Maddux Report - Tampa Bay's Business, Finance and Development Magazine

A Credit to the Industry
by Melissa Wells

Technology and a 24/7 contact center have made PSCU the nation's largest credit union service organization.

Twenty-five years ago the nation's largest credit union service organization (CUSO) was an idea ready to happen. At that time credit unions had a limited playing field in the financial services arena. To extend their services the chief executives of five large credit unions – GTE Federal Credit Union, Suncoast Schools Federal Credit Union, Pinellas County Teachers Credit Union, Publix Employees Federal Credit Union and Railroad and Industrial Federal Credit Union formed Payment Systems for Credit Unions (PSCU) in St. Petersburg.

Dave Serlo, president at St. Petersburg-based PSCU, has been expanding the financial services arena for credit unions. His latest initiative is electronic commerce.
Photo: Robin Donina Serne

"We are a credit card service company," explains Dave Serlo, PSCU's president and first employee. "We were established to help credit unions into the business of issuing cards to compete with larger financial institutions."

Chartered as a not-for-profit company in Florida in 1977, PSCU functions as a cooperative. "The credit unions we serve are owners of this company," Serlo says. "They pay a nominal entrance fee (ranging from $2,000 to $7,500) and we provide services exclusively to the owners of this company."

A natural extension of credit card services led to the offering of debit cards to credit union members. For the first 10 years PSCU outsourced the processing of transactions and customer service. "Then we shifted gears in 1987," says Serlo. "We saw a need to help the credit unions become more competitive."

That led to the choice of Omaha-based First Data Resources Corp., "the largest credit and debit card processor in the world," Serlo says. "They have a very feature-rich system. This gave us the opportunity to control our quality of service to cardholders."

With the processing of transactions well placed, the next move was to bring customer service in-house. In 1989 PSCU opened a 60-person contact center in Novi, Mich., and set up additional regional offices in Jacksonville, Honolulu and Herndon, Va. "We immediately became a 24/7 operation," says Serlo. "This has been a strategic means for us to attract and retain business."

Serlo adds that this customer service center was among the first in the financial services industry to operate outside normal business hours. "Our credit unions could compete better against other financial institutions," he says. "They were able to grow to their fullest potential and we attracted other credit unions to participate."

Five years later that contact center relocated to St. Petersburg. "We were implementing image processing and it was more cost effective to do locally," Serlo says. "We also established a back-up center in Jacksonville. We were very successful at this point in our history with our credit and debit card services. We established ourselves as a leader in call center activity due to our technology."

It was at this time that PSCU occupied its current headquarters at Carillon in the Gateway area of St. Petersburg. The cooperative bought an 85,000-square-foot building that had formerly been occupied by Florida Federal Savings & Loan. "It was held by the Resolution Trust Corp.," says Serlo. "We were able to acquire it when the real estate market was down. Our offer included the building and land plus five or six acres next door for future growth."

That capital investment of $3.1 million plus another $2 million for renovating the building created the current headquarters for PSCU. And Serlo counts his good fortune for the company's location in the Gateway area. "We probably couldn't afford this real estate today," he says.

This transaction would fit the growth needs of PSCU, "we thought for 10 years," says Serlo. "But in four or five years it became obvious that we would need another building. Our additional acreage was a blessing."

Next came development of the $15-million, 100,000-square-foot building that has been dedicated for use as the contact center. When not handling the business of customer service, PSCU employees have access to an entertainment center, fitness center and a two-story Internet café. A second café at the administrative building has been finished to resemble the interior of a Chili's restaurant. All of this detail has been built into the headquarters campus to help employees lead a stress-free life, as much as possible, at work. "When we hire an employee, we plan to keep them for their entire career," says Serlo.

That philosophy appears to be working. Call centers historically have turnover rates of 50 to 60 percent but PSCU's turnover is at about 28 percent.

The company has grown to 820 employees and 500 credit unions representing 6.4-million cardholders. "We expect 900 employees by the end of this year," says Serlo.

PSCU's revenue rose 18 percent to $265 million in 2000. The firm hasn't released 2001 figures, which are currently being audited, but its NewsLine publication reports that last year's income is expected to be the best in the company's history. "We had growth of 19 to 20 percent in 2001," Serlo says. "We anticipate 22 percent in growth of revenue this year."

The company is in the process of executing its next strategy for growth. It is a twofold thrust. First, PSCU is expanding the range of services offered to member credit unions. This includes electronic commerce, collection services on credit cards, lending and telemarketing services. "There's a growing interest in electronic banking," says Serlo. "This is a new market not yet tapped and it's a wise way for us to meet our growth goals."

The second initiative under way is the closing of regional offices in Jacksonville, Michigan, Honolulu and Virginia. PSCU is establishing a second contact center in Phoenix. "One of the markets underdeveloped for us is the West Coast, California specifically," Serlo says. "The Phoenix office gives us a presence."

Those employees losing their jobs due to the closing of regional offices have been offered the opportunity to relocate to either St. Petersburg or Phoenix, including a trip with their spouse to either or both locations in order to make an informed decision. "We've been able to retain 67 percent of the employees adversely affected by this business decision," says Serlo. "Collectively this represents 400 years of institutional knowledge. This is key not to disrupt the level of our service."

Quality of service is the reason the credit unions established PSCU. "PSCU exists to serve its credit unions because we exist to serve our members," says Wendell "Bucky" Sebastian, president and CEO at GTE Federal Credit Union in Tampa. "Its growth is assured because its underlying institutions have the brightest possible futures."

Industry statistics show that 85 million people belong to 10,366 credit unions in this nation. "There will be 100-million people in 10 years," says Serlo.

In addition, a consolidation is occurring among those credit unions. "Industry experts think the consolidation process will bottom at 7,500 to 8,500 credit unions," Serlo says. "This is good for our owner profile of larger-sized credit unions."

What edge does PSCU provide a credit union like GTE's? "We've outsourced all of our plastic card business to PSCU," Sebastian says. "They have an expertise that would be difficult if not possible, if not affordable to have on our own. It would be too expensive to do all the things they do for us and we couldn't have the expertise of staff here that they can have when the cost is spread over 500 credit unions."

And volume continues to grow as credit unions increase their membership. "We add probably 1,000 members a month," says Sebastian. "As we grow PSCU grows."