GRAND RAPIDS, Mich.-Dealing with a tough economy? Save on backoffice expenses by joining a CUSO. Need to increase products and services available to members? Gain access to more offerings by being part of a CUSO.
The answer to most questions, according to Randy Karnes, is to join, form or otherwise invest in a CUSO. That position may not be a surprise, as Karnes is the CEO of CU*Answers, a CUSO owned by more than 70 credit unions that has more than 165 credit union clients for its list of services, which includes staff training, marketing, data processing and running kids clubs.
"The opportunity in CUSOs is to create unique and very powerful credit union member solutions that might not be easy to emulate by a credit union doing it for itself," Karnes told Credit Union Journal, emphasizing the critical need for forward thinking in the movement. "If we are going to change our future, we have to design businesses that will meet the needs of members in the future. In CUSOs, credit unions can own businesses that are not entrenched in the last 100 years. They can have innovation inside and outside their business model. Collaboration is expected to change the design of the business. Alliances are a competitive advantage in a CUSO.
"CUSO charters allow credit unions to act larger than their individual charters," he added.
With CU*Answers celebrating its 40th birthday this year, it has already has sold out its 2010 business plan for core data processing.
But an even greater measure of success, he said, would be to let small or struggling CUs know they have an alternative to simply packing it in and looking to NCUA to negotiate a purchase-and-assumption agreement.
"The concept of three credit unions working together without merging is big. I think credit unions are going to crack the code on running credit unions in a new way, and that might be the time when CUSOs become an even more attractive option. Credit unions can work globally and focus locally, rather than think they need to be bigger in order to survive. We can flip that and go in a different direction, and CUSOs are one of the major areas where we can give people hope.
A Wrong Impression
Karnes believes many within credit unions have a wrong impression of how CUSOs fit into the larger state of cooperatives.
"CUSOs do not equal cooperation and cooperation does not equal CUSOs," he said. "CUSO formation is for improving and broadening credit union performance for members. It is a business charter that empowers a credit union to provide services to members in a new way. CUSOs are an excellent opportunity for credit unions to combine their efforts and attack problems in a new way. There might be cooperation underpinning that concept, but the possibilities for the credit union marketplace are done a disservice when we talk about the forming of CUSOs being cooperation.
"With that said," he continued, "CUSOs are just another member-capital investment - same as investing in opening a new branch."
For those attracted to the business side of CUSO membership, Karnes urged credit union managers not to jump into a CUSO "just to make money." When credit unions invest in a CUSO just to make money, he argued, it is a "drain on member capital, not an addition to member capital because it is not the same as investing to build a credit union."
"It has to be about who owns the CUSO and it has to be like a credit union. Credit unions need to pick a CUSO for the same reason someone picks a credit union rather than a bank - a respect for members and a respect for member capital."
Karnes believes many forget how "magical" member ownership is. "If we look to the future, if CUSOs fail, it will be because they didn't honor the spirit of member capital. But if we do respect member capital, there is no limit to what CUSOs can do."
