The challenging interest rate environment of the last few years may extend a decadeslong consolidation among local credit unions.
But as this week’s cover story reports, it has also highlighted the resilience of the local industry’s survivors.
The number of not-for-profit Rhode Island credit unions has been cut in half over the past two decades, from 31 in 2004 to 15 last year. But their membership has steadily climbed during that period, rising 42% to an estimated 492,000.
The biggest credit unions have grown by competing with for-profit banks for new, younger customers with upgraded digital services. And when many big banks lost the appetite for issuing auto loans after interest rates spiked in 2022, credit unions locally and across the country stepped in.
They offered loans at lower rates with the help of local dealership partnerships.
Smithfield-based Navigant Credit Union and Coastal1 Credit Union in Pawtucket were among the local beneficiaries.
“We partner with well over 100 [auto] dealerships and they offer financing, and typically one of those options is Coastal1,” said Brian A. Azar, Coastal1 Credit Union CEO and president. “We’ve attracted younger members who are buying autos, and then we expand those relationships.”
That business helped the bigger credit unions weather the interest rate storm of the last two years. It also gave them confidence to continue targeting younger members to help grow market share.
That will likely come at the expense of smaller players in a competitive industry, but credit union customers will be the long-term winners.