Credit unions have by and large had their roots in lending and, until recently, have offered the most basic banking capabilities to their members. This has begun to change, however, due in part to thin profit margins and growing competition within the financial services industry. Increasingly, many now find themselves competing head-to-head with banks, while their members are demanding more sophisticated product portfolios. As a result, credit unions are undergoing a major shift in strategy, increasing their product and technology offerings, loosening member requirements, and participating in mergers and acquisitions.
"As the credit union industry is forced to evolve, many institutions find themselves in uncharted waters," says Christine Barry, research director with Aite Group and author of this report. "Survival in today's competitive marketplace requires flexibility, and, in the case of credit unions, it also sometimes means expanding well beyond their roots."