As our nation's economy struggles to gain momentum, many ofAmerica's credit unions continue to feel the ripple effects fromthe recent financial crisis. Looking beyond today's challenges,however, the credit union industry seems poised for a new era ofgrowth. By offering new products and exploring new approaches,credit unions can simultaneously improve services for members,enhance consumers' satisfaction, appeal to a wider universe ofpotential members and increase the lending that helps strengthenAmerica's economy.

We must remain vigilant, of course, about the financial concernsafflicting the credit union system. Delinquencies and loan losseswill likely continue to increase in 2010, and credit union failureswill probably rise again. The number of credit unions downgraded toCAMEL 4 and 5 almost doubled during the recession-and those creditunions hold more than 5% of all insured shares. Many of the 7,600federally insured credit unions, while still adequatelycapitalized, will record negative earnings and thus drain theircapital.

Yet even if we're not fully out of the woods, far-sighted creditunions can look ahead toward better conditions-and positionthemselves to ensure their future strength. I see fouropportunities that offer promising pathways for growth.

Online Services. The expansion of onlineservices presents an enormous opportunity. Offering a wider arrayof online capabilities will reduce expense ratios, whichtraditionally tend to be high because of credit unions' high-touchnature. Moreover, online services will appeal to a new generationof tech-savvy consumers, who expect more than face-to-facetransactions at a teller window.

Credit unions lag behind banks in online services, especially inthe areas of portfolio management and bill payment. However, arecent study found that credit unions that offer online serviceshave significantly higher consumer-satisfaction ratings thansimilarly equipped banks. To encourage credit unions to embraceonline services, the NCUA will be hosting an online seminar nextmonth with the CUNA Technology Council to discuss best practices inmember-service technology. To register, go to ncua.gov.

Payday Loan Alternatives. Appealing to thosewho need access to short-term loans can attract newmembers-especially those who might otherwise fall prey to paydaylenders, who often charge triple-digit interest rates. The demandfor alternatives to payday loans is huge as is the opportunity toprotect vulnerable consumers from payday predators.

The NCUA's staff is now working on a proposed rule that wouldmake it more attractive for credit unions to offer payday-loanalternatives. By making short-term loans, credit unions can fill aniche in the marketplace, attract new members and help prevent thehardships caused by payday lending.

Member Business Lending. The effort to increaseor remove the cap on member business lending offers significantgrowth potential. At a time when businesses need access tocapital-and when banks remain reluctant to lend-momentum isbuilding against the arbitrary and outdated cap, imposed byCongress in 1998, on the percentage of assets that credit unionscan lend to members seeking business loans. Lifting or removing thecap would lead to the creation of an estimated 110,000 new jobseach year.

Few credit unions may now be near the cap of 12.25%, but thevery existence of this cap is an impediment to credit unions'development. They face a disincentive to build the infrastructureto pursue business lending if they know that its small scale willnever justify the investment. I've made that point clear in severalrecent meetings with Treasury Department officials. I'veunderscored that, if the cap is raised or removed, the NCUA willrevisit our regulation to ensure that any credit unions increasingbusiness lending must do so in a safe and sound manner. Responsiblemember business lending will channel capital toward small firms,thus helping create jobs.

Supplemental Capital. Credit unions should beallowed to raise capital in ways beyond simply retaining earnings.Today's interest-rate conditions create a paradox. Healthy, growingcredit unions-because of their inability to bring in supplementalcapital-are effectively penalized for taking in new deposits. Thatparadox occurs because new deposits end up lowering institutions'capital ratio. That lower ratio, ironically, could become aweakness that, by law, must be remedied through Prompt CorrectiveAction.

Credit unions should not have to turn away eager consumers.Allowing credit unions to gain access to supplemental capital, thushelping relieve the pressure that new deposits put on their capitalratios, was the topic of a letter I recently sent to the chairmanof the House Financial Services Committee, with the caveat that anycredit unions seeking supplemental capital must meet certainbenchmarks of safety and soundness.

Together, these opportunities could promote strong growth, andhelp propel the industry past a significant milestone: increasingits numbers from 92 million members today to 100 million by 2015.Achieving the 100-million-member mark by mid-decade would reflectAmericans' growing appreciation of what credit unions uniquelyoffer: not only financial security for depositors, but financialassistance to members.

Consumers increasingly recognize that strong, well-managedcredit unions remain a high-quality, low-cost choice. Credit unionsoffer a unique value proposition: not a for-profit interest in themarket overall but a not-for-profit commitment to their membersindividually. Helping credit unions serve their members and theircommunities, with the low-cost services that families want and withaccess to the business loans that our economy needs, is the surestway to help promote savings, build thriving communities and investin a stronger American economy.

Debbie Matz is the chairman of the National CreditUnion Administration. She can be reached at 703-518-6301 [email protected]