Hello Everyone, this is our new blog, being born of the Partner Connection Sessions at this years NACUSO conference and taking on the subjects of collaboration in our industry. Lets call it collaborating on collaboration!
We have just returned from the very successful NACUSO annual conference and exhibit. The conference demonstrated what we have been seeing across the credit union industry, a new enthusiasm, and maybe more importantly, a new need for CUSOs. I think that enthusiasm and need comes from the ultra-competitive financial services world that the industry is facing.
This new world is one of ultra-low rates and margins, fierce competition from FinTech companies, an invigorated banking industry and the requirement to invest in a new world of digital, data and web based retail services to address this new paradigm.
As we have seen in our past, when competition is at its highest levels and a shift is occurring in the industry through new products (digitized and web based lending, ex. Rocket Mortgage, OnDeck, Lending Club) or new technologies (data analytics, big data and sophisticated lead generation) CUSOs are our answer to those challenges. Why? Because a major investment is required, scale is critical and the risk can be substantial. It is better to share these challenges than it is to go it alone, even if we can afford to go it alone, which is rarely the case. Think about our industry answers to the challenges of ATM networks, credit card, debit cards and mortgages — each time we started CUSOs so that we could serve our members new needs, compete against the banks and diversify our products and risks. By collaborating we shared the costs, helping to reduce the risk of innovating.
The conference was overflowing with this type of thought and energy. From the winners of the next big idea competition – Rate Reset/LoanGen – using automation to quickly refinance auto loans, to the new payment products (TruVanatage) to using the web to distribute loan participations – LoanStreet. We held roundtables that discussed new opportunities to create CUSOs to work together on mortgage and commercial lending services, backroom operations (accounting, compliance, etc.), new technologies (the sharing of core system operations and development) and an extremely well attended roundtable on the credit union opportunities for market place lending.
One big area of current investment in CUSOs is the collaboration in new technologies — we saw at the conference and we see across the industry – CUs are searching for ways to get more out of their technology investments and are turning to collaboration models to share core investment and to build data analytics and business intelligence skills. There are at least 20 projects going on around these types of CUSO collaborations today. This is the number one trend in large CUSOs today.
We think the next big trend will be digitized lending through the web, using improved risk management (through data analytics), aggressive web and data base created lead generation and the inherently superior member experiences (at least for Millennials and those of us of any age who use the web as our primary retail channel) of market place lenders or peer-to-peer lending (and who would be better at peer-to-peer services then the inventors of the model, credit unions) is the next great opportunity for CU collaboration and CUSOs. Think – of a Lending Club or other market place lending example — where CUs would own the brand, own the business model, provide the consumer with lower fees and rates and have loans flow to their balance sheets. We could own the consumer web based business model. In many ways the banks have leveled the playing field to our advantage, lets seize it.
These are some of the thoughts and examples of what is occurring in collaboration, through CUSOs and at NACUSO. Join us, together is where our strength lies.
I’m going to write for this blog from time-to-time I would love to hear your thoughts on what makes senses, what is working in the CUSO world, what we can all do to help spur innovation (a subject for the next blog) through CUSOs and what you think we should rethink or maybe not do. This is our opportunity to collaborate on collaboration. I hope you grab it and together we build something great.
For those of you that were able to attend the Partner Connection Session, you will be receiving an invitation to join the Partner Connection Session LinkedIn group. For those of you that weren’t able to attend and are members of NACUSO, you can join by clicking on the Partner Connection Session group in LinkedIN and sending a request to join. This will not be open to the general public (we don’t want the bankers to know what we’re up to!)
ABOUT THE AUTHOR: Kirk Kordeleski is CEO of Edge Consultancy, and is widely considered a breakthrough financial performer with an unmatched track record of growing credit unions and providing leadership and direction in the non-profit community. Mr. Kordeleski is a relentless bottom-line driver respected industry-wide for leading Bethpage Federal Credit Union to become the largest credit union in the Northeastern United States. Kordeleski has a history of working with credit unions to over come their reluctance to “lose control” and see the value of collaboration. His collaborations saved millions of dollars annually for the owners of OTS and S3 CUSOs.
