The Power of Collaboration

Today as I write, is the first day of Spring, my younger son Josh’s birthday, and a mere 8 days away from the opening day for baseball season.  These events that mark spring are much anticipated by me and many others.  I thought about these events a lot while trapped in an airport because of a blizzard.  My only hope now is that we have seen the last winter storm of the season!

As I, along with many others were able to experience more of the amenities at the Minneapolis airport on this last trip—more than I ever cared to—it did give time to ponder the credit union industry after the recent conference I had attended.  One theme that is evident in this industry more than others in the financial arena is collaboration.  In my career in finance, I have worked for savings and loans, banks, insurance agencies, and now for credit unions.  Of all of these, I have found credit unions to work together the most for common goals. 

I think much of that is ingrained in the credit union DNA.  From the beginning, credit unions that started in factories realized they would be stronger if more worker-families used the credit union for their financial needs.  Community-based credit unions realized they could server more people when more people in the community joined.  With this natural bend toward financial services that benefit the entire group rather than those driven by profit to the shareholder, it seems natural that credit unions would join with other credit unions to conquer common problems.

This is quite evident in our institution, a credit union service organization or CUSO.  From what I know, there are no banking service organizations or insurance collaborative companies.  Yes, all financial sectors do have common trade groups or user groups with different vendors, but none have groups like a CUSO, where its credit union owners have vested ownership and a stake in making the CUSO successful, which in turn will help make the owner credit unions more successful in one area or another. 

The CUSO model also embodies the spirit of collaboration.  Individual CU owners who are vested with the CUSO will make decisions that may not be the best decision for their individual CU but will benefit the CUSO.  The short-term sacrifice will turn into better long- term gains for the industry and for the individual CUs.

We see this a lot as we work with the collaborative power of funding large commercial loans.  Some of these could not be individually funded by one institution and they need the help of others in the funding.  The institution that purchases a portion of a commercial or agricultural participation will receive a higher yield than other alternative investments.  This provides more earning benefits to their individual membership. 

But the purchaser provides much more benefit than just higher earnings.  They help the selling institution win the deal.  This makes the seller a more viable financing option for future business loans by others in their community.  Helping here strengthens and builds up that credit union.  This helps to strengthen and builds up credit unions as a whole.  More business owners and farmers will see working with a credit union for their financial needs as a viable option when they hear of fellow businessmen who have gained financing for their building expansion or new land purchase through a credit union.

The loan buyer benefits from this increased awareness of the credit union option.  They also could benefit from the present CU seller helping them when they have a large project that needs to be funded.  This collaboration is shown when we help our brother and sister institutions.

The collaborative benefits extend to the CUSO which can provide and service more accounts and help facilitate more loans with servicing income earned from managing each credit.  The income also allows the CUSO to expand its services in its support of credit unions.  Again, the power of collaboration is evident throughout this model.

As an individual CU, how have you reached out beyond your group and collaborated with others?  This brings the possibility of new ideas, new members, and new business for all of the group which will allow your individual CU to grow beyond all efforts solely done on your own.