LAS VEGAS-Innovation rarely comes from within an industry, and because credit unions tend to be particularly "myopic" as a group, they need to take a cue from the movies.
That was the message from Tom Davis, president and CEO of NACUSO, who shared clips from the 1969 classic "Butch Cassidy and the Sundance Kid" with attendees of the trade group's recent Annual Conference here to make his point. After the title characters, played by Paul Newman and Robert Redford, respectively, attempt to rob a railroad car, a posse chases them seemingly halfway across the Old West. Despite the pair's best tricks for losing pursuers the group keeps coming, leading to the iconic line, "Who are those guys?"
According to Davis, CUs need to do three things to help them innovate: 1. Ask, "Who are those guys that are doing well? 2. How do they do that? And, 3. How can I use that by taking it back to my credit union? "Credit unions need to look at what they are doing to create a competitive advantage and increase their value proposition," Davis told Credit Union Journal. "Are they combining assets?"
NACUSO is working to engineer the next generation of credit union service organizations, Davis continued. He said the No. 1 issue for the industry is sustainability. "If that is the issue, what is the answer?" he asked. "Innovation, or creating more value than one's competitors. Collaboration is important because credit unions have notoriously small scales."
What Davis foresees is a networked business design with open communication among groups of credit unions facilitated by CUSOs. The current model, he explained, consists of a service organization in the middle with spokes radiating off connecting the owner credit unions. The problem: communication, by and large, is limited to the individual CUs and the CUSO, with almost no independent interaction among the credit unions.
"It is about leveraging shared resources, as opposed to everybody standing alone," Davis said. "One credit union can ask: 'Who needs the excess capacity I have?' or 'Who has something that meets my needs?' It works both ways. This can be for just about anything, such as a credit union that needs 17 hours of collections work done."
The beauty of this "CUSOs Version 3.0" system, Davis suggested, is if one network cannot meet the needs of a CU, then it can connect with other networks, and so on. He hopes to someday see networks connecting with networks, some of which might be third-party vendors. "The best way to drive value to members is to use resources," he said.
Credit unions have less than 6% of the assets in the financial services industry, and have been below that threshold for 20 years, Davis rued. Worse, he said, within that 6%, the CU industry is "fragmented," with "no unifying vision."
"Credit unions are about driving value back to the members. They must come together and create more scale," he declared. "NACUSO's mission is to be the catalyst for establishing collaboration and innovation for the growth of credit unions and the sustainability of the industry. We want credit unions to be around for 50 years, but people don't think about that enough.
