PSCU and Co-op Solutions, two leading credit union service organizations and financial technology service providers, have closed a deal to combine operations.
As of January, PSCU and Co-op began operating as one company, which is based in St. Petersburg and led by Charles E. “Chuck” Fagan, who was previously president and chief executive officer of PSCU. The newly combined organization will be known as PSCU/Co-op Solutions, until further notice, as a new brand is expected to emerge and be announced in the coming months.
“Through this combination, we are establishing an enhanced, end-to-end product portfolio – ranging from access to instant payments and data analytics, digital banking, fraud and risk management, contact center solutions and services, an ATM network, shared branching, collections and more – to help credit unions innovate and achieve their goals, while also providing increased scale, meaningful value and additional growth opportunities,” said Fagan, in a statement about the closing of the deal.
To learn more about PSCU’s growth and how the Co-op deal came to fruition, Tampa Bay Business and Wealth visited Fagan, in his corner office, at PSCU headquarters. This interview has been edited for length and brevity.
To what do you attribute the consistent growth that PSCU has been experiencing, in the past few years?
First, from the cardholder side, when we entered the Covid pandemic, cash was still over 50% of transactions under $20. And, when we all were forced out of in-person retail and restaurants and forced to do business online, it drove a lot of displacement of cash. Your personal trainer will tell you it takes 21 days to create a habit and 66 days to create a behavior, so the behavior of online utilization of payment products went up because of not being able to be out, and that behavior stuck.
We’ve seen continued growth from the utilization of card payment devices that are anything but cash. You’re seeing the use of Venmo and Zelle, those types of things, skyrocket. All of us are using our cards more and more. So, we’ve had an organic growth that, I think, accelerated through Covid, so that would be one.
We really have built our business model, over the last eight years, or so, to own more of the technology. In the early days of our organization, we were a reseller and we now own much of the consumer, or cardholder, experience and the credit union staff experience, as they work with us because we built that technology out that’s enabled us to do some acquisitions over the last several years. We’ve done three or four acquisitions, since Covid, which has positioned us for the future and not being dependent on others for technology.
I know that from talking to you in the past, company culture is important to you. How do you, as a leader, maintain that same culture as you get larger and bring in new teams?
Over eight years, we’ve worked really hard [on culture] and we were recognized earlier this year, by Gallup, for being one of the most engaged workplaces in the world…and then Forbes, which was kind of unsolicited.
Our first employee and only CEO, until 2010, led the company [with the mindset] that our employees are our greatest asset. It’s how I know to lead based on that. We’re 3,400 employees today and we’re bringing in a company on the West Coast called Co-op Solutions. And they’re 1,800 to 1,900 employees. It’s going to be important to invest the right amount of time, and energy, to understand their culture which, I think, closely aligns with ours and make sure that we take advantage of the best of both organizations and try and build it out.
Four directors from Co-op are merging onto our board of directors. I’m humbled, and honored, to be able to lead the new organization. It is going to be led from that perspective of the employees being front and center in everything we do.
What is the greatest challenge that PSCU, or the industry in general, will be facing in 2024? What keeps you up at night?
We can’t lose sight of our day-to-day business. We have to stay focused on that. When you talk about staying up at night, just the speed of the fintech world is something that we have to match. Our segment of the market is the community financial institution market and the credit union system. If we don’t match the cadence, then we’re not keeping that segment of the financial market competitive. So, not only do we have to have strong investment, but we have to do it at a speed that keeps them relevant in the market they’re in. An example of this is digital wallets, which are becoming more and more prominent. When Apple Pay came out, it had this initial adoption and then it plummeted, in terms of usage.
Technology moves fast. The U.S. is typically last to adopt new payment technology, not because we’re laggards but because we have nearly 10,000 financial institutions in the U.S. No other country in the world is close to that. So, adoption across all of that financial landscape is a challenge. We get an opportunity to learn what happens around the world…Apple Pay has now exploded. The enhancements to digital wallets is something we have to be on top of. We have to create ways to enable [the technology] for financial institutions to be competitive. Speed is the main area of focus, I think, for us.
So, from that standpoint, the cashless movement has benefitted you greatly?
We do between 8 billion and 9 billion transactions, a year; combined with Co-op, they bring an additional 8 billion to 9 billion transactions, a year. We will be doing 17-plus billion transactions, as a combined organization, annually. That’s all from the issuer’s side. It puts us pretty high up, in terms of the volume that goes through MasterCard and Visa.
How long before you are the number one in terms of volume?
Let’s just say, we’re on the radar.♦