CUSOs Offering Technology Services Continue To Proliferate
Look for technology CUSOs to proliferate as credit unions continue to move to share the costs of integrating sophisticated and flexible software.
At least that's the view of Mark Wintzinger, CEO of a new southeastern Ohio CUSO, the Shared Resource Technology Group.
"The evolution of the credit union technology industry is such that we're moving away from the old legacy systems," said Wintzinger. "The trend is to the more open system where you have the ability to utilize your core vendor's suite of products or integrate a variety of third party products.
"You'll see more technology-sharing down the road," he added.
If the recent success of a number of the nation's smaller, credit union-owned technology providers is any indication, Wintzinger is right.
In Harrisburg, Penn., eCU Technologies, Pennsylvania State Employee CU's CUSO, added 35 CUs for a total of 72 in 2004, according to Alan Brunner, the CUSO's COO. eCU increased 2004 revenues by 50%, he said.
Wescom Resources Group, a CUSO of Pasadena, Calif.-based Wescom Credit Union, also reported success and this month announced an upgraded platform in an exclusive interview with The Credit Union Journal (see related story on page 14).
Of the larger, national technology CUSOs, Kentwood, Mich.-based CU*Answers, which is owned by 50 credit unions, said it had surpassed the 100-client mark last year, growing by 50% in five years.
Last year, Ohio's new Shared Resource Technology Group stepped on the stage, delivering its line directly to small CUs.
Although large credit unions typically wield the open systems that can support varied services and thus increase member loyalty, small CUs can't embrace that flexible architecture, Wintzinger said.
"Some of the smaller credit unions can't afford what they'd have to pay for an open system," said Wintzinger.
"The Shared Resource Technology Group wants to offer a package of services that includes integrated core processing, homebanking, audio response and network administration to credit unions with fewer than 10,000 members-at a monthly price that makes sense," he said.
Behind The CUSO
The $120-million CINCO Family Financial Center CU, Cincinnati, and the $151-million AurGroup Financial CU, Fairfield, Ohio, banded together in May to create the new CUSO, said Wintzinger. A third partner, $121-million River Valley CU in Miamisburg, Ohio, joined in October, he said.
The CUSO will take advantage of economies of scale to resell The Complete Credit Union Solution, a core processing system with ancillary applications offered by Open Solutions, Inc. (OSI) of Glastonbury, Conn, said Wintzinger.
Wintzinger wasn't able to provide a cost estimate for smaller CUs looking to adopt the CUSO's Open Solutions package.
"We're still working on the pricing model and pooling our resources to benefit future credit union clients," he said. "The objective is to be able to offer a complete package of services to the credit union and not have the fee vary month-to-month based on number of members or some other benchmark."
Smaller Credit Unions
Wintzinger said he would like to see the CUSO add at least two clients from the nearby Ohio, Kentucky and Indiana market in 2005.
"We feel we can provide smaller credit unions with more technology for their IT dollar," he explained. "The smaller credit union market is not the primary focus of Open Solutions. In order to reach that market, Open Solutions has partnered with our CUSO so that we can offer the benefits of the OSI system to smaller credit unions at a reasonable price.
"We've taken the same dollars and bought more of a system than we would have been able individually," Wintzinger continued. "And together, the CUSO partners share seven employees from their IT departments, with a combined 100 years of credit union and technical expertise."
Wintzinger said the CUSO's cooperative solutions won't stop at core processing and ancillary technologies. "We're working with OSI to develop an affordable shared branching product that will be able to handle both deposit and lending transactions in our geographical area."
This quarter, the three CUSO partners will focus on their own conversions to the Open Solutions package, he added.
The Complete Credit Union Solution also includes access to document imaging, loan origination and business intelligence.