As cooperatives themselves, credit unions are very familiar with all the benefits cooperatives provide their members and communities. That same cooperative business structure can and does apply to many industries, from small clubs to Fortune 500 companies. For the credit union industry, it need not stop at the credit unions that make it up though. Cooperative CUSOs and other supporting co-op businesses can provide the same types of benefits that credit unions provide to their members, but in this case to the organizations that make up those cooperatives. Aside from the obvious benefits of ownership and member-controlled business directions, cooperatives disrupt in three primary areas.
Disrupting through price
Price disruption comes in two flavors: controlled and negotiated. In the example of a cooperative CUSO providing data processing services, the owners who also use the software have more control over the pricing. As such, the cooperative will seek ways to reduce expenses for their member-owners as part of a win-win strategy.
When it comes then to incorporating technology or service from a third party, a single credit union, whether small or large, does not have much leverage to negotiate on the price of that product. However, as a cooperative composed of many organizations, that single entity will be able to negotiate on behalf of all those individual partners. With that added leverage comes an increased ability to negotiate a lower price for access to that third party’s product.
Disrupting through access for participants
Speaking of access, a cooperative negotiating third party pricing for the entire network is one way of getting access for its members. The other is by providing access directly through its own development. Take for example the development of mobile apps for credit unions. At first, third parties offered to build those mobile apps at a price they dictated. Credit unions that could afford it paid. But for some, the pricing may have seemed unrealistic for their shop. Enter the cooperative to which those credit unions belong. By developing its own native mobile app, the cooperative provides access to those credit unions at a more affordable price.
Disrupting through shared resources and execution
Lastly is disruption through shared resources and execution. This might come in the form of two credit unions jointly hiring a single individual to perform tasks at both credit unions, sharing that resource. Or it comes in the form of a cooperative providing a shared execution service to its members, reducing their need to staff those requirements individually. Or it might come in the form of the members of that cooperative sharing information, best practices, strategies, etc., banking on the knowledge of one another rather than a consultant.
Going it alone might be possible, but it is also not necessary. Cooperatives have shown time and again that they are a viable business structure with proven success. Credit unions were formed in America in the early 20th century for the same reasons we see cooperative CUSOs and other business springing up today. To provide opportunity and the means for their members to grow and succeed.
