As new De Novo credit unions launch this year, there have been discoveries that any CEO looking to launch a new credit union will need to keep in mind as they begin this process. This article will cover key vendor relationships that most De Novo credit unions will want or need to establish at launch so they can stay competitive in the credit union industry.

First stop, the NCUA and the Federal Reserve

The first two relationships are not optional as the credit union must have approval from the NCUA and a Routing & Transit number from Lexus Nexus (ABA) before they can continue with this project. It is also recommended that these relationships with vendors have begun before beginning your conversion to a core processor.

One of the most important vendors is the Federal Reserve (FED), as a relationship must be established with them before the credit union can begin processing through the Automated Clearing House (ACH). There are also other vendors such as Share Draft processing, debit card/credit card settlement, ACH origination, etc. that all require the credit union to have a relationship with the FED.

This relationship can take anywhere between 6 to 12 months to establish as there are agreements and disclosures that must be completed by the credit union and approved by the FED.

Debit and credit card vendors

The next vendor that all credit unions want to offer their members are debit and credit cards. Fidelity Information Services (FIS), Fiserv, SHAZAM, and Co-op Solutions are all examples of vendors that offer both services.

However, the timeline for launching these products can be upwards of six months depending on the vendor. It is also important that the launch date of these products is communicated to your core processor as it could require an additional project or programming resources on their end.

Item processing vendors

Most credit unions want their members to have the ability to write checks which will require setting up two relationships with two different vendors.

The first one is item processing which is the vendor where these checks will clear through for all your members and who will send a daily draft file to your core processor. Some examples of vendors for this process are Corporate America, Catalyst, Corporate One, Alloya, the FED and even some core processors have their own item processing teams.

The recommended timeframe to contact this vendor is six months before the credit union opens its doors. This vendor cannot be fully set up until all paperwork has been completed with the FED. The second vendor related to checks would be a check printing vendor, such as Harland Clarke, Main Street, Deluxe, and Checks for Less. This is who the credit union will work with to provide checkbooks to your members, again the recommended time to contact them would be six months prior to launch.

Setting up the branch

Though most individuals looking to start a De Novo credit union already have a building or location in mind for where they will operate, they will still need to establish network connectivity at this location. This will include working with most of the following types of vendors: internet service provider, IT company, and core provider or third party for hardware.

The location should be locked in, and the credit union should be communicating with these vendors at the same time when they engage the NCUA as they will need NCUA approval on their location.

Credit reporting and pulling

Most De Novo credit unions want to start offering loans to members at the time of launch so that you can start generating interest income, this requires communication with a few vendors to do so.

The credit union will need to contact any/all bureaus that they plan to work with to setup both credit reporting and credit pulling for their members. The four bureaus the credit union can report or pull reports through would be Equifax, Experian, Transunion, and CBC Innovis.

Additionally, you will want to contact a forms provider like OakTree, Trustage (Loanliner), Securian and Conmar to customize any loan and membership forms that you will require for members. These forms can include some of the following: truth in savings, loan disclosures, loan applications, membership agreements, etc.

Typically, most forms vendors will have samples to provide the credit union, though you may want to reach out to your peers to see what forms they provide to members.

Prepare in advance!

There are plenty more vendors that are not mentioned in this article such as remote deposit capture, loan origination vendors, loan insurance, shared branching, and the list goes on.

The key thing that all De Novo credit unions should keep in mind as you begin this extensive process is to engage all potential vendors as early as possible even if this is a year before your launch date. This advance notice will help ensure a smooth launch for your new credit union so that you can best serve your future members!