Saving money with CUSOs

By Katherine Weber
If you are not involved in a CUSO, what are you waiting for? Are you not interested in making money? Or maybe you are not interested in saving money? It is intriguing to me to see the demographics of the credit unions involved in CUSOs—historically, they tend to be the larger credit unions. This is rather counterintuitive in some ways, as it is the smaller credit unions that could benefit the most from a CUSO. In fact, I would venture to say it is the smaller credit unions that should consider CUSO involvement to be mandatory for their survival! When it comes to the bottom line—which let’s face it—most credit unions are focused on the bottom line these days—CUSOs can either help you save money or generate the non-interest income you are looking for. In this economy, all credit unions should be looking for ways to trim down on expenses. We represent a CUSO the owners of which estimate the CUSO saves them each approximately one million dollars per year. Now that’s what I call trimming the fat! It’s a technology CUSO called OTS. It was originally formed by two credit unions each with over two billion in assets.

If making money or saving money does not convince you, would you like to be able to provide a broader scope of services to your members in a more efficient manner? CUSOs are the collaboration mechanism that enables credit unions together to be able to offer what individually they would not have the economic resources or personnel expertise to do so. Collaborative multi-owned CUSOs provide scale. CU Student Choice Partners, LLC is a perfect example of multiple credit unions of varying sizes collaborating to offer student loan products to members. It is not only an income generator but it is also infusing its credit union owners and users with a new much needed demographic of members. These members in college and graduate school have their entire financial lives ahead of them—from car loans, to mortgage loans to investments.

Still not convinced? Well, how about a combo of one and two—make money and offer an additional service to your members efficiently. CUSO Financial Services, LP is a broker dealer enabling credit unions to do just that. The broker dealer CUSO has 50 credit union owners and has paid out $15 million in distributions to its owners over the past three years. Would a new service along with extra earnings make an impact on your credit union?

This is not an advertisement for any particular CUSO. It hopefully motivates you to start thinking creatively. Start brain storming—where could you collaborate to save some money or make some money? What services do your members want? Whatever the idea, “There’s a CUSO for that!”

Katherine Weber is a partner at Messick & Weber P.C. and a co-host of the Current Issues in Credit Unions podcast.

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