MADISON, Wis. (7/5/12)--Consumers are revolting against bank fees and by doing so have handed credit unions an opportunity and a challenge. In response, CUNA's Operations, Sales & Service Council has released a new white paper titled, "Alternative Revenue Sources: An Engine for Sales & Service Growth," which offers ideas for new revenue.
The paper presents several ideas for revisiting traditional revenue sources with a fresh approach and adding innovative revenue methods to help ailing margins. Many credit unions nationwide contributed their expertise on how to readily seek revenue sources. Ultimately, each source is not only a revenue opportunity, but is also an opportunity for credit unions to be an engine for growth and development within their local communities, the paper said.
Fees are especially tricky for credit unions after the backlash against Bank of America, which in October 2011 said that it would charge $5 monthly for debit cards. The resulting uproar was a public relations fiasco for the bank that resulted in Bank Transfer Day, which helped increase U.S. credit union growth in 2011 by 1.3 million members, more than double the 600,000 who joined during the previous year (News Now May 4).
According to the council's white paper, GTE FCU, Tampa, Fla., has changed its focus back to the traditional cooperative business model, which is simply--the more business you do with the organization, the more value you receive. Its Member Advantage program, for instance, has 25% of the 180,000 members qualifying automatically if they sign up for services, such as free checking or e-statements and have additional services such as a mortgage or credit card and perform eight debit card signature based purchases monthly or three virtual banking transactions.
In return, the member receives benefits, including earning more on deposits, fewer fees and lower interest rates on loans. If members elect to have a paper statemenst, they are charged $3 monthly. Some 30% of the membership still receives paper statements.
Fees can nudge members into behavior to save money for both parties with changes that are easily made, the paper said. GTE FCU has created a scenario where it charges fewer fees, but creates more revenue.
To download the whitepaper, use the link.