Description

The competitive environment between banks and credit unions has changed significantly since the first credit unions were formed in the early 1900s. The earliest credit unions started as small groups of people who were associated by a common bond such as the neighborhood in which they lived or a church they attended. Many of these individuals were unable to obtain loans from financial institutions because of their low incomes and consequently their perceived high risk. However, credit union members were willing to take on the risks of loaning money to each other because they knew the character of their fellow members.