drive business to the CUSO.  We provide not only the products and services to improve a member’s financial well-being, but we also provide the education on how to maximize the impact of our products and services.

What have been the greatest successes in your opinion?

The CUSO is relatively new but already has seen more than 50 new memberships between the two credit union owners in just the first 60 days of existence.  We have helped more than 20 members break the cycle of payday lending by qualifying them for a loan to pay off the payday lender.  The large majority of the members already qualified for a conventional loan, but simply either did not know that they would or had been conditioned to think that payday lending was their only option.  Likewise, we have refinanced several automobiles from title lenders cutting the interest expense to these members astronomically.  Because of the close knit nature of the community, we already have people walking in saying “You helped my friend…can you help me?”

PART THREE: Reflections and Lessons

If you could start your CUSO all over again, would you do anything differently? Why and what would you do?

So far, our only regret is that we did not recognize this opportunity sooner.  Our credit unions have had great success in helping our members as well as our community in general, but had never really looked closely at this model and the potential impact it might have on a specific community that so desperately needs an alternative.

Finally, when you think of the future, what gives you hope and what makes you concerned?

We hope that this concept will serve as a model for credit unions all over the country to collaborate and share the risk of really reaching into and serving impoverished areas.  We believe that this model could considerably reshape communities while more firmly securing credit unions as the consumer choice for banking.

When I finally retire from credit union land I always thought that I’d volunteer. I’ve always been inspired by our volunteer board of directors. For the most part the people that are elected to a credit union have little knowledge about how to run a cooperative financial institution but they have a servant’s heart and a desire to help. Many of them come from being loyal members and know what it’s like to be a member, which is super important. I have worked with some pretty impressive boards of directors at high tech credit unions that are able to draw upon their field of membership expertise and recruit CPAs, HR professionals, Technology experts, etc. Not all are that fortunate, but it’s up to us to cultivate the best talent, give them guidance and the education necessary to make solid decisions.

Rather than wait for retirement I recently was presented with the opportunity to volunteer to fight fires and provide emergency medical services for our tiny remote town of 589 residents. We were in danger of losing our ambulance and fire truck because we did not have enough residents that were volunteers. At first I thought I might be too old. Turns out I’m more around the average age of our volunteers. Then there’s the training. I will begin formal EMT Basic training winter term at the local community college. In the meantime, a lot of this is “on the job” training. Or as I like to think of it – in the truck training.

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