In The End, It's The Checking Account That Is Still Most Important

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WILMINGTON, N.C.-The lever CUs should be pulling the hardest to drive the bottom line is the one connected to the checking account, according to Bob Giltner.

A proponent of keeping free checking, the consulting partner with Velocity Solutions stated that credit unions must beef up their checking account referral and acquisition programs (Credit Union Journal, April 4). "Banks are chasing away customers with fees. In the average year 18% of checking customers change banks, and many people are predicting that may double this year. The fish are biting."

Segmenting Members

Adjusting overdraft pricing to fit the behaviors of the members will increase revenue, as well, Giltner advised. "Segment members based on their use of overdraft. Many credit unions use fixed limits, like $500 or $700, set arbitrarily. Credit unions should be using dynamic overdraft limits adjusted to the characteristics of the membership."

Giltner contended that credit unions are losing revenue and reducing service with arbitrarily established overdraft limits, and should instead set limits higher for members who are low risk and lower for customers who are high risk. "Not one-size-fits-all."

On the debit side, Giltner said the "quickest way" to increase income is to look at members who swipe their card less than 10 to 15 times a month and give them short-term immediate incentives to use the card more. "Maybe a $10 gift certificate, or some type of reward. This can lead to a quick jump in revenue because these low users of debit often represent 35% to 40% of the membership."

Other Revenue Streams

Giltner reminded that increasing debit usage also improves other revenue sources, such as NSF fees and account relationships.

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