Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
Diversify non-interest income sources--online speaker
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.


RSS print
News Now LiveWire
Sept. #NCUABdMtg is adjourned.
4 minutes ago
.@TheNCUA : Positive TCCUSF net position does not mean that CUs will get a rebate. Final accounting likely in 2020 or 2021. #NCUABdMtg
8 minutes ago
No Stabilization Fund (TCCUSF) assessment in 2014. #NCUABdMtg
9 minutes ago
.@TheNCUA says TCCUSF repaid Treasury $300m during 2014 2Q #NCUABdMtg
10 minutes ago
First Service FCU charter change approved by NCUA. Next up: TCCUSF report.
13 minutes ago