Summary
On an industry-wide basis, the net interest margin can no longer be counted upon to sustain credit unions. In many credit unions, particularly small credit unions, the operating expense ratio is greater than the net interest margin. The good news is that people have the tools to sustain credit unions if they would only use them. The widespread adoption of a collaborative model can bring scale to reduce operational costs while increasing the level of operational services and generating income opportunities for credit unions outside the traditional model. One of the biggest challenges to a business is managing capacity. This requires the creation of Collaborative CUSO Networks. The principals of a network are: 1. The owners of the network are credit unions and must be users and supporters of the network. 2. There are no proprietary rights to intellectual capital; credit unions share policies and procedures to encourage the best to be used. 3. Member information is confidential to the individual credit unions.
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Extract
The Collaborative Strategy
The challenges of running a credit union have never been greater. In times past, credit unions lived off the net interest margin. The interest earned on loans was more than enough to pay for the operation of the credit union and the dividends paid on the share accounts.
On an industry-wide basis, the net interest margin can no longer be counted upon to sustain credit unions. In many credit unions, particularly small credit unions, the operating expense ratio is greater than the net...See the full content of this document
