Discovery: Fight Back Against Threats To Non-Interest Income

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MADISON, Wis. – Credit unions can combat legislative threats to their non-interest income by driving greater use of credit and debit cards by members, along with the installation of a “consultative culture.”

That was the message from Bob Larson, a financial support consultant for CUNA Mutual Group, during CMG’s Discovery Conference. According to Larson, non-interest income has become increasingly important to credit unions over the past decade. Unfortunately for CUs, several factors are combining to impinge on this source.

“Non-interest income is up an average of 12% per year since 2001,” he told a virtual audience as CUNA Mutual hosted Discovery online for the first time. “There are two sources of non-interest income: transaction fees and what I call ‘conversation fees.’”
Conversation fees are driven by products such as credit protection, debt protection, GAP insurance and other items that require, as the name implies, a conversation with members, he explained. Transaction fees include NSF/courtesy pay fees and interchange income. “Transaction fees are easy – the credit union makes money just by members’ activity,” he observed.

Larson advised CUs to get past the idea that “sales is bad” and promote a consultative culture. “Employees should sit down with members, hear their needs and find solutions to help them going forward,” he said.

In addition to traditional credit union insurance products such as GAP, Larson said the industry should look into expanding insurance offerings to include home, life and AD&D coverage. As another alternative, he pointed to some credit unions that have had success with having a title company alongside their mortgage lending business.


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