As Fiserv Prepares For Its Future, CUs Questioning Theirs
If you're a Fiserv exec you can count on at least one of two comments being made to you by a credit union CEO: "Man, I wish I had gotten in on the ground floor with your stock," and "How long before you merge all those credit union business units."
After all, credit unions themselves are merging like flies on the picnic chicken, all seeking efficiencies of scale, and Fiserv has seven business units offering tech solutions to CUs: Aftech, CUSA Technologies, GalaxyPlus, Integrasys, Summit Information Systems, XP Systems, and USERS.
Fiserv grew through a wave of acquisitions during the 1990s and will continue to look for opportunities where there is "greater sizzle," according to Joe Barry, the one-time USERS, Inc. president who today is Fiserv's Credit Union Eastern Division president. But like many organizations that have matured, it is looking inward for organic growth, recognizing it needs a more "entrepreneurial" mindset. Certainly, the company has taken steps to consolidate some operations, including reducing its data centers to three, and it has also collaborated on some technologies to be deployed by the seven brands, rather than having each invest in the R&D to create the same thing.
But it still keeps coming back to that question: "When will Fiserv merge all those business units under the Fiserv brand?" The answer, says Barry, is no time soon; in fact, no time in the foreseeable future. Instead, the company has embarked on what it is calling "Fiserv 2.0." The components of Fiserv 2.0 are, as Fiserv explained them:
1. Active portfolio management. Active collaboration and coordination across the enterprise to leverage the resources of the seven units.
2. Enhanced client relationships. "Fiserv recognizes that the credit union's relationship with the company exists at the individual business unit level."
3. Operational excellence. A focus on applying best practices across the enterprise and leveraging the division's considerable resources to deliver products with greater speed to market and at extremely competitive prices which credit unions couldn't obtain on their own.
4. Greater capital discipline. A focus on the next best use of the division's capital with the goal of delivering the greatest value to clients.
5. Innovation. Fiserv recognizes the need to deliver innovative solutions to its credit union clients and will make greater investments in product development efforts.
Those are Fiserv's five areas of focus. But it's still likely company reps will get questions about other numbers.
Another group of people has some concerns. During a recent roundtable discussion among a group of credit union volunteers, I took these notes on their observations, thoughts and concerns, in no particular order:
* "With real estate charge-offs, we've found the more recent the loan the more likely it is to be charged-off. People just aren't seeing the appreciation. We've had some people who couldn't even make their second mortgage payment, which makes you wonder how that loan was ever made."
* "Regardless of how the Wings/Continental situation turns out, I worry about the public relations damage to credit unions."
* "We set up an associate board member program to get candidates, but no one signed up. We joke with our most senior board members that they can't retire unless they first find a replacement."
* "I think a lot of board members really want to retire but don't have the guts to say so."
* "We give our associate board members a laptop, give them access to board and supervisory committee information, and let them go on one educational trip per year."
* "To get volunteers we talk to our SEGs and ask for recommendations."
* "We created a list of desirable characteristics for board members: involvement in local communities, meeting with (elected) representatives, travel to conferences, and we then forward this to the nominating committee. We also ask board members to do self-evaluations on this."
* "We dinged our CEO's comp this year due to a lack of growth."
* "Volunteers within credit unions have a limited opportunity to interact with other volunteers."
* "I think there are opportunities there. I don't think volunteers are seen as availing themselves of those opportunities. I think that many of our volunteers are so entrenched in their own credit union that they are not paying attention to the rest of the movement."
* "The spread and net interest margin have become a disappearing act."
* "There is no yield curve. There's just a yield line."
* "I think membership has always been and still is a big concern. People just don't know they can join."
* "With UBIT, once the IRS gets its nose in, then this could get ugly."
* "We recently went to a 'Service Promise' for employees, and a lot didn't like it and have left."
* "One thing we did is we launched a leadership communication program, and we discovered the board does not communicate very well."
* "I don't know if it's a problem, but we haven't had an election in six years."
* "You can see how interested credit union volunteers are in networking at the chapter dinner. People from Credit Union A all sit at the same table, Credit Union B at the same table, and so on."
* "I think one problem is that credit unions themselves are more in competition with each other than ever before, and that's to the detriment of the credit union community."
Frank J. Diekmann is Publisher of the Credit Union Journal.