Davis Urges CUs To 'Change Model' As He Departs NACUSO
NEWPORT BEACH, Calif.-Credit union service organizations continue to take on more importance in the movement as facilitators of everything from increasing business lending to selling insurance, but as of Dec. 31 CUSOs will need a new chief advocate.
That's because Tom Davis will be leaving the National Association of Credit Union Service Organizations after spending two decades on the NACUSO Board and the last four as CEO of the trade group.
Although he no longer will be at the visible post of head of NACUSO, Davis pointed out he still will be heavily involved in developing CUSOs to further aid the business prospects of credit unions. As a parting message, he urged credit unions to realize the value and importance of working together and changing the way in which they interact.
Credit Union Journal: After four years as CEO of NACUSO, you announced you were resigning. What factors led to this decision? Why now?
Davis: There were three factors driving the decision to leave NACUSO. One is the fact that I have served on the board for 20 years and as CEO for nearly four years. It's time to let someone else take the lead at NACUSO. Second, when I accepted the CEO position, I did so with the board's approval that I could continue with my industry consulting practice in the areas of business strategy and change management and also continue my duties as a partner in CUSO Development Company (CDC) LLC. In the meantime, the CEO of CUSO Development Company departed, requiring me to step into that position.
CDC provides an opportunity for another chapter in serving the credit union industry and to "walk the talk" that we espouse at NACUSO by building collaborative businesses and CUSOs. Third, I need more family time. It's easy to talk about having a balance in life, but another thing to actually do it.
CUJ: What types of goals and aspirations do you have for CUSO Development Company?
Davis: CUSO Development Company is a multi-credit union-owned holding CUSO with subsidiary companies that provide mortgage services, and is just getting out of the blocks with offering business services. Our goals are to create a competitive advantage and drive greater value to the members of our partner credit unions, while providing the credit unions with a substantial return on their investment.
Our long-term vision is to create a networked business design structure whereby credit unions can create competitive advantage though scalable platforms and network effects across a large number of operational services.
CUJ: In April, at NACUSO's Annual Conference, you talked with Credit Union Journal about a "CUSOs Version 3.0" system, a networked business design wherein if one network cannot meet the needs of a credit union, then it can connect with other networks, and so on. How close is this new generation of CUSOs to reality?
Davis: We have been encouraged with the reception of the networked business design concept that we refer to as CUSO 3.0. We think the external pressures upon credit unions will force transformational changes in the credit union business model. Credit unions desperately need additional income and reduction in expenses. The only proven approach out there that does both is the collaboration model.
There are credit unions that use the hub-and-spoke CUSO 2.0 model to produce thousands, even millions of dollars per year in additional income and reduced expenses. But they collaborate on a single service here and another one there. The CUSO provides the service and delivers the benefit to the credit union owners and users. The day will come when that is not enough to succeed in the marketplace and a more fully integrated network will be needed.
The only CUSO I know of that has the mindset and organization to move to a network model in the near future is CU*Answers. Others will follow if we can effectively communicate that there is more risk in not changing the credit union model than in changing it.
CUJ: What are you most proud of from your four-year tenure at NACUSO?
Davis: The opportunity to develop educational experiences and help reinforce the message that collaboration and cooperation is paramount to credit union and industry sustainability. NACUSO's mission is to be the catalyst for collaboration and innovation for the growth of credit unions and sustainability of the industry. Along with the board, I have tried to remain true to our mission and be a voice for collaboration and develop programs for networked business design.
Collaboration is the furnace of credit union transformation. Our objective has been to help credit unions understand and adopt the collaborative model by promoting the benefits of collaboration. While at NACUSO, we initiated the National Center for Collaboration and Innovation and are supporting it through four strategic processes: 1) critical thinking, 2) innovation and value creation, 3) collaboration, and, 4) implementation.
We have integrated these processes through the learning experiences we offer: Collaboration and Networked Businesses Program in partnership with Pepperdine University, annual conferences with a focus on collaboration, regional conference series featuring 3.0: The Next Generation of Collaboration, as well as regulatory advocacy for CUSOs.
CUJ: What do you wish you had been able to accomplish for credit unions and/or CUSOs that you have not done yet?
Davis: Credit unions have about 6% market share of assets in the financial services industry. We are a speck in market space. Within that 6%, we are highly fragmented and for the most part, have minimal scale. Collaboration is one solution for building a unifying vision for the industry.
But collaboration is a tough sell. Although it makes a lot of sense intellectually, there is a lot of emotional resistance to it. Collaboration is becoming more popular but it is still not the dominant theme in the industry. My wish is that more credit unions will be open to exploring the benefits of collaboration and be willing to work with other credit unions and business networks to leverage shared resources and meet shared needs.
I want to thank the NACUSO board, NACUSO members, and all our supporters who have made NACUSO the success that it is today. They have provided inspiration and phenomenal support in helping me to develop a vision, direction, and educational programs related to collaboration for NACUSO.