ST. PETERSBURG, Fla.-It's time for credit unions to reach out to vendors to seek longer-term deals that cut costs.
PSCU Financial Services reports it has been seeing many more requests for such deals, often extending terms out to 10 years, explained Chief Sales Officer Chuck Fagan. "We can give better pricing because of that long-term commitment, and as much as 15% to 20% savings can be achieved. Credit unions should expect good response from their partners right now and get some win-win solutions."
Fagan noted that 7- and 10-year deals are becoming much more common, and that for the first time PSCU has five 10-year deals on the books. He said that credit unions save a great deal on transaction-cost pricing, but a long-term deal has little impact on fixed costs, like telecommunications lines.
PSCU said the ability to partner with credit unions keeps dollars within the CU community, and that effort is also supported by companies PSCU works with. "When we partner with companies, and we have on our own books more guaranteed long-term business, it puts us in a better position to negotiate favorable pricing from the companies we work with, and recover some of the margin we gave up to credit unions."
Outside of the contract savings, Fagan believes credit unions can drive income through promoting credit cards to young adults. "But going after young adults also means that the credit union must have the Internet capabilities and means of access suited for this member segment."
