The Rise of Credit Union Service Organizations (CUSOs)

Credit unions have long been pillars of financial stability for millions of Americans, offering personalized services and cultivating a sense of community that is often lost in larger financial institutions. However, in a post-pandemic digital world, credit unions face a unique set of challenges as they strive to modernize their services and keep pace with larger banks and fintechs. 

Enter Credit Union Service Organizations (CUSOs)—a vital component in the credit union ecosystem, improving how these institutions deliver value to their members. In a recent interview with Karen Webster of PYMNTS, Chuck Fagan, CEO of Velera (formerly PSCU/Co-op Solutions), emphasized the crucial role of technology in helping credit unions attract and engage the next generation of consumers.

Legacy Modernization with Limited Resources

One of the most significant hurdles credit unions face is their legacy systems. These outdated infrastructures, while reliable in the past, now hinder the agility and innovation needed to compete in a world where digital-first financial solutions are the norm. Unlike large banks with vast IT departments or fintech firms built on modern tech stacks, credit unions often operate with limited IT resources. The challenge of untangling decades-old systems to integrate modern technologies is daunting, to say the least.

But this is where CUSOs have stepped in, “as you build technology,” Fagan said, “you have to do it in a way that allows the consumer to connect with the [FI] the way they want.” Credit Union Service Organizations, like Velera, are designed to provide credit unions with shared services, including technological advancements that individual credit unions might struggle to implement on their own.

Bridging the Tech and Talent Gap

The digital transformation of financial services has been swift and relentless. By pooling resources and expertise, CUSOs help credit unions tackle legacy integration issues more effectively, enabling them to adopt new technologies without completely overhauling their existing systems. “Marrying up those segments with the FinTechs and the 4,000+ FIs” served by Velera, “puts us in a good position” to modernize CUs’ operations and offerings,” continued Chuck Fagan.

That’s why CUSOs often partner with API management platforms (APIM) and Integration Platform as a Service (iPaaS) providers to offer credit unions scalable, ready-made solutions that can be seamlessly integrated into their existing systems. These partnerships enable credit unions to leverage cutting-edge technology without the heavy lift of building custom integrations from scratch.

Mastering Integration Velocity

Connectivity is vital for credit unions with limited tech resources, especially when launching complex features like mobile deposits and peer-to-peer payments in a new mobile banking app. Legacy systems often slow down progress, but by partnering with a CUSO that provides pre-built, scalable solutions, credit unions can accelerate the integration process, overcoming challenges more efficiently than if they were to develop these features in-house.

Streamlining Regulatory Compliance:  As the CFPB advances open banking regulations and the FDX shapes open banking API standards, credit unions must adhere to strict guidelines for data protection and transaction security. CUSOs can ease this burden with compliance-ready solutions, developed with partners that meet industry standards. This minimizes regulatory risks and accelerates integration, allowing credit unions to launch new services more quickly.

Enhancing Ecosystem Collaboration: CUSOs simplify integrations by working with API platforms, like Sensedia, to build an ecosystem of standardized APIs that meet regulatory requirements and connect credit unions to fintechs, payment networks, and partners. This ecosystem approach allows for better service offerings and member experiences, delivering a wider range of financial products through a single, trusted source.

Future-Proofing Credit Unions: By leveraging scalable, flexible solutions and partnering with innovative API platforms and fintechs that evolve with their needs, CUSOs give credit unions a significant advantage, helping them stay agile and compete cost-effectively for valuable market share.

Driving Innovation Through Collaboration

The collaboration between Credit Unions, CUSOs, Fintechs, and integration platforms, exemplifies the power of ecosystem-driven innovation. By working together, these entities create a robust support system that empowers each other to tackle the complexities of digital transformation head-on. The frictionless connectivity of advanced technologies through partnerships not only streamlines operations but also positions credit unions to deliver a superior member experience.

As open banking continues to gain traction, these collaborative ecosystems will become even more critical. CUSOs, with the support of tech providers, can ensure that credit unions are not just keeping up with the pace of change but are also leading the charge in delivering secure, compliant, and innovative financial solutions. “The cross-pollination of these products and solutions means that we can help a credit union with a more robust package offered to a member … and to have an ability to consistently invest on an ongoing basis,” concluded Fagan.

How can Sensedia Help with Credit Union Integrations?

At Sensedia, we leverage our extensive system integration experience to deliver tangible business value. We support a diverse range of financial institutions, from legacy core banks to fintechs, driving real success in open banking worldwide.

Our focus is on providing robust stability, security, and support to future-proof your business beyond compliance. Eliminate dependencies on intermediaries and data aggregators, and build a scalable, efficient, and profitable financial ecosystem. 

Sensedia is a global leader in multi-layer integrations, APIs, and Open Banking standards. Recognized by Forrester Wave™ (Q3 2024), 'Best Open Banking Solution Provider' by Fintech Awards UK, and ‘Best Real-Time Payments Solution’ by the Paytech Awards, a certified AWS Financial Services Partner, specializing in open innovation and enabling a more digital, connected, and open world.

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Learn How Sensedia Helps Credit Unions and CUSOs