5 Things to Consider Before Offering Third-Party Services



Is it time for your credit union to up the ante on its suite of product offerings? If so, you may find yourself facing the in-house vs. third-party decision. Support from an outside partner makes sense on many levels. Should your CU decide to go that route, these best practices will help you get the most out of a third-party partnership.

Upon entering the lucrative business lending arena, credit unions often choose to first offer a simplified suite of services: a few loan options, a basic checking account and online access. This limited portfolio is typicaly enough to get started, but as your program grows you will need to consider adding to your product offerings. Today’s sophisticated small businesses demand a wide range of financial services, including treasury management, remote deposit capture, sweep checking accounts, credit card processing and payroll services.

At that point you will face a crossroads: should you try to develop additional products and services in house, or should you consider partnering with a third party? In many cases, it makes sense to team up with an experienced third party that has expertise in a particular product line as well as the resources and scale to offer such services competitively and efficiently.

As a credit union, you have a choice among third-party relationships. You can select from a multitude of traditional for-profit vendors, or you can join with a Credit Union Service Organization (CUSO), a non-profit structure that is available only to you. Judging by the doubling of credit union investment in CUSOs over the past decade (Fig. 1), the concept has been embraced enthusiastically by the credit union movement. Reportedly, over 900 CUSOs have registered with the National Credit Union Administration (NCUA) in accordance with the agency’s new data registry requirements. This abundance leaves credit unions with a number of options within the industry to help with their operational, technology and member service needs.

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