Study Suggests Shared Management One Means For Credit Union To Grow
More small credit unions need to investigate shared management sources as a means of maintaining their identity and remaining competitive, according to a new analysis.
The report, "Outsourcing and Sharing Credit Union Management," was sponsored by the Filene Research Institute, and explores ways in which credit unions can cooperate to achieve economies of scale in management functions. The study identifies four successful organizational models that provide shared management services that were discussed at a colloquium sponsored by the Filene Research Institute and the Center for Credit Union Research at the University of Wisconsin.
"The report provides guidance for organizations that wish to replicate one of the models to provide management services to credit unions that want to retain their identity rather than merging," Filene stated.
According to the authors, the four models are:
1) A family-owned business operating since 1959 with a staff of 25, providing management and operational services for six credit unions with total assets of about $40 million ach credit union has its own board of directors and its own identity, but all other functions are provided by the management organization.
2) A corporation wholly owned by the five credit unions it manages, with a total of about $30 million in assets. It is a cooperative formed by the credit unions to provide themselves with management services ach of the credit unions has two of its directors on the board of the center, which oversees its operations.
3) A business wholly owned by one person, with three full-time and two part-time employees. This business specializes in serving smaller credit unions with a variety of services, generally targeting credit unions under $5 million in assets.
4) A large credit union that provides complete management services to one credit union; nearly-complete management services to a second credit union; and partial, but very substantial, services to a third.
"This report is good news for the many credit union boards and managers who want to provide a full range of services to their members without sacrificing their identity," says Bob Hoel, Filene executive director. "Credit unions have excellent brand equity and name recognition through a field of membership comprised of people who work together and talk to each other. When we combine that with the credit union tradition of offering great service, we have terrific opportunities. If we can combine recognition on the one hand with shared services to make service delivery economical and practical, we have a winning combination."