A recent survey of credit unions and other finance companies has found the sector is facing a tough lending environment, with a myriad of competitors and rapid technological changes.
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A KPMG survey of 23 non-bank financial institutions indicated all types of lenders were experiencing strong competition, and faced a dip in the availability of wholesale funds from overseas sources.
The survey found the industry's net profit rose 8 percent to $207.8 million in the year to September 30, while total assets rose more than 17 percent to $11 billion, over the year earlier.
Despite the strong result over the past year, KPMG's head of banking and finance John Kensington said the industry was expecting tougher times ahead as interest rates were on the rise.
"There are some changes on the horizon for them, because they've done well and because they've been able to raise relatively cheap money, relatively easily. I'm not saying rates are going to go up dramatically but I think they will find money a little more expensive."
He said competition was also increasing.
"They are facing a whole range of challenges from both competitors within their own sector but also from other entities, which are commonly referred to as fintechs, and the peer-to-peer lenders are an example of that."
Mr Kensington said the industry was also being disrupted by technological change.
"And while all this is going on they are also needing to have the most up-to-date technological systems for getting loans away quickly, effectively and efficiently."
The survey noted some finance companies had been slow to embrace technological changes, which could leave them struggling to keep up with the industry, or may even go out of business.
Mr Kensington said the industry was also changing following the break-up of GE Capital, The Warehouse's buyout of Westpac's 51 percent stake in The Warehouse Financial Services and the sale of Fisher & Paykel Finance to Flexigroup.
"All of those businesses, which are all quite reasonable size... will be looking for new opportunities, looking to form new relationships with card merchants and with retail stores and the like, so that will be an interesting playground as well."
