What Banks Can Learn From Credit Unions

In today’s highly competitive market, community financial institutions are doing everything they can to stand out and grow. This is always a challenge, especially given the complexities of commercial and business banking.

Credit unions have been a traditional competitor of community banks, typically focused more on retail customers rather than business banking. Many credit unions often have tools in their arsenal that give them a significant competitive advantage: credit union service organizations, or CUSOs. CUSOs are client-owned cooperatives that give institutions control of specialized companies that provide them with personnel, marketing support, technology and a wide range of other products, services and benefits.

Increasingly, more forward-thinking community banks are adopting a similar strategy to better compete and thrive in their local markets – and realizing some key strategic benefits along the way.

Better Technology
More robust and newer technology is one of the key advantages that larger banks typically have over smaller institutions; sharing the development expenses and saving on configuration costs gives community and regional institutions a way to level that playing field.
This gives institutions access to innovative technology and needed resources that they might not otherwise be able to afford. Banks can realize many benefits from today’s technology and get a better view of what may be coming next.

One of the biggest challenges that many community banks face is the inability to capitalize on emerging technology trends – even when they can see them coming. Most institutions are at the mercy of their technology partners and vendors, that in turn tend to focus on the needs of their larger bank customers. A cooperative, by comparison, can respond to the needs of all its clients, giving each of them a voice in the future development of their tools, regardless of asset size.

Having a seat at the table is an invaluable benefit if a bank realizes it needs to alter its workflow or implement new back-office processes. Instead of waiting on a technology partner to find time to discuss the changes, cooperative clients have access to dedicated experts who can prioritize their needs.

All-Inclusive Access
Community bankers recognize that while having access to technology and innovation is a key competitive advantage, knowing how to properly leverage that technology is even more critical.

Banking cooperatives can give bankers direct access to best-in-class technology like secure, cloud-based loan origination platforms and systems, pairing that with access to experts who can help their clients fully understand these solutions to generate the greatest return.

Cooperatives can also provide access to skilled professionals across a wide range of specialties, including underwriting, marketing and call center operations. This is especially valuable in today’s marketplace, as recruiting qualified talent has become even more challenging.

Additionally, most cooperatives offer access to group purchasing. This can save clients a significant amount of money on everything from software, computer equipment and hardware to office and break room supplies.

Innovating Together
One of the biggest advantages that cooperatives offer financial institutions is the ability to bring together a community of like-minded, forward-thinking peers that foster and promote innovation. The cooperative structure allows credit unions – but also banks – to share best practices and take a more direct role in how they help develop and implement new technologies, while having an ownership stake in those products and services.

Today’s banking landscape is more crowded than ever; with technology evolving so quickly, it can be difficult and costly for community banks to stay on top of these changes while competing effectively against larger institutions.

A well-designed banking cooperative can offer community banks a way to share benefits in the same way that many credit unions have long enjoyed, through access to the best technology and the collective wisdom, insights and experience of a cooperative community that provides the tools and support they need to grow and succeed.

This piece was originally published in the second quarter 2023 issue of Bank Director magazine.


Loughlin Cleary

Loughlin Cleary is the president and national sales director at Lenders Cooperative. Mr. Cleary is responsible for day-to-day operations, providing banks and credit unions with both loan origination software and shared services across credit underwriting, SBA LSP services and operations to help drive growth and efficiency at each institution.

Mr. Cleary most recently served as EVP, business development for the Independent Community Bankers of America (ICBA) and has more than 25 years of experience both advising and partnering with financial institutions. At ICBA, Mr. Cleary was responsible for developing and leading the member relations team charged with recruiting, retaining, and engaging with nearly 5,000 community banks across the country.