PSCU And Co-op Solutions Merge to Create a Potential Fintech Powerhouse for Credit Unions

Long-time credit union service and financial-technology providers PSCU and Co-op Solutions announced a merger late Monday. The merged entity, which has yet to be named, will create an end-to-end payments system for credit unions of all sizes, PSCU chief executive and president Charles E. “Chuck” Fagan, promised during a press conference announcing the deal.

Fagan will serve as chief executive of the merged entity, which will remain a credit union service organization, or CUSO. The deal is expected to close Dec. 31.

Data is expected to be at the core of any new payment solutions the new entity develops, according to the companies. One way in which data can be used is to enhance the new entity’s payment solutions is to create better customer relations, especially in the call center.

“We are on the cusp of what data can mean to interactions with members,” Fagan says. “We can utilize data to position credit unions for deep interactions with members.”

Fraud detection and prevention will be another area of focus on the payments side, added Co-op Solutions chief executive and president Dean Michaels. “Both companies have a strength around fraud [solutions] and we expect to see aggressive investments in that area,” he said. Michaels’s position in the merged entity has yet to be announced.

The entire leadership team will be announced once the merger is finalized. The company’s board of directors will include credit union chief executive representation from both current boards, including nine directors from PSCU and four from Co-op. The new company will be headquartered in St. Petersburg, Fla., home of PSCU.

PSCU and Co-op, which generate $871 million and $527 million in annual revenue, respectively, provide such services as instant payments, data analytics, digital banking, fraud and risk management, contact-center technology and services, collections, a credit union debit network, a network of more than 30,000 ATMs, and a shared-branch network with more than 5,700 locations. Co-op currently operates the debit and ATM networks and shared-branching locations. Each company processes 8 billion transactions annually.

While PSCU, which services more than 2,400 financial institutions, and Rancho Cucamonga, Calif.-based Co-op, which services 2,650 credit unions, had explored similar deals in the past, merger talks between the two companies began in earnest in January. Helping spur the discussions was that both companies, which are established payment-solution providers to credit unions, recognized credit unions’ growing need for better technology to keep them relevant in today’s financial-services landscape, the organizations said. In addition, PSCU and Co-op management recognized that the companies are stronger together than separately, they said.  

“Our collective technology assets will allow us to compete effectively and help credit unions better service their members by providing a better member experience,” Fagan said. “Personalized member experiences are the future and customized payments experiences are something that credit unions have to enable.”