Strategic Link Business Partner, Capstone, Offers Advice on Credit Union Growth


When most hear the word “merger,” they instantly think of a large credit union buying a smaller credit union. Smaller organizations may shy away from this tactic out of fear of being gobbled up by a larger institution.

While that is certainly one type of transaction, mergers and acquisitions can come in various forms. A consolidation where a credit union buys 100 percent of another credit union is just one form of growing by engaging with an organization outside of your own.

From a broader perspective, mergers and acquisitions are part of a growth pathway called external growth, which credit unions of any size can pursue to grow their organizations. External growth includes tactics such as joint ventures, collaborations, investing in a credit union service organization (CUSO), as well as strategic mergers and acquisitions. While each of these pathways is slightly different, they can all lead to successful growth.

For example, a credit union looking to add insurance services may acquire part of an insurance brokerage firm to form an insurance CUSO, or it may invest in an existing insurance CUSO to gain access to these services and products for its members.

Another option would be to collaborate with another like-minded credit union to build an insurance CUSO together. All of these various external growth forms fulfill the same need: providing insurance services and products to the credit unions members. These types of transactions are, at their core, in line with the credit union philosophy of bringing value through cooperation.

Credit unions should not be concerned with size alone and instead focus on strategy first. Strategic acquisitions can help an organization of any size add new products or services, enter into new markets, fulfill a member need, or augment your capabilities.

Contrary to popular belief, credit unions do not need to execute a massive merger to successfully grow through strategic acquisitions or external growth. Successful external growth is driven by strategy, not by size, so any organization can implement this tool for growth. A carefully planned, strategic deal that targets a specific need can sometimes be more powerful than a multi-billion-dollar consolidation. Meaningful transactions are those that help your organization become increasingly focused and effective so that you can stay true to your mission.

Strategic Link business partner, Capstone, helps credit unions and CUSOs weather the changes of the industry through proactive growth programs and strategic mergers and acquisitions. To learn more about Capstone, contact Jason Smith, Northwest Credit Union Association VP of Strategic Resources, or visit Capstone online.

Posted in Industry Insight.