Credit unions need M&A to grow and technology to sustain it

Changing consumer behavior and other factors demolished the once rigid line that divided credit unions from the rest of the financial services industry. And now, these institutions face a stark mandate: transform or fail.

Credit unions were founded to serve smaller, more specific audiences, like employees of a company. But that operating model is no longer viable. Credit unions need to grow beyond their niche roots. To survive, they must expand their digital capabilities, as well as offer new products to serve a larger set of customers of different demographics, across more locations. To do that, they’re turning to deal-making.

Prevented by restrictive charters, credit unions can’t easily expand into adjoining regions. And many don’t have the ability to independently support services like small business and commercial lending that help to broaden their audiences. It’s why Hudson Valley, Global Credit Union, and others are rushing to buy community banks, as well as fellow credit unions. These acquisitions give them the wider geographic reach, more expansive set of services, and larger client base needed to compete in the new market.

 

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