Generating non-interest income in a highly regulated environment
by. John M. Floyd
Credit unions looking for ways to remain viable and competitive can no longer rely on conducting business as usual. As the opportunities to generate fees from traditional services are reduced, many are concerned with how to maintain a level of income that allows them to offer the services that keep them competitive. It’s a challenging balancing act at best: increase your bottom line while staying compliant and delivering the services and service levels your members demand.
According to industry experts, service charges on deposits have decreased substantially from levels reported just two years ago. And with ongoing regulatory pressures during that timeframe, the two products that produced the most non-interest income – debit card interchange fees and overdraft/NSF fees – have been greatly restricted.
What actions can credit unions take to offset the reductions in net non-interest income losses as a result of these pressures? By following these five strategies, your credit union can streamline your processes, increase your non-interest income and provide services that more accurately reflect what your members want and need:
- Let go of unprofitable products.Constantly review product profitability to determine if an offering has passed its prime. If you introduced a product as a growth loss leader and now have enough – or even too many – deposit balances, it is time to remove that product from your list of offerings.