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Before You Hire Another Compliance Officer, Consider This First

February 22, 2019


Marji Hughes, COO at California-based Christian Community CU, was kind enough to participate in a compliance case study for us, which we would like to share with you today. Christian Christian Community LogoCommunity CU's  VP of Compliance, a 42-year veteran of the credit union, retired in November of 2018 and Marji decided to utilize our outsourced compliance team to reduce operational costs. Read on to learn why Marji chose to outsource instead of rehire the position.

Salary and benefits continue to be a significant operational cost to credit unions. At a time when most, if not all small to mid-sized credit unions are taking a hard look at increasing operational efficiencies, considering an alternative to hiring additional staff should be top-of-mid.

CU Service Network, a CUSO that provides back office services like compliance assistance, has found a troubling industry trend: credit unions are wedged in a grey area, where not having a dedicated compliance team makes them vulnerable, but having one certainly stretches salary expenses to a point of discomfort.

Thus, credit unions are now finding value in outsourcing certain areas of their compliance operation. The goal is to retain their current compliance staff, while (1) replacing those who have moved on or retired with outsourced assistance or (2) transitioning current staff to other areas with a better fit. Both options can provide significant improvement to credit unions looking to optimize their compliance department.

Christian Community Credit Union is a $653M institution based in San Dimas, CA, that recently began utilizing CU Service Network’s compliance assistance service in 2018.  The catalyst for Christian Community COO Marji Hughes exploring a compliance assistance option was the retirement of their VP of Compliance, a 42-year veteran of the credit union. After reaching out to CU Service Network for information, Hughes was pleased to find that her credit union would be able to reduce the position’s operational costs by over 75% if she chose to outsource instead of rehiring the position. Hughes knows a thing or two about credit union operations. She has been involved in the credit union industry for 33 years, starting as branch manager and working up through all the business units to become COO.

In the study below, you will learn these takeaways:
1. Outsourcing parts of your credit union's compliance can have significantly lower costs than hiring a FTE.
2. You can reallocate the costs saved on salary and benefits to improve other areas of your credit union.
3. A team of outsourced compliance experts can provide a wider spectrum of knowledge and interpretation than one single specialist can.
4. Compliance doesn't have to be a core competency - it can be outsourced like any other skilled service.

Knowing the operational savings would be substantial, Christian Community CU opted to work with CU Service Network’s Compliance Service, which included the CUSO’s popular Compliance Marketing bundle. “We have utilized the marketing compliance area quite a bit. The staff at CU Service Network are doing the same amount of research that the VP of Compliance was doing,” said Hughes. There is one big difference however, and that is the substantial decrease in cost for the credit union. “The cost savings were huge – CU Service Network’s service costs 22% of what it cost for salary and benefits for our VP of Compliance.”

Outsourcing compliance often comes with a savings of over $50k, and many credit unions that utilize the service reallocate the extra money to needy areas of their organization. This could be in hiring staff in other departments, training and promoting current staff, or investing in tools and resources to streamline efficiency. Christian Community used their cost savings in two ways. The first: “It freed up money to staff in areas where we needed staffing, and we were able to bring in resources for other departments. We hired one additional person in a totally different department that we really needed,” explained Hughes. The second: “We kept the BSA area of compliance in house, which allowed us to create an additional role for a current employee. Her new role gave her room to grow – it is like a second skin to her.” Using the cost savings from outsourcing improved other departments and allowed the credit union to nurture an employee growth track.

knowledgeAside from hard cost savings, the single biggest benefit credit unions appreciate across all of CU Service Network’s back office outsourced products is the breadth and depth of knowledge it brings. Because CU Service Network’s compliance team collectively has over 100 years of credit union-specific experience and has assisted over 50 credit unions, they know the ropes more than any single employee can. “They see so much more than our VP would have seen just working here, because they support so many other credit unions and have a totally different vantage point,” explains Hughes.

One thing that’s for certain is that credit union employees are known for wearing multiple hats. Another thing that’s for certain is that keeping up to date on compliance is a huge endeavor. More credit unions are realizing that they don’t have to be fluent in compliance, because having an outsourcing partner can do the job just as well. Credit unions are abandoning the notion that compliance “needs to be in-house.”

COO Hughes looks at a compliance officer like an attorney or auditor – something you can easily outsource. “I would outsource as much as humanly possible if I could, because being able to serve my members is most important. If managing compliance takes you away from serving your members or a valuable employee away from doing something that provides a better level of service, then outsource it. Compliance is compliance is compliance. All you need is an expert to guide you.”

When asked what she would say to credit unions who are on the fence about outsourcing, Hughes said, “You have this wealth of information and knowledge available to you at your fingertips, not just one person’s interpretation or capacity to know. That in itself is a reason to outsource.”


thank you

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