Co-Sourcing: How 3 Credit Unions Collaborate On Back-Office Ops

Communication and a shared perspective allow this consortium to gain efficiencies in areas that are scalable and manageable with clear metrics and service level agreements.

After collaborating on a shared core system through Open Technology Solutions for more than a decade, Bellco Credit Union ($3.4B, Greenwood Village, CO), Bethpage Federal Credit Union ($6.2B, Bethpage, NY) and SECU of Maryland ($2.9B, Linthicum, MD) asked what other ways they could partner to increase operational efficiency.

Their answer? The S3 Shared Service Solutions, LLC CUSO, which supports collaborative business solutions in the areas of deposit operations, real estate lending, consumer lending, collections, and call center operations. S3 officially launched in 2012 and is the 2015 winner of NACUSO’s Innovation Collaboration Award.

Although the three partner credit unions are each large by industry standards, their combined asset base exceeds $12.5 billion and their membership tops 630,000. This, along with their existing technology alignment, has opened the door to more cost-effective and efficient operations.

We are an operations center focused on delivering high-quality and cost-effective services to our credit union partners, says Mike Scully, CEO of S3. We see ourselves as an extension of these three credit unions, not as a traditional vendor or outsourced provider. We call it co-sourcing,’ as our goal is to offer the best of both worlds.

Pre-Planning And Strategic Alignment

Bellco, Bethpage, and SECU of MD spent a significant amount of time planning for the new CUSO and made key decisions well in advance of hiring any official S3 employees.

According to Scully, sales is the major dividing line between what the CUSO manages versus what each credit union keeps in-house.

The CUSO doesn’t dictate product offerings or influence how the partners market to prospective or existing members, Scully says. S3 simply does the back-end fulfillment.

This allows the credit unions to maintain their distinct identities within their markets while benefitting from efficiencies in areas that are scalable and manageable with clear metrics and service level agreements.

Our goal is to create a better member experience through the shared systems and tools available and exceed what any of the partners could have provided individually for their members.

These fulfillment end services include the call center for all three credit unions. Although some might see the call center as a hybrid between sales and service, the S3 partners view the area as a member service channel that should be housed under one roof.

Strategically, the decision was made to bring the call center into S3, Scully says. Over time, our goal is to create a better member experience through the shared systems and tools available and exceed what any of the partners could have provided individually for their members.

Employed By Three Credit Unions

Everyone at S3, including the call center agents, receive a lot of information from the three credit union partners.

We have corporate trainers here that support the entirety of S3 and specific department trainers for the call center who incorporate new product offerings and promotions from the partners into bite-sized training so we are positioned to help the members, Scully says.

The CUSO is in daily contact with all three credit unions, and although the processes are more streamlined, they are not all that different from what the credit unions were doing before.

Instead of walking down the hall to your call center, you are calling us before you launch a new campaign, Scully says.

The consortium, as the partnership is referred to internally, focuses a great deal on communication. In addition to S3 employees communicating with each of the three partners, the three credit unions have frequent discussions themselves and keep one another informed of activities. And cross-partner meetings, involving all parties in each business area, occur on a regular basis.

All of the first mortgage business leads or digital strategy experts will meet to discuss high-level topics or how to improve specific processes, Scully says. We’re constantly making adjustments to improve efficiency and enhance partner alignment. It’s an ongoing process.

>Related Article: Operation Sharing Ops

Multi-Layered Governance

According to Scully, S3 has several layers of governance. The CUSO’s operating board consists of the CEOs of the three partner credit unions. The board meets on a monthly basis, many times via video conference, and meets in-person at least annually.

In addition to the operating board, S3 has a governing board that consists of six individuals. Two members from each of the credit union’s own board of directors serve on a rotating basis. The governing board meets quarterly, with members being re-affirmed annually and rotating on a two-year cycle. The S3 organization reports to both boards.

The Importance of Like-Minded Partners

S3 hasn’t completely ruled out adding new partner credit unions, but the CUSO is not actively pursuing anyone.

We’re focused on making S3 as productive and valuable as possible for our current partners, Scully says. It would take a special partner to enter this group because the three credit unions are so like-minded. Successful collaboration requires partners to be open-minded and make sacrifices for the common good.

Not only must partners be open-minded, according to Scully, they must also be fully committed for the long-term. This includes setting aside enough time and effort in the pre-planning stage.

A large part of S3’s ability to get up and running quickly was how much work the credit unions put in before we existed, Scully says. They really set the stage for us to be successful.

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November 9, 2015

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