by. Jim Marous
With interest rates remaining low and traditional fee income impacted by recent government regulations, banks and credit unions are increasingly looking for new ways to make up the shortfall in revenues.
Despite continued pressure from consumers around ‘fee anxiety’ and our industry’s habit of giving most services away for free, there are still opportunities to promote customer loyalty and generate new non-interest sources of income according to new research.
In the most comprehensive fee optimization study of its kind from Market Rates Insight, Inc. entitled, ‘Growth and Revenue Potential of Emerging Financial Services‘, the importance and value of new financial services are evaluated to determine new revenue sources as well as ways to attract and retain customers. In the study, it was found that there is a willingness from consumers to accept ‘value-added fees’ for services that are viewed as valuable.
“For the foreseeable future, deposit rates will remain flat and loan demand will be soft, so financial institutions will need to rely on fee revenues for income growth,” states Dan Geller, EVP of research at Market Rates Insight. “To convert services from ‘free’ to ‘fee’, banks and credit unions will have to identify new services that consumers want and are willing to pay for. The study shows organizations how to use service fees to expand profits and penetration with both new and existing customers.”continue reading »