800-809-2307
Four Letters. Infinite Potential.

The Disconnect Between Adding New Accounts and Increasing Revenue

By Richard Miller
Executive Vice President

According to Call Report data, between 2012 and 2015 the number of credit union checking accounts rose from 46,612,471 to 57,135,397 – an increase of 23 percent. This says a great deal about the level of trust and value consumers place in credit unions. However, this increase in checking accounts is actually masking a serious decline in fee income per account for many institutions. Overall, fee income only increased by six percent over the same time period, meaning that credit unions actually lost $1.70 per account per month in fee income; making the loss to the industry a staggering $1.168 billion. This number does not include the increased expense of servicing the new accounts.

As the financial services industry continues to struggle with low interest rates, along with decreasing income-producing opportunities – such as the potential loss of interchange income – and the rising costs of technology and maintaining compliance, simply acquiring more member accounts doesn’t automatically translate into generating the revenue necessary to thrive. In fact, it can cost you in terms of staffing, data processing and facilities.

For instance, CUNA’s latest Regulatory Burden Financial Impact Study found that compliance costs for credit unions were $7.2B in 2014 – $1.7B higher than what the costs would have been without the regulatory changes that occurred from 2010 to 2014. According to the study, because compliance includes so many fixed costs, the financial impact hits small credit unions three times as hard as large ones.

The good news is – memberships are expected to increase 3.1 percent this year But credit unions must sharpen their focus on how to boost the earnings they can expect from the growing member base in order to reap the full benefit of this anticipated gain.

Elevate results and provide better service
One proven way to improve revenue is by implementing a results-driven overdraft program. In addition to providing a healthy revenue source for your credit union, overdraft income can help to offset the high costs of addressing increased regulatory expectations. Plus, a fully disclosed program can strengthen member relationships with a valuable service that helps them to manage their finances more effectively.

As a trusted provider of revenue enhancement solutions, JMFA has implemented more than 1,600 customized program installations for financial institutions throughout the U.S. As a result, in addition to experiencing non-interest income increases from 50 to 300 percent – in many cases far exceeding their expectations – our clients have been able to provide a higher level of service to their members, update their technology and introduce products that have helped them to remain competitive in their market. All while maintaining total compliance with all regulatory expectations.

Overdraft services fill economic needs of credit unions and members
Although the economy continues to improve, the earnings outlook remains challenging for many credit unions. So while forecasts continue for increasing membership numbers, now is the perfect time to implement a fully compliant overdraft solution that benefits your credit union and your members – both current and future.

View more related articles

Get a free assessment of your program

Learn more about JMFA OVERDRAFT PRIVILEGE®

 

 

Name:
Email:
Subject:
Message:
x
account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders announcement attracting talent Bank of Pacific banks batching best practices board governance board member board of directors bottom line branch profitability branding Bryan Hanks budget business culture business environment business strategies career advice Case Study CEO onboarding CFPB Charles Shanley Cheryl Lawson Chris Karstens communications Compliance compliance examinations compliance risks Consumer FInancial Protection Bureau Contract Optimizer Contract Renegotiations contract review contract staffing core processor contracts corporate culture corporate governance CPE credits credit card contracts credit cards credit unions Crissandra Fry CSS culture customer service cyber security Darin Byrd debit card contracts digital directors economy efficiency studies election employee employee retention employees EMV migration evaluation executive search expense management expense reduction expense studies expenses Federal Reserve Board fees financial services financial stability Floyd's Forum full disclosure Generating Income generating leads generation governance government hiring HR HR Consulting HR policies human capital human resources income income enhancement 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 lending program Linda Meyer loans management Mark Roe marketing Midwest Region Millennial Millennials Missouri NCUA negotiating contracts Net Operating Analysis NOA Non-Interest Income Oliver Ireland onboarding Organizational Health outsourcing overdraft compliance overdraft coverage overdraft fees overdraft practices Overdraft Privilege overdraft program Overdraft programs overdraft protection programs overdraft service overdraft strategy overdrafts Paul McFarland payday loans Pennsylvania performance improvement personnel planning Press Release Privilege Manager CRM process improvement product profitability Profitability Improvement project staffing Recruiting Recruitment Services recruitment strategies re-engineering regional director regulations regulators regulatory Retaining Employees revenue revenue enhancement Richard Miller ROI Ron Jennings senate service service agreements shareholders social media staff staff development staff spotlight staffing staffing gaps staffing studies staffing study stakeholders Strategic Planning Succession plan succession planning Susan Prell talent technology technology costs technology utilization temporary staff Tim Strandquist training UDAAP vendors Washington Westmoreland Community FCU