No longer are credit unions simply mom-and-pop operations.
Increasingly they are becoming full-service financial providers with product portfolios that can compete with banks. And more people have access to their services: many now serve communities rather than specific company employees.
As customers became more demanding, many credit unions began to offer expanded mortgage lending and credit-card services. Within the next couple of years, many plan to move into services such as student loans, international money-transfers and branded prepaid cards, according to a recent survey.
Increased sophistication means that members will "be able to use credit unions to meet all their financial needs," says Christine Barry, research director at Aite Group, a financial-services industry research group. Aite conducted a survey of 101 credit unions with more than $100 million in assets.
Credit unions are somewhat of a financial services safe haven in today's volatile consumer loan market. They avoided much of the sub-prime debacle by not offering the types of exotic loans and teaser rates that were widely available at the time.Unlike banks, which are responsible to their stockholders, credit unions are ultimately responsible only to their members, who collectively own the financial institutions.
Expanding services seem to be bringing more people into the fold. Due to consolidation, the number of credit unions is shrinking. But membership in federal and federally charted state credit unions has grown by more than 15% to 86.9 million members since 2000, according to the National Credit Union Administration. And assets have increased even more rapidly: Between year-end 1999 and year-end 2006 credit union assets grew 73%.
Chief among credit unions expanding services are mortgage loans, according to the Aite Group survey. Of the credit unions who currently offer mortgage loans, 91% say they are seeing greater overall volume growth in mortgage lending than any other type of consumer loans.