Credit union service organizations (CUSOs) are collaborative entities created to provide the ancillary services that credit unions lack the resources or capacity to develop on their own, such as mobile apps and online banking platforms that give members more modern digital experiences. CUSOs also manage back office functions like accounting, compliance and human resources so credit unions can streamline operations while still prioritizing member service.
CUSOs help credit union members expand their selection of financial products with access to specialized lending programs and investment services, payment processing solutions such as debit and credit card services, automated clearinghouse transactions (ACH), wire transfers as well as operational efficiency solutions provided by business process automation solutions from CUSOs.
Credit unions today face one of the greatest challenges: outdated technology systems and manual processes which place undue strain on staff while detracting from member experience. Credit Union Service Organizations help credit unions select and implement technology solutions which enable fast, affordable process automation that results in real operational efficiencies gains.
Credit unions must abide by stringent regulatory guidelines that mandate data protection and transaction security, which requires continuous monitoring of activities – an extremely labor-intensive task. To alleviate the strain associated with monitoring all activities, CUSOs offer software designed to automate and streamline regulatory compliance requirements for credit unions.
CUSOs also support the establishment of shared branching networks, enabling members to conduct transactions at other credit union branches without incurring extra costs – helping CUSOs reach members in distant areas and meet their specific needs.
As the financial industry rapidly develops, CUSOs play an essential role in expanding the range of products and services that credit unions can offer their members. From investment advisory services, mobile banking applications, or alternative lending options – these solutions allow credit unions to meet the rising expectations of tech-savvy consumers.
The National Credit Union Administration (NCUA) oversees CUSOs. Their regulations outline the services that CUSOs may perform, including checking and currency services, clerical and professional services, consumer mortgage origination services, electronic transaction services, fixed asset management services, insurance brokerage or agency services, leasing agreements, loan support services, record retention services, security disaster recovery recovery services as well as securities brokerage brokerage.
CUSOs may be structured either as C corporations or limited liability companies (LLC). C corporations are subject to federal and state income taxes at both the corporate level, while LLCs take advantage of pass-through taxation by eliminating double taxation on profits and dividends distributed. Both structures have their own distinct set of advantages and disadvantages; therefore it is vital for CUSOs that are just getting started to determine what structure best fits their specific purpose – this is particularly crucial when trying to establish themselves within the market; having the appropriate foundation can help them create lasting and robust business models.