The Map Behind One CU's Network Of CUSOs
SALEM, Ore.-The path to the eight CUSOs that MaPS Credit Union wholly or cooperatively owns is one that is both simple and complicated.
The story is complicated enough that even the senior management team has difficulty remembering the names of all of the CUSOs off the top of their heads. On the other hand, Jill Nowacki, the credit union's VP of development, said the reason for operating so many CUSOs is not convoluted at all-they simply were formed out of necessity.
"We have had CUSOs since the mid-1980s," she recalled. "Over time, more CUSOs have been introduced as needs have been identified. One that came up recently is text banking. People don't have to go all the way into online banking, but can uses texts to check their balance before they make a purchase."
MaPS was founded as an education-based credit union (its name is an acronym for Marion and Polk Schools). It currently serves 39,000 members in eight Oregon counties, plus SEGs and underserved areas. One of its two insurance CUSOs is MaPS Insurance Services, which offers insurance to consumers and businesses, including auto, home, life and commercial lines.
Mark Zook, president and CEO of MaPS, said the insurance CUSO started with a narrowly defined product base.
"But if you really want to have a strong, deliverable product for members you have to have a greater structure," he said. "We have folks who are dedicated to doing insurance services, and the best part is they do so in a way a credit union would do-with great member service."
Advanced Reporting-another MaPS CUSO-is a background screening company that provides employment-related background checks for credit unions and private businesses. David Deckelmann, VP of operational subsidiaries for MaPS Service Agency, a holding company that operates many of MaPS' CUSOs, said because Advanced Reporting is credit union-owned, it understands the "unique needs" of the credit union industry and has "designed services around those specific needs."
In addition, he explained, Advanced Reporting has created specific educational programs to help credit unions set up compliant screening programs.
"We resell background screening services to our SEGs and to credit unions across the country," Deckelmann said. "What we bring to the table is not only expertise in background checks but also credit union management, so we feel we can relate to these folks on a service level they can relate to. We feel it is a competitive advantage."
Internetworked CUSOs-Future Is Now
In a recent interview with Credit Union Journal, Tom Davis, president and CEO of NACUSO, discussed the concept of "CUSOs Version 3.0 ("Why It's Time For CUs To Get Ready For Upgrade To CUSO 3.0," CU Journal, May 10). Davis said he foresees a networked business design with open communication among groups of credit unions facilitated by CUSOs. If one network cannot meet the needs of a CU, then it can connect with other networks, and so on, he explained.
On a smaller scale, the vision of the future Davis espoused is being put into practical reality by MaPS, according to Zook.
"Each one of the companies is there to provide a service to members, but at the same time they are affiliated to MaPS or with other credit unions," he said. "Willamette Business Group is owned by eight credit unions; MaPS owns 48% of it. In terms of services to members, it can cross-sell. While working up a business loan, the service rep might discover the person is looking for a checking account, a money market account, payroll services or commercial insurance. The answer might come from an affiliated credit union, or perhaps another CUSO that is affiliated. The CUSOs are internetworked."
And this internetworking is good business for MaPS, Zook continued. He said while traditional loan products such as auto loans generate revenue needed to sustain the credit union, its CUSOs generate a revenue stream in the form of non-interest income.
"Through additional income generated by income streams that would not traditionally be part of a credit union we are able to diversify and make our income statement healthier," he said.
Deckelmann said the text banking product cited by Nowacki illustrates the process by which MaPS develops new CUSOs. He said management looked at the marketplace and examined its own needs, and because there was no product available that fit within its budget, it developed its own.
"SMS is the fastest-growing segment of mobile banking today," he declared. "Text banking is a product within the wireless CUSO. It was rolled out to MaPS members in January and it is currently being offered to other credit unions."
Text banking was first offered to another credit union in February, and another one recently signed on making three CU users, counting MaPS.
Providing Additonal Income Stream
More than 100 MaPS members are being added each month, Deckelmann continued. "It is an additional income stream for CUWireless, and it is a service to members. The credit unions seeing the benefit and it might drive more credit unions to join the CUSO, which currently has 18 member-owners."
MaPS launched three CUSOs in 2009, including an investment advisory service for other credit unions. Zook said that effort was "a lot of expansion" and it required a significant commitment of time from everyone in the credit union.
"We are not focused on building any new CUSOs right now, but you never say never in case new needs come up," Zook said. "There was clearly a need last year for advisory services, so we created the investment advisory service."