MADISON, Wis. (11/5/10)--Diversifying the revenue sources for non-interest income can help credit unions boost overall earnings, CUNA Mutual Group’s Bob Larson told participants of the Web-based Online Discovery Conference. Larson, a financial support consultant, said current market conditions and new regulations are hitting return on average assets. In addition, credit unions face shrinking auto loan portfolios and rising delinquencies and charge-offs, Larson said. Overcoming these challenges to profitability requires developing new and different sources of revenue, he said. Larson recommended creating an internal work group to scrutinize the credit union’s income statement and assess income-generating sources based on where they are in the product lifecycle and whether revenue can be enhanced. One option for creating higher revenue is increasing plastic card use to boost transaction income. Larson said cash-back and reward programs can work, but the cost must be justified by increased use. Another option is increasing “conversation fees,” a term used to describe the revenue generated by employee cross sales to members. Credit unions can generate revenue by selling credit insurance, guaranteed asset protection (GAP) policies, debt protection, mortgage-related products and other insurance products, he said. Selling these conversation-based products requires creating a consultative sales culture. Larson said that means sitting down with members, listening to their needs and then finding solutions. Strong communications must be backed by accountability and a tracking system. Finally, credit unions must recognize that building a consistent revenue stream from marketing insurance takes time. Currently, debit and credit card interchange fees and non-sufficient funds/courtesy pay fees together generate 58 cents of every $1 of interest income, he said.