Stanford FCU last week announced the spin-off of its wholly owned CUSO subsidiary, CyberBranch, and the move of its president/CEO Warren Marshall, to run the Internet service provider as CEO.
The switch is a logical one for the pioneering institution and its CEO. An SFCU member at Stanford University wrote the first Internet application for home banking in the early 90s, before the days of the World Wide Web, and Marshall was among the first to witness and nurture the transformation of on-line banking practices. John Davis, formerly executive VP, is the new president.
After 15 years at SFCU, 10 of those making 18 speeches a year across the country about the importance of credit unions moving forward with Internet-based technology, Marshall said he is following his own advice.
"I'm moving across to the CUSO because we think it is so important," Marshall said. "We know that in the next three years the vast majority of credit unions have to adopt some sort of technology-otherwise they're going to be in terrible trouble."
SFCU's sponsor, Stanford University, spawned front-line computer age leaders like Cisco Systems, Hewlett Packard and Sun Systems (initially named Stanford University Network until it left the university), so it is not surprising that members expect nothing less than barrier-breaking technology.
"They've pushed us into home banking, they've pushed us into the Web services, to loans online to every imaginable product and service that's electronic," Marshall commented. "Hopefully we'll be able to go to the next step, which is probably wireless."
Through CyberBranch, Marshall intends to bring Internet competencies to credit unions of all sizes, but particularly to smaller CUs as a matter of survival in an age where, according to Marshall, every member should have access to Internet banking. "I'm frightened of the fact that credit unions' best members are utilizing these services now, and if a credit union doesn't provide it they're going to be out of business," Marshall told The Credit Union Journal.
Remaining competitive is a matter of survival not only for credit unions, but for CyberBranch as well, Marshall suggested.
"We've been a sleepy little business that's gone by word of mouth and we've never advertised," Marshall said. "We decided that we will now try to branch out. We could go away very easily if we didn't branch out and go advertise ourselves."
In terms of funding, Marshall would say only that the CUSO is seeking funding from outside capital sources as well as institutional investors within the credit union field. Though the business originated in Silicon Valley, the Initial Public Offering capital of the world, Marshall said he doesn't foresee CyberBranch going public.
The CUSO, as Cardinal Services Corp., was created in 1997. CyberBranch serves 130 licensees in the U.S. and five in Canada.
"It's very difficult for a small financial institution to take money from the credit union to build all these new and great products," Marshall explained. "It's been relatively successful, but there are a great number of banking organizations selling to credit unions and we think we've got better products and services, a better pricing model, and we know this business better than anybody else because we were the first in this business."
