ONTARIO, Calif.-Expense management is often a key factor in why small credit unions continue to struggle.

But what can they do? The obvious answer to some is greater collaboration in order to create efficiencies. But there is debate over just how much efficiency collaboration can really create.

Diana Dykstra, president & CEO of the California & Nevada CU League and the Shapiro Group, which provides services to small CUs, suggested that similarly sized credit unions can band together to hire experienced professionals to serve one role at multiple institutions.

"It's hard to find people that wish to take on the role of CEO at a very small credit union," she said. "They're hard to find, and our biggest problem right now is retirement of CEOs in the smaller institutions and the board of directors' inability to find qualified people."

Dykstra said that the California and Nevada league has been devoting resources to building collaborative business models around compliance, HR and risk management "so that credit unions can participate in all of that, have better products, better pricing and relieve some of the day-to-day pressure from the management of these smaller institutions."

The California and Nevada League has created a CUSO, CURoots Cooperative, that already offers some backoffice services to participating credit unions. It is headed up by Lucy Ito.


Collaboration? Hold On A Moment

But not everyone was willing to say that such collaboration is a truly viable option, including CUNA Economist Mike Schenk.

"Collaboration is not the easiest thing in the world to pull off, but if you can pull it off the payoffs can be substantial-it can mean the difference between surviving and not surviving," said Schenk. "But the research shows that it takes a special mix of circumstances for that to work and work well." Schenk noted that not only is the issue of size a factor-including ensuring that no one institution feels like another is trying to take it over-but other practical operational issues must be addressed, such as ensuring all participating institutions use the same core system.

Schenk didn't discount the collaborative structure entirely-specifically noting that it can make a difference with backoffice operations and lending-but said that in the end there's no silver bullet to growth, including collaboration.

"The bottom line is that there is no silver bullet-if there was a silver bullet in terms of strategy, everybody would be shooting those bullets," he said. "Some things work in some situations for some credit unions with some fields of membership. But there's nothing you can say that would be THE answer for all institutions that are finding it difficult to grow and earn money."

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