Make room at the adult table for CUSOs

It’s an old, but often true, phrase that some things get better with age. From wines and cheeses to flannel shirts and blue jeans, maturity is often associated with a high comfort level and feelings of security.

CUSOs have undergone a maturation process as well, advancing with the times and with technologies. And now they are perfectly positioned to assist credit unions in some of their more “mature” spaces often associated with the back office. As creation of, and investment in, CUSOs continues to ramp up, credit unions are turning to them to manage accounting, HR, administration, healthcare, compliance functions, and more. This makes a lot of sense as by having CUSOs involved in handling these areas, they can focus more on ‘being there’ for their members.

As part of my work as a partner in a strategic consulting firm, I have the opportunity to not only help form new CUSOs, but to assist existing CUSOs in acquiring privately held organizations. This is a wonderful opportunity to bring talent, technology, products, and market opportunities to the CUSO and credit union communities. More than ever, credit union leaders are seeking creative ways to drive non-fee income. Title companies, wealth management, and insurance agencies are just three areas where CUSOs (and their credit union owners) are finding potential acquisition options within established industries.

So now that it is widely acknowledged that CUSOs have come into their own, what does it take to be successful in this space where so many organizations want more scale in every part of their business? It all starts with the people and the market demand. If you have both of those, your likelihood of success increases greatly. Conversely, if you are missing key personnel and there is not clarity regarding the target market and associated opportunity, you could be setting yourself up for disappointment. But if you have that crucial alignment of people and markets, you will find CUSOs to be a highly adaptable growth vehicle for everything from bringing in new bleeding edge tech to becoming part of a CUSO holding company.

As a father with a couple of college aged children, I observe the maturation process in other aspects of my life. When our older children are home for the summer and share learnings (and co-exist) with our youngest, it does make me think again about the prospects for CUSOs—the ‘rage’ of early stage fintech investing leading to more entrepreneurial CUSOs co-existing with, and learning from, the more mature CUSOs. And just as I’m excited for the next chapter of my children’s lives, I’m looking forward to seeing all that the future holds for CUSOs, credit unions, and their cooperation.

John Dearing

John Dearing

John Dearing is a managing director at Capstone, a leading advisory firm focused on helping credit unions and CUSOs grow through proactive strategic growth programs and mergers and acquisitions. He ... Web: Details