Credit unions have been operating in the United States more than 100 years, and in the early days, they served a local community, offering simple products with relatively clear costs, such as branches, and technology costs included buying a new adding machine. 

The digital revolution has changed that model drastically with the help of 2020’s coronavirus pandemic. Credit unions’ cost of doing business – from technology to compliance to security – have grown exponentially in the last decade or so. The mounting expenses make it difficult for  small- to mid-size credit unions to compete.

Credit unions, and particularly small- to mid-size credit unions are ignoring their greatest value as not-for-profit, cooperative financial institutions that serve to benefit their members. In a survey by the CEO Advisory Group in late 2019, a staggering 60% of respondents cited digital transformation as a driving factor for cost cutting. 

The second most frequent response was economies of scale. A report from CUNA clearly outlines the costs of regulatory compliance. CUNA found it costs credit unions an average of $115 per year per member-family to support regulatory compliance. Larger credit unions get a better deal than that, but mid- to small-size credit union costs in these areas skyrocket. A report by the International Journal of Trade, Finance and Economics clearly highlights the role economies of scale play in profitability. 

That is why credit unions must band together as smaller financial institutions to gain scale by leveraging collaborations.

Credit Union Service Organizations are credit unions’ underused and underappreciated superpower! CUSOs can help your credit union bridge the scale gap. Member Support Services works with your credit union to combine mid- and back-office efforts across multiple credit unions to share the cost to your organization. High-dollar experts, expensive technology upgrades and services and costly problems can be solved with shared technology solutions.

It’s time to stop and take a look at the industry. Consolidation, while a solution, doesn’t meet every credit unions’ needs nor their members. 

Mid- to small-size credit unions need not fall further behind the technology revolution – embrace it through shared services and negotiating power of a CUSO. We can’t afford to go it alone and remain relevant. Reach out and work with Member Support Services and other CUSOs to realize your credit union’s potential. 

If you’re ready to maximize economies of scale while maintaining your brand promise and member-driven service, contact Member Support Services right now to learn more about how we can help your credit union thrive.