I've read a couple of good posts lately extolling the advantages of large-scale collaboration in the credit union space.
- Jim Jerving on the NACUSO blog: Credit Unions are Slow to Innovate
- George Hofheimer on the Open Source CU blog: Leave it to Beaver
These posts reminded that I neglected to report on my Member Gateways experience where I was exposed to some amazing large-scale collaboration actually taking place! What's Member Gateways? Here is a description from its website:
Member Gateways is the credit union industry's networked new product incubatorOwned by 24 progressive credit unions and one strategic industry partner, Member Gateways provides the opportunity and means for all credit unions to offer the products and services typically afforded only to mega-sized financial services institutions. Through our combined solutions, partnerships, intellectual properties, strategic CUSO investments and financial service partnerships, we expect to transform and revolutionize the credit union industry.
I was invited by Vic Pantea and Deb Jones from Member Gateways to present the Young & Free story at the their semi-annual meeting in mid-June in San Antonio. Although it was a relatively small crowd compared to some that I have been speaking to, it was intimidating to present to more than 40 progressive senior credit union leaders.
The best part of this opportunity for me was that I was allowed to attend the entire two-day session and see one presentation after another about cool things that Member Gateways' credit union partners are considering or already have in the cooker. Most of it was private, but I can tell you that it was impressive and extremely encouraging to see real innovation on its way to market. And by credit unions no less!
There are a lot of voices here in the CU blogosphere that are frustrated about the lack of innovation in the credit union space. I have definitely been one of those voices from time to time. Meanwhile, here is a group of very powerful US credit union leaders quietly implementing fresh innovations at their credit unions. They are just getting it done and it was inspiring to learn about these stories.
A silly side story
One highlight that I can share (I think) is about Zopa. Three of the six founding credit union partners in Zopa US are Member Gateways credit unions, so Scott Pitts, Zopa US' Managing Director, was at the meeting to give a progress report on this credit-union-partnered peer-to-peer-lending service.
Zopa is doing really well, but what stuck in my head was an anecdote about one of the most popular members of the Zopa community—the cat guy. Zopa members can choose to offer a very low interest rate to people they feel are most deserving.
After joining one of the six credit unions, members of the Zopa community build out a profile similar to other social networks like Facebook or LinkedIn. The members also write a little bit about what they plan to do with the funds that they want to borrow. And of course, members upload a profile picture to put a face to their name. Well the cat guy, who is paying one of the lowest interest rates on the site, is popular because he regularly updates his profile picture with one of the latest funny LOLCAT images (click here if you don't know what LOLCATS are).
While that silly side story has nothing to do with large-scale collaboration, it is the only story from the meeting that I think I am allowed to tell!
And now back to my point
In order to compete, credit unions needs to innovate. But innovation is often expensive and innovation often takes scale. In recent times, credit unions have turned to merging to get that scale. But mergers can be messy and expensive and quite often stall innovation for an extended period of time while the parties try to bring their operations and cultures together.
Large-scale collaboration is a legitimate alternative solution. It allows credit unions to remain smaller and independent, yet allows these credit unions to share, cooperate and, most importantly, innovate. If you are not involved in collaborating with other like-minded credit unions, it's time to get started.