Larger credit unions being created through mergers are set to challenge the banks, experts predict.
The tie-ups will see them being able to offer a wider range of services instead of just offering savings and loans products, analysts at Investec said.
The comments come after it was revealed that three mega mergers of credit unions are proposed.
Two of the largest credit unions in the Munster region are in talks that could lead to a mega merger. Clonmel and Charleville credit unions serve a large area stretching from north Cork to south Tipperary.
Charleville needs up to €4m in financial support to boost its reserves.
The planned tie-up comes as merger discussions are ongoing between the Civil Service Credit Union and the Irish National Teachers' Organisation's lender Comhar Linn Credit Union.
The credit unions for staff in the ESB and parts of central Dublin, St Patrick's, is in talks to take over the RTÉ lender, in a move that could create a €420m super credit union.
The planned tie-ups are expected to be closely watched by banks as larger credit union entities are likely to create "mini-banks" that will compete with the likes of AIB and Bank of Ireland.
Analyst with specialist bank Investec, Philip O'Sullivan, told investors he saw this as significant consolidation, something that was likely to continue.
If the Munster merger goes ahead, the combined Charleville and Clonmel entity would have assets of €218m and a membership of close to 40,000.
A combination of the public service credit unions would create an entity with assets of €355m, and about 40,000 members, that had combined profits of €6.8m last year.
If the talks between broadcaster RTÉ's credit union and State electricity utility ESB's credit union result in a deal, then the combined operation would have assets of €420m.
Mr O'Sullivan said these balance sheets were small compared with the domestic banks, but they were large by credit union standards.
"The achievement of scale through mergers allows credit unions to contemplate expanded product offerings," he said in an investor note.
This is expected to include current accounts, debit cards, insurance and pensions products.
It comes after it was revealed recently that credit unions are seeking to ramp up mortgage lending this year. This would challenge mainstream banks, Mr O'Sullivan said.
They could lend up to €400m this year. This is despite having some €5bn to loan out.
Current rules mean they can only issue 10pc of their individual loan books in long-term lending, such as mortgages.
Regulators in the Central Bank have insisted that credit unions come up with credible business plans and boost their balance sheets before widening their mortgage offering.
However, the Central Bank has also said it was reviewing the rules, in a move that could give a massive competitive boost to the home-loans market.