Jan 01 2002

Small Business: The New Frontier

As credit unions enter the 21st century, they have vastly expanded their powers to serve members in terms of products, services, and fields of membership. However, this broadened capacity does not guarantee the future. Credit unions must continue to evolve if they are to survive to serve future generations of members.

The current environment in the financial services industry is particularly demanding. Competition is fierce, and most product offerings are mature. Margins for first mortgage lenders are slim. More and more institutions are becoming involved in indirect lending, making this a difficult competitive arena. The big players in the game are appropriating credit cards. The profitable components of a credit union’s loan portfolio have therefore been limited to used autos, home equity loans and personal lines of credit. Overall, margins are shrinking and consumer product lines are becoming commodities in which the sale typically goes to the lowest bidder. Meanwhile, the area of business services continues to offer significant opportunities.