ALEXANDRIA, Va. - There is a feeling in the industry–at least by some–that credit unions are too quick to play the merger card, that there are other options.
Tun Wai is one of those who holds that opinion.
“A merger should be the last option you do; something you keep in your back pocket, you only do if you have to do,” said Wai, NAFCU’s chief economist. “If you are well managed and well planned, a merger is thought of as a contingency plan.”
Unfortunately, many credit unions are pushing mergers to the forefront and considering them as a first choice without other options, he believes, adding there are a number of alternatives to mergers, especially for small credit unions. Credit unions have the competitive advantage to work collaboratively, something that is rare for banks to do.
One such collaboration can be seen among the 31 small and medium-size credit unions using Grand Rapids, Mich.-based CU*Answers, a CUSO that charges each of the credit unions $157.50 a week for its services.
The bookkeeping function is handled inexpensively for the credit union and resources can be applied for the important business of finding new members and developing existing relationships. This type of networking brings a competitive advantage, by allowing the credit unions to harvest benefits of scale that were previously beyond their reach, said Randy Karnes, CEO.
Many functions that credit unions perform can be outsourced or shared with other credit unions, according to Bob Hoel, former executive director of Filene Research Institute and now Filene fellow. The chart below shows a list of possibilities.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
