By Ray Birch
MARSHFIELD, Wis.—Another small credit union is stepping up to help its small CU brethren by creating a CUSO for shared services.
Alan Bergstrom, CEO of Exclamation Services—which is offering human resources, information technology, marketing, and operations experts at “affordable” rates to small shops—contends the only ones truly stepping up to help small credit unions collaborate are small CUs themselves. The CUSO is owned by the $263-million Simplicity CU here.
“It's smaller credit unions coming to the rescue of smaller credit unions,” said Bergstrom. “I know what the small credit unions are experiencing—we are experiencing the same issues at Simplicity. It’s all about the need for skilled resources at affordable prices, we know that small credit unions struggle to attract and pay skilled people and keep them. The movement was founded on the cooperative spirit and that's how we all survive and thrive.”
The message, and the method—a CUSO that will pool talent from those within Simplicity, from other CUs that participate in the CUSO, and from third-party services—are similar to another shared by a new CUSO, CU Evolution, created for the same purposes.
“Exclamation Services was formed with the underlying belief there are too many small credit unions today struggling to stay afloat, and this is an opportunity and a way for us to help smaller credit unions either attract the top talent they need and to share the cost of those resources. That’s what our CUSO is doing,” said Bergstrom.
Bergstrom said he is all too aware of the plight of small credit unions, not only struggling to attract the human resources to compete with much bigger players, but also warding off advances of larger credit unions looking to scoop them up along with their healthy capital cushion.
‘On the Hunt’
“Prior to taking this role, I worked for what I would consider two large credit unions, one in Michigan and another in Wisconsin,” noted Bergstrom. “Big credit unions are on the hunt for smaller credit unions and I know that first-hand.”
Bergstrom shared a concern offered by many within the movement, that if too many small credit unions disappear, the movement’s tax-exemption might someday do the same.
“Credit unions are becoming larger and larger, providing the same kind of products and services of the large banks, and a number, in my opinion, are not delivering their services in the credit union way anymore—close, personal service, which each member’s needs are considered. You get to be more than a billion dollars, how can you have that close relationship anymore? I believe if you look like a duck, walk like a duck and sound like a duck, then you're a duck. I think this is dangerous for the credit union movement. I know these large credit unions rationale for their size is they need it to compete with the big banks, but in that argument you lose the entire point of what credit unions were originally empowered and established to do.”
The Word From Bigger CUs
Alan Bergstrom
Bergstrom said he has been in board meetings of large credit unions where the topic of the potential loss of the CU tax exemption has been raised. He said the big shops felt that if they had to convert to a bank they could absorb the tax due to their size.
“I’ve heard from large credit unions that if we ever convert to a bank it wouldn't be that bad, but it would be for a smaller credit union—they certainly couldn't make that transition. Small credit unions don’t have this option, so that is one of the reasons we established this CUSO, to fight for them,” said Bergstrom.
Exclamation Services believes the industry needs to preserve as many of the movement’s small and medium-size credit unions.
“The way we think is the best way to do that is through shared services,” he said. “For example, if we've got six credit unions that work together we can pull all of our resources and hire the top-notch marketing, operations and IT people. With five to six credit unions we can share that cost. But you can’t do that alone.”
Getting Things Going
Bergstrom said the CUSO got things moving by shifting all 22 people who comprise Simplicity’s CU’s marketing, HR, IT and operations teams to the CUSO. The teams are now providing the same services back to Simplicity through Exclamation Services.
“Simplicity is out first client,” Bergstrom said, adding additional credit unions will be coming aboard soon.
The goal is to bring on more credit union clients and at first use the existing team to support partner credit union needs. But Bergstrom said Exclamation Services would soon expect to add new talent from the partnering CUs’ talent pool, and then eventually hire more staff as economies of scale increase.
“Another option is for the CUSO to partner with other organizations, possibly outside of the credit union space,” said Bergstrom. “Maybe that means app developers, for example, and IT security. From these partners we will negotiate some preferred pricing to pass that along to our other credit unions.”
Exclamation Services is not intended to be a big money-maker for Simplicity, but instead will function more as a service to credit unions, said Bergstrom. The CUSO leases space from Simplicity in the CU’s Marshfield headquarters.
“As the CUSO grows, we will add staff in Marshfield and our team may also be in other locations, as we deem necessary,” Bergstrom said.