HERDON, Va. — Though their main mission is to serve the credit union industry, some CUSOs are finding additional clients in other financial institutions, businesses and perhaps even the public sector.
DigitalMailer here, for instance, has signed an agreement with Global Elite Group, one of the top emergency and security service firms in the country. The deal puts the CUSO's crisis notification system, known as Exigent911, in place at the security firm, replacing the old calling tree it used to get in touch with responders and other personnel after a natural disaster.
"It was a manual process. What the system does now is send two e-mails, two text messages and two voice calls to everyone in the database," DigitalMailer President/CEO Ron Daly explained. "Instead of dialing one by one and trying to keep track of all these people, the system does it all at once."
The CUSO previously only implemented its notification system at credit unions to assist them in contingency operations, but the service can be adapted for businesses and even governments. Daly sees the expansion of not only DigitalMailer, but other CUSOs as well, into spaces outside the cooperative movement as something that will not only make the organizations stronger but also boost the health of credit unions.
"I think it is a positive step; you see the tech providers to the banking industry coming into the CU space," he said. "The same thing that works for CUs will go outside and work for banks, other financial providers or in this case, cities and counties or other industries. We need to take advantage of the innovation and look for new ways to deploy it-why wouldn't we try and grow our CUSO faster?"
While CUSOs are required to generate the majority of their revenue from credit union sources, there is nothing to prevent them from booking just under half of their business from non-CU sources. And there appear to be a handful that are doing just that, albeit somewhat quietly.
"We got the green light to enter the bank, thrift and insurance company markets in 2003," said Brian Hague, president/CEO the of investment services CUSO CNBS in Overland Park, Kan. "It can be politically difficult when you're credit union-owned and a lot of it depends on the state; some states' banking trade groups are more anti-credit union than others. You tell someone you're CU-owned and you try to break into the bank market and there's some resistance."
But CNBS has found a niche with some community banking clients as well as larger bank and insurance clients where the investment managers once worked in the credit union space. The CUSO is also succeeding in the dealer-to-dealer market thanks to its bond market access. Though the non-credit union business is solid, Hague says CNBS has never made a "huge push" into that space.
"The most we ever derived from non-CU sources is 10% of our transactional revenue," he pointed out.
With about a dozen non-credit union customers and just a handful of those being businesses others than CUSOs, it would not appear at first glance that Maryland-based Ongoing Operations derives much of its revenue outside the cooperative space. But CEO Kirk Drake said the disaster recovery and business continuity firm actually brings in 30% to 40% of its revenue from those sources, thanks to one very large client.
"Their solution is 10 to 20 times bigger than any other credit union solution," he pointed out. "They bring great scale for us that we then leverage for our credit union clients."
That one client has almost 50 to 100 times the buying power of 100 credit unions combined when it comes to bandwidth, which is great news for CUs. Drake pointed out that only CUSOs could put credit unions in touch with firms that can bring that kind of scale to the table.
"It drastically lowers the price for that aspect of the business," he continued. "Credit unions have this idea that if they band all together they can bring scale. While that would lower your price 15% to 20%, scale is when you cut your price from $100 to $5."
While NACUSO's executive director, Michael Hales, is less than enthralled with the idea of CUSOs going outside the cooperative community, saying that it "defeats the whole purpose of the CUSO," he did acknowledge the real possibility that such expansion could eventually bring more businesses and individuals under the cooperative umbrella.
Digital Mailer's Daly hopes to accomplish just that with Exigent911 as he looks to put the technology in the hands of credit unions in vulnerable states, such as Florida, who could then bring it to businesses in the area. He even mused about the possibility of having a municipality's or county's emergency communication "sponsored" by a credit union in the region that has access to DigitalMailer's product.
"The plan is to get this into any place where business interruption is important or communicating to a community when there is a disaster," said Daly.
