MADISON, Wis.-Credit unions are advised to keep an eye on PayPal, because while it's not currently a threat to credit unions, it could be soon.

That's the word from Dan Kaiser, SVP, product executive, at CUNA Mutual Group, who spoke on the topic of "Trends in Lending and Member-Friendly Income" during CUNA Mutual Group's Online Discovery Conference here.

"The payments systems space has evolved quickly," said Kaiser. "PayPal is probably not a significant threat at the moment to credit unions. Where their expansion is and where they're advancing remains in payment systems primarily, but not exclusively."

Kaiser pointed out that non-traditional competitors are gaining a competitive edge to credit unions because of the trust consumers already have with them. State Farm and Walmart, for example, offer financing, checking, credit cards, and more.

"No matter whether or not you call PayPal a financial institution, they have the largest number of users in the world," said Kaiser. Additionally, consumers can use PayPal to pay for purchases at Home Depot and other retailers.

While CUs keep an eye on the evolving payments space, Kaiser offered a few notes for CUs looking to grow the bottom line. For starters, he said, the greatest opportunity for growth in many cases remains with a credit union's existing membership. "Green loans," for products such as energy-efficient vehicles and home appliances or improvements are also a space for CUs to explore, along with lifestyle lending. Cosmetic surgery, adoption or funeral expenses are all potential avenues for CUs to expand their lending portfolios, he said.

One old stand-by remains a strong growth driver for many CUs, reminded Kaiser-indirect lending. He cited a 2012 study from Callahan & Associates that found that credit unions with indirect lending have an average loan balance of $65.6 million compared with $36.3 million for those that don't, along with 4% annual auto loan growth, compared to a 1.8% annual average for CUs that do only direct auto lending.

And while the economic recovery has not been as fast as many hoped, Kaiser argued that slow, steady improvement may actually be better.

"As we slowly climb out, each step we take is more solid," he said, adding that the slower process gives allows credit unions more time to examine how they can best help their members through the recovery.

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