Four Letters. Infinite Potential.

Generating Non-Interest Income in a Highly Regulated Environment

Financial institutions 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 account holders 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 financial institutions take to offset the reductions in net non-interest income losses as a result of these pressures? By following these five strategies, your financial institution can streamline your processes, increase your non-interest income and provide services that more accurately reflect what your account holders want and need:

1.  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.

2.  Look outside of the traditional revenue boxes.
Limiting your focus to the standard checking and savings accounts, auto and signature loan product offerings will limit your marketability and revenue opportunities.  In today’s environment, consumers demand more sophisticated financial products that help them reach and maintain their financial goals. By diversifying your product offerings, you can increase your revenue opportunities and remain competitive.

3.  Change your delivery to a “Sales and Service” culture.
Train your staff to cross-sell peripheral products that result in increased revenues. Universal Financial Services representatives who can provide account holders with access to multiple services – such as opening new accounts and taking loan applications – provide convenience and are part of a more cost-effective operating strategy for the institution.

Also, basing compensation on production can be a win-win for both motivated staff and the financial institution as new business goals are met.

4.  Combine compliant products with great service.
You can set your financial institution apart by providing your account holders with access to the products and services they need to manage their finances, such as an overdraft privilege program. Just make sure you provide full disclosure of all fees and usage terms.

While consumers continue to be wary of hidden charges, they are willing to pay for services that add value to their lives. By providing transparent communication and education regarding eligibility, appropriate program usage and repayment policies, you can strengthen the relationship you have with existing account holders. Plus, you can avoid regulatory concerns while earning the non-interest income you need to reach your performance goals.

5.  Determine the best way to provide service to account holders.   
As consumers rely more and more on untraditional ways of conducting business, it is imperative to learn how your account holders – as well as prospects – want to interact with their financial institution.  Do your competitors offer mobile, person-to-person or business to-business banking? If you want to remain competitive, it may be necessary to change your existing business model.

If you’re not sure what types of products and services your account holders want or need, ask them. Create a short survey to gather input on the value they place on your existing offerings and ask them about their level of interest in services that you don’t currently offer, but would be willing and able to add. Also, train your front-line staff on how to begin discussions regarding financial products and services with your account holders. Face-to-face conversations are a great way to gauge interest in a topic and demonstrate that your institution is truly committed to providing excellent service and meeting the needs of account holders. 

As seen in:
Hawaii Credit Union League's website- September 11, 2013


account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders Advice Agreement Analytics announcement ATMs attracting talent Automation B2B Bank Bank of Pacific banking services banks batching Benefit best practices board governance board member board of directors bottom line branch equipment branch profitability branding Bryan Hanks budget business culture business environment business practices business processes business strategies career advice Case Study CEO onboarding CFPB change Charles Shanley Cher Cheryl Lawson Choose Chris Karstens Cloud Communication communications Competitive Compliance compliance examinations compliance risks compliant Consistent Consumer Consumer FInancial Protection Bureau consumer protection Consumers Contingency Contract contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts core processor contracts Cornerstone Credit Union League corporate culture corporate governance CPE credits credit card contracts credit cards Credit Union credit unions Crissandra Fry CSS culture customer service cyber security Darin Byrd Data Deal debit card contracts Decisions Dick Miller digital directors economy Education efficiency studies election employee employee retention employees EMV migration evaluation Evolve executive search Expectations expense management expense reduction expense studies expenses Expert Federal Reserve Board fees financial services financial stability FinTech Floyd's Forum Free Analysis full disclosure Generating Income generating leads generation governance government hiring HR HR Consulting HR policies human capital human resources improved efficiencies improved results income income enhancement Innovate Innovative interview strategies interview tips IT contracts Jan Southern Jennifer Peoples Jim Griffis JMFA Academy JMFA clients JMFA News job search John M. Floyd Keith Hughey Kelly Flynn Kim Kreps leaders leadership Learning lending program Lesson Linda Meyer Literacy litigation loans Long Term Long-Term Maintenance management Mark Roe marketing measurable Members Midwest Region Millennial Millennials Missouri Mobile Banking NAFCU NCUA Negotiate negotiating contracts Net Operating Analysis NOA Non-Interest Income Oliver Ireland onboarding Organizational Health outsourcing Overdraft overdraft compliance overdraft coverage overdraft fees overdraft practices Overdraft Privilege overdraft program Overdraft programs overdraft protection programs overdraft service overdraft services overdraft strategy overdrafts Partner Paul McFarland payday loans Pennsylvania performance performance improvement personnel planning Press Release Privilege Manager CRM proactive