The National Association of Credit Union Service Organizations, NACUSO, was formed in 1985 to help credit unions explore the use of credit union service organizations and the delivery of nontraditional products and services. Today, NACUSO is the industry’s home for collaborative business models, producing innovative solutions, and helps credit unions seeking collaboration as a competitive advantage. NACUSO promotes collaboration, innovation, growth and entrepreneurship within the credit union industry.
Believing that the future of credit union success in both member service and financial viability will be driven to a significant degree by the ability of credit unions to leverage collaboration as our primary competitive advantage to increase member service and decrease operating expense, NACUSO will provide strong support of all legislative and regulatory initiatives that will further those pillars of future credit union success and will oppose any that will be contrary to these goals.
Collaboration is inherent in the credit union structure as cooperatives and is one of the most powerful differentiators of credit unions from other financial service providers. Collaborative business models are effective, efficient platforms for innovative solutions because they create economies of scale, lower operating costs, spread risk and capital, as well as leverage infrastructure and intellectual capital. CUSOs are the most common form of collaborative business model in the U.S. credit union system.
To build a sustainable credit union industry long term, we must create a favorable environment for innovation and collaboration through legislative activism and regulatory advocacy. The regulatory environment either spurs or inhibits new investments by credit unions in CUSOs, both those currently providing products and services as well as those that will be developed in the future through collaboration, more than any other single factor.
- Credit unions need an environment that encourages them to eagerly pursue new ways to deliver a better member experience and improve the financial well-being of consumers; not an environment that makes them question every idea’s ability to make it through the approval process.
- Credit unions need an environment that encourages them to seek new ways to serve member needs; not an environment that caps potential for growth and opportunity to serve underserved markets.
- Credit unions need an environment that challenges the status quo and rewards investment in innovation and collaboration; not an environment that restricts credit unions’ ability to improve the value being delivered to members.
- Credit unions need an environment that supports entrepreneurial incubators for collaboration and innovation that are removed from the credit union, allowing credit unions to reap the benefits of entrepreneurialism without the direct risks; not an environment that forces its innovation arms to be tied with restrictive regulatory policy of traditional financial institutions.
The NACUSO legislative and regulatory agenda for 2011 will be focused on, but not necessarily limited to, the following key associational positions:
- NACUSO supports all regulatory initiatives at the federal and state level to expand authorized products and services that can be offered by CUSOs, including the streamlining of the authorization process for such products and services, should advance approval of the appropriate regulatory agency be required in limited circumstances.
- NACUSO supports a legislative initiative to increase the statutory cap limiting credit union investment authority in CUSOs from the current 1% of a primarily asset based complex formula to 5% of a similar asset based or other appropriate formula of corresponding value, both in the limitation on investments and also in the limitation on loans.
- NACUSO supports a legislative initiative to remove the 12.25% cap on member business lending and increase the minimum to be considered a member business loan to $200,000, while also supporting a regulatory initiative to allow CUSOs and credit unions with a proven track record of effective risk management in the business lending field to approve business loans for otherwise qualified entities without a personal borrower guarantee where appropriate.
- NACUSO opposes any regulatory or legislative initiative that would authorize federal or state credit union regulatory agencies to directly regulate, examine and supervise CUSOs, including any efforts to directly regulate credit union vendors, as many CUSOs offer products and services to credit unions.
Other issues of importance to CUSOs and their credit union owners could arise during the course of 2011 that would have a potential impact, either positively or negatively, on fostering credit union collaboration, innovation, growth and entrepreneurship. NACUSO will not hesitate to take a position, through board approved action, on these issues as they arise.
In the current environment it has become increasingly important for credit unions to find new sources of non-interest income in order to enhance earnings, build capital, and maintain necessary growth. Thus, collaboration and innovation are more critical than ever before to create sustainability for the credit union movement. NACUSO educates the industry as a whole (CUSOs, credit unions and other providers) on the benefits of collaboration and innovation, facilitates cooperative business opportunities, and provides leadership on how to implement these strategies within a favorable legislative and regulatory environment.
It is the desire of NACUSO to be recognized as an effective organization in support of building a favorable legislative and regulatory environment through what we consider the four pillars of future credit union success -collaboration, innovation, growth and entrepreneurship. NACUSO will be balanced in approach, but bold in action to aggressively promote this agenda and will seek to join with other like-minded organizations, when appropriate, to work in collaboration with NACUSO to see these key agenda items accomplished.
