WINSTON-SALEM, N.C.–A credit union that firmly believes CUSOs are an important part of the CU business model and a very effective means of leveraging capital has been recognized with NACUSO’s CUSO of the Year Award for its business solutions offerings.
Allegacy Business Solutions, a CUSO of Allegacy FCU here, is focused on helping client companies to build those businesses by providing tools for attracting and retaining talent.
Below, R.C. Leander, president and managing director of Allegacy Business Solutions, offers insights into what has made the CUSO a success, along with some lessons it has learned along the way.
CUToday.info: Can you tell me more about what Allegacy Business Solutions offers?
Leander: Allegacy Business Solutions focuses on helping its members and clients attract, develop and retain first class talent. Finding and keeping high quality human capital is the number-one concern of business owners and managers. To help businesses, we offer payroll services, employee benefit solutions, human resources, training and development consulting and wellness program & culture consulting, 401(k) and retirement plan development and management. These services are our primary offerings and we deliver these either as a fully integrated offering or as al a carte services to small and medium sized businesses and to credit unions.
We also have a couple of other major CUSO activities. We have Allegacy Real Estate which helps our members buy and sell residential properties and partners closely with the mortgage department of Allegacy Credit Union. We also created and still own 40% of Advanced Fraud Solutions, which provides a variety of fraud detection services to more than 500 credit unions and banks across the US. Advanced Fraud has been named one of INC 500’s fastest growing private companies the last two years.
Allegacy has a very successful Financial Planning Group, with more than $1 billion in Assets under Management. That business was initially incubated in our CUSO holding company (called Allegacy Services); once it reached a material size we moved it into the credit union to better integrate its services with the other offerings we provide to our retail members. We are now leveraging our expertise to help other credit unions build their Financial Planning functions; we manage their programs and hire and train their staff.
CUToday.info: How has this offering grown and evolved? Any lesson learned?
Leander: We look for opportunities to monetize our strengths and skills. We had a great opportunity in the area of Financial Planning and now use what we have learned to help other credit unions provide first class financial planning expertise to their members. We took our award-winning Wellness Culture and deliver an array of programs to our local community. During this process we have learned a number of lessons. First, we’ve garnered a very strong appreciation for how important culture is when looking at acquisitions. Culture analysis is the most important part of the due diligence process and culture integration is the most important part of the assimilation process and we take culture issues very seriously when looking at potential acquisitions. Secondly, we focus on having strong partners who are experts at what they do. Knowing what we are good at, and just as importantly being honest about what we not good at has helped us provide a better range of high quality services to our clients and members.
CUToday.info: Are there products/services that you/the credit union has stayed away from, and why?
Leander: Our focus in on areas where we can monetize a particular strength of the organization or where we spot an opportunity that we can leverage. We are often presented with opportunities to invest in CUSO’s and we undertake a rigorous review of those that look interesting. In most cases we shy away from being a passive investor whose only value is the capital we contribute. Our model is to be a strategic investor in companies and bring our expertise and market leverage to the opportunity to accelerate growth and improve results.
CUToday.info: Business solutions obviously require an expertise. How has Allegacy built that expertise and where do you find the talent? What particular skill sets do you look for?
Leander: We focus first on cultural fit; culture really is “table stakes”; no matter how technically skilled, experienced or connected an individual might be if we don’t believe they are a match for our culture they don’t get very far in our consideration process. As part of that process we want to see people that are smart, show an ability to think about things differently, can get things done and are fun to be around. Only then do we start considering specific skills relative to the role we are looking to fill. We have grown increasingly comfortable with the idea that if a prospective team member has the right culture and soft skills we can teach the technical details of the job.
CUToday.info: How to you get feedback from your business members, and how has that feedback directly or indirectly affected your offerings?
Leander: We have significant interaction with our clients and members as a result of the type of work we do for them. We also do formalized feedback, we have just rolled out a quarterly electronic survey that asks a few key questions about our performance and produces a net-promoter scores. The feedback we receive from these formal surveys as well as our daily interactions informs our product offering evolution as well as our service capabilities. In response to recent feedback we are in the process of rolling out a new module for our benefit clients that will allow them to automate much of their administrative workload.
CUToday.info: What is the market like in terms of competitive offerings?
Leander: Small and medium sized businesses in our footprint have very few options for an integrated approach to human capital; most of the offerings for this segment of the market are individual, standalone products. We are seeing strong interest in our more holistic approach to this critical need for business owners.
CUToday.info: What are your plans for growth looking forward?
Leander: We are looking to expand our offering in a number of areas. We are expanding our efforts to help other credit unions provide employee benefit solutions to their SEG’s and business members. We are looking at options to enter the commercial Property and Casualty broker business as a way to further expand our offerings to small and medium sized businesses. We identified three interesting CUSO ideas at the NACUSO conference this past April, and at our strategy off-site last week we identified five new opportunities in our market that we are investigating. Lots of opportunities on the horizon.
CUToday.info: Did you get feedback from NACUSO on why Allegacy was selected for the award?
Leander: Allegacy looks at CUSOs in a way that is different from many others in the industry. We identified two specific ways we could support the mission of the credit union when I assumed this role 2 ½ years ago.
First, create and deliver products and services that the retail and business members of the credit union could use to solve their problems and enhance their wellbeing. Second, deliver products and services to a broader market to generate profits (and capital) that in turn enable the credit union to invest in our members. We place equal weight on those approaches and don’t shy away from the notion that our CUSOs are for profit entities.
In an environment where our industry is under increasing pressure to increase capital but have limited ways to do so we believe that leveraging the capital generating potential of the CUSO model needs to be an important part of a credit union’s business model.