Since the economic downturn in 2008, financial institutions across the nation have made adjustments to increase revenue and reduce expenses. But no one expected the difficult conditions to last as long as they have. Five years later, economic and regulatory factors continue to restrict revenue opportunities. Financial institutions face new worries today about the cost of regulations, increased capital requirements, low interest rates, and reduced loan quality and demand.
Until the economy gets firmly back on track, it is clear financial institutions need to take a new strategic approach to their daily operations if they want to maintain stability during this uncertain ride.
While managers continue to be cost-conscious regarding staffing levels, it’s important to remember consumer demand for financial services remains high. Maintaining sufficient front-line personnel is essential. As the old adage warns, “you can’t cut your way to prosperity,” especially if it means a drop in account holder services, causing you to lose business.
The best approach today is a strategic review of your ongoing expenses, with an eye on long-term consequences and benefits. You’ll see an appreciable difference in the bottom line and uncover new opportunities to improve the services provided to your institution. Relying on the “we’ve always done it that way” strategy could be costing you much more than you realize and affecting the level of service you receive from vendors throughout the year.
Taking a more strategic approach to cost-cutting initiatives – with input from the staff and board of directors – can lead to substantial savings, more efficient operations and a more cohesive work environment.
Of course controlling expenses is only half the equation. Discovering new sources of income generation is equally imperative in today’s challenging environment. Take a look at the related article, “Generating Non-Interest Income in a Highly Regulated Environment ,” to learn more about how to boost your bottom line with products and services that are in demand by today’s consumers.
When all is said and done, remaining viable in today’s economy takes a balanced approach of maintaining an efficient organization, supported by compliant, income-producing products and services that provide value to account holders.
As seen in:
Northwest Credit Union Association’s Anthem– September 13, 2013