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Credit union service organizations are increasing in number and impact.
Research from Callahan & Associates puts the current number of CUSOs at about 1,000, according to Jack Antonini, president/CEO of the National Association of Credit Union Service Organizations (NACUSO), Newport Beach, Calif. Of that number, about 580 are wholly owned by individual credit unions, and the remaining 420 are owned by two or more credit unions.
The National Credit Union Administration’s new direct reporting requirements for CUSOs should yield a more accurate census beginning this year, including data on subsidiaries owned by credit union service organizations, or “baby CUSOs” as they are sometimes known, says Guy Messick of Messick & Lauer, LLP , Media, Pa. Messick is also NACUSO’s general counsel.
In the meantime, Messick and Antonini agree that the number of CUSOs, especially cooperative ventures with multiple investor/owners, has been increasing in recent years. About 40 percent of the industry has an ownership or investment interest in a CUSO, and while there may be no way to verify this assumption, Antonini suggests that the vast majority of U.S. credit unions do business with at least one CUSO to obtain a variety of services.
The larger the credit union, the more likely it will have multiple CUSO relationships, Messick says. “I think an urgency is developing, especially in the mid to larger credit unions that see a real need to be nimble in reacting to changes in financial services. The sweet spot for collaboration seems to be among credit unions that are under $1 billion and a bit north of $200 million (in assets), that see an alternative business model as essential if they are going to stay in business, because they can’t make money on net interest margin alone.”
Karen Bankston is a long-time contributor to Credit Union Management and writes about credit unions, membership growth, marketing, operations and technology. She is the proprietor of Precision Prose, Middleton, Wis.
