By John San Filippo
PSCU and Co-op Solutions merged on Jan. 1, 2024, forming PSCU/Co-op Solutions. However, at least for 2024, the new organization has chosen to conduct two user conferences: Member Forum, which was traditionally the PSCU event, and THINK, which was traditionally the Co-op Solutions event. Member Forum was held Apr. 10-12 in San Antonio, Tex., while THINK will be held May 7-10 in Nashville. Finopotamus caught up with CEO Chuck Fagan and Chief Administrative Officer Brian Caldarelli at Member Forum for an update on the merger, from both a business and technology standpoint.
No New Name … Yet
When Finopotamus spoke with Fagan at the 2024 Governmental Affairs Conference, he indicated that a new, unified brand would be announced at Member Forum. However, such was not the case. “We were well on the path to announce [the new brand] at this meeting,” said Fagan. “We had everything picked out. We had done the initial search, but when we did a deeper search, we discovered we were going to be pretty close to another company's name outside of the U.S.”
He added that the company needed to make sure it was on solid legal ground with the new name, noting that the plan now is to announce the new brand at THINK. Despite the delays with branding, Fagan said the merger is otherwise moving ahead at full speed.
Merging Technologies
“We recently hit day 100 in the overall integration process,” noted Caldarelli. “In that time, the teams really got together and worked diligently on a couple things. One is they got into a fact-finding mode to figure out who has what and where it is.”
He added that the next phase was ideation. “We tried to get under the covers to say, knowing what we know now, what's possible now that these two organizations are combined and truly doing that without any bias.” The new company has created functional integration teams and an integration management office that will allow the company to the best ideas, best practices, and best talent from both organizations to create one incredibly strong organization, he added.
Caldarelli explained that being a CUSO is advantageous in this situation. “We're not a public company, so we don't have the Wall Street pressure,” he said. “We're able to take a step back to say, hey, if we were to start a company from scratch, how would we do it?”
Culture Eats Strategy for Lunch
Just as important as the technological fit is the cultural fit, observed Caldarelli. “We are extraordinarily focused on culture,” he said. “We found both organizations really had a strong heart for service. They had a strong heart for our credit unions. That's something that we're really going to strive to maintain as we work forward to build a new company.”
To further define and refine the cultural component of the merger, the company recently conducted a survey called an “organizational health index.” Said Caldarelli, “In that survey, we measured both legacy organizations. Hey, tell me about the strength of your culture. How do decisions get made? What's emphasized between both organizations? And we found an incredible amount of alignment between both organizations. In fact, both organizations together scored in the upper quartile of any organization ever scored.”
He continued, “We always say, culture eats strategy for lunch. Culture is the number one reason why these things don't work. But for those organizations that pay attention to and proactively manage culture, you'd have over a 55 to 60% better chance of achieving your ultimate targets.”
According to Fagan, that positive culture extends to the members, too. “We knew with the positive response we got from the credit unions in the membership vote, support was extremely strong,” he said. “But to be at GAC and now be here at Member Forum, the environment is just so enthusiastic. It’s really an attractive place to be right now as we bring the two companies together, not only from a scale perspective, but from that desire to work together.”
What’s in It for Credit Unions?
Finopotamus asked what benefits credit unions should expect to see from the merger. “First off, we both spend in duplicate areas over and over again,” noted Fagan. “Think cyber, think PCI compliance, think auditors – on and on goes the duplicative spend. Now we only have to spend that once. So those dollars that we save out of that duplication, we get to put back into use to benefit credit unions and ultimately the engagement and relationship they have with their members.” Fagan added that it will likely take a minimum of two years to fully flesh out what the financial implications of deduplication will be.
Finopotamus then asked, will the cost savings also help accelerate technology development? “Without a doubt,” Caldarelli responded. “Take the energy that both companies had at the same time competing against each other. Then you start looking at some of the overlaps that no longer have to happen anymore. And then you might see that one organization might have been more efficient in this process than another. We can drive those efficiencies together for more best-in-class capability.”
Fagan said that the merger could prove especially beneficial to small and mid-sized credit unions. “The fintech market looks at distribution to the middle segment of financial institutions and the smaller segment of financial institutions as a barrier for them to gain success,” he explained. “[The fintechs] look at us as an entry point. We have the distribution. We have the account executive sales.” By serving as a conduit between fintechs and smaller credit unions, the company will help keep all credit unions stay relevant.
As an example, Fagan pointed to the partnership PSCU announced at the 2022 Member Forum with Chicago-based Amount, a digital lending fintech. “I showed a video this morning during my keynote (see below),” said Fagan. “We have just released now a capability to where a credit union member can apply for a credit card over the phone, be digitally decisioned in a matter of a minute or two, and the card digitally provisioned into their mobile wallet. And we also linked buy now pay later in it to where the member can actually decide how they want to pay for whatever they just bought.”
As for the future of the two-conference scheme, Fagan said, “I announced on stage this morning that next year this same conference will be consolidated. It will not be two different meetings. Next year we'll be in Denver and it'll be one conference, both THINK and Member Forum combined.”