Five ways to improve your bottom line
The outlook for both inflation and economic growth remains uncertain, as implied by the recent decision of the Federal Open Market Committee to leave the federal funds rate unchanged. This decision continues to be troublesome for many credit unions that are suffering a compression of margins without any real relief in sight.
Normally, credit unions make money by borrowing at lower short-term interest rates to lend at richer long-term rates, with the difference added to their net interest margin.
Because today’s narrow margins generate less interest income, credit unions need to step up and concentrate on other ways to enhance their margins such as increased fees and improved member relations. Here are five additional suggestions on how to help your credit union thrive:
1. Fee Income
Finding new non-interest income streams to offset negative market influences is vital. Consider doing an audit of every service you offer that generates fees. If you are waiving fees for car loans, mortgages, stop payments and refinances you could be leaving money on the table. Plus, an overdraft program can be one of the easiest boosts to your fee income and it is an added-value service for your members.
2. Process Improvements
Improvements to your operational efficiency translate into improvements to your bottom line. A careful analysis of organizational structure, workflow and expenses can reveal new ways to streamline credit union process, improve employee performance, enhance the member experience, build stronger member relationships and even save time and effort.
3. Checking Account Growth
If you can grow your non-interest income and control expenses through process improvements, you can afford to be more competitive with the services you do provide. By targeting the segment of account holders in transition with effective, consistent marketing, you can boost your member base substantially. If you need help, consider a program like JMFA ACCOUNT ACQUISITIONSM which provides techniques proven to increase the number of members with share draft accounts.
4. Loan Growth
Be competitive with your lending offers so that potential borrowers recognize the value of your credit union. It’s vital that you price your loans based on your total relationship with the member. For example, a member that has multiple accounts may be worthy of a lower rate. Visit www.LoanOptimizer.com/LPM for suggested loan models.
5. Fast and Personal Member Service
Simply put, if you can keep your members happy, they’ll stay. Make it a priority to turn your service reps into excellent sales people. If your members aren’t ready for a loan right now, they may be in the future. Continuing to remind them of your rates and services will keep you top of mind when they do have a need.
Having training classes for your employees is a great way to keep them up to speed on all of your credit union’s products and services. Taking time to focus on product training will ensure employees are ready to assist your members the next time someone needs information on the services you offer. Or better yet, with training they will become proactive knowledgeable sales reps.
The Bottom Line
Margins are only going to continue to get tighter. By making these areas a priority, you’re sure to improve your credit union’s bottom line.
About John M. Floyd & Associates
John M. Floyd & Associates (JMFA) is a profitability and performance improvement consulting firm and a leading provider of overdraft privilege programs serving more than 2,000 financial institutions in 49 states and Central America. JMFA is also recognized for training, account acquisition, executive placement and earnings enhancement programs, as well as product, service, pricing and technology improvement consulting. As a direct result of our programs, JMFA has helped thousands of clients dramatically improve their performance and bottom line. To learn more about JMFA, please visit http://www.JMFA.com. To contact the Regional Director, James Atwood, call him at 877-668-4857 or email him at .