BIRMINGHAM, Ala.—Look for the credit union community to have a larger number of CUSOs than credit unions by 2025.
Former NCUA Chairman Dennis Dollar made that prediction to CUToday.info, saying the collaborative nature of credit unions and the continuing number of mergers in the industry will bring the forecast to fruition.
"I have long said this, because of the value of collaboration and risk-sharing that is inherent in CUSOs,” said the principal partner at Dollar Associates.
Having more CUSOs than credit unions by 2025 is not necessarily bad, as more innovation that benefits both members and credit unions will come through the risk-sharing model of CUSOs, he said.
“Add to the growth of CUSOs the fact that the increase of voluntary mergers among credit unions will enable the resultant fewer credit unions—probably somewhere around 3,500 by 2025—to be better positioned to grow, expand services to more members, impact more communities and have the economy of scale to be financially stronger and much better capitalized," said Dollar.
CUs Sharing Risk
Some of the most progressive credit unions in the country are sharing risk, expanding services and dramatically increasing their non-interest income through strategic CUSO investments, noted Dollar, noting the moves only enhance the ability to become even more full-service institutions.
“Just about every strategic planning session we participate in has a goal for looking at new CUSO opportunities, and I expect that to continue over the next five to seven years,” said Dollar.
The only thing that might hamper the growth in CUSOs would be too much regulation, said Dollar.
“But NCUA and the states seem to be quite open to CUSO expansion—the new federal CUSO rule notwithstanding,” said Dollar. “It would be good if CUSOs could offer any type lending themselves that credit unions can legally offer. Right now, CUSOs are limited to mortgage lending, student lending and business lending. It would open more opportunity if CUSOs could also make auto loans, personal loans and issue credit cards themselves. Still, CUSOs are a valuable credit union option. The risk sharing aspect itself can be a real expense saver."