BOSTON (1/23/08)--About 36% of credit unions surveyed say their biggest challenge is lower profit margins, while 34% say they struggle to identify ways to attract new members, according to a report released Monday on the evolution of credit unions. The report, “The Evolution of the U.S. Credit Union Market,” by Aite Group, analyzes the current credit union market, and credit unions’ changing strategies and product offerings. Aite Group surveyed 101 credit unions with more than $100 million in assets. While credit unions reported their challenges, 33% of those surveyed also indicated that they are planning charter conversions to savings institutions, thrifts or banks. Head-to-head competition with banks, increasing demand for more sophisticated portfolios from members and other factors have caused credit unions to change their strategies, the report noted. More than half of credit unions surveyed said they believe that offering superior member service has been the most successful strategy for attracting new members, and 63% said they consider the branch to the be the most importance member-service channel. New market conditions are forcing credit unions to abandon their strict membership guidelines and competitive strategies based primarily on price. Surviving today’s competitive marketplace requires flexibility and “in the case of credit unions, it also sometimes means expanding well beyond their roots,” said survey author Christine Barry. Technologically, credit unions continue to offer new products and enhance online capabilities by focusing attention on the user experience, the survey stated. Credit unions are often more advanced than banks of similar sizes in regard to online capabilities and online adoption--about 57% reported that they achieved online adoption rates between 30% and 49%. The survey is part of a larger study, in which Aite studied 201 U.S. credit unions.