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Small CUs fewer banding together on services
WORCESTER, Mass. (4/27/10)--Small U.S. credit unions are dwindling in number and some of the remaining ones are banding together to achieve economies of scale, according to a Monday article in the Worcester Business Journal. “Big credit unions are getting bigger and there are more of them while small credit unions are dwindling in number. All this is happening while the total number of credit unions continues to decline around the country," said the article titled, “Big Credit Unions Keep Getting Bigger.” One distinct factor has caused the decrease in the number of small-asset credit unions, Daniel Egan, president/CEO of the Massachusetts Credit Union League, New Hampshire Credit Union League and the Credit Union Association of Rhode Island, told the Journal. “This is a direct response to smaller-asset credit unions not being able to maintain the continuingly increasing regulatory requirements,” Egan added. One remedy is that roughly a dozen small-asset credit unions in central Massachusetts have banded together and use their combined purchasing power to achieve economies of scale--such as hiring an information technology (IT) director, Debbie Guiney, president of Allcom CU, Worcester, told the Journal. “We got a great price for someone to come in, do IT audits and check for vulnerabilities, and it was much less than what any of us could have individually achieved,” she said. “This type of collaboration will be critical for institutions to survive.” Also, the collapse of the financial services industry highlights the need for smaller locally based credit unions and banks, Egan told the Journal. “Given the recent economic crisis, the whole idea of ‘too-big-to-fail’ is being called into question,” he added. “We’re seeing an increased interest in people going to credit unions to have the safety and security of local financial institutions.” To read the article, use the link.
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