JACKSONVILLE, Fla.-There are four opportunities for credit unions to improve non-interest income, according to Jerry Nissen: adding value to free services, offering small business services, increasing fees for existing services and growing membership.
"Each can provide non-interest income opportunities, but to what extent depends upon the membership of the particular credit union," said Nissen, SVP-general manager, real time solutions, for FIS.
By changing "free" to "fee," Nissen suggested the first source would allow the credit union to keep the "r" for itself-"revenue. It is not likely this can be done for all free services," he noted. "However, a new class of service can be created that carries a fee and offers real value to the member. Packaged offerings that combine services or products used most often are perceived as valuable and are more readily marketable."
Offering small business services could be a new class of products or services for some CUs, and may include cash management services, insurance or merchant card services. Nissen cited HSAs (health savings accounts) or warranty and maintenance programs as other possible sources.
"Fee income from new delivery channels, such as mobile services, will not materialize due to competitive pressures," he predicted. "In fact, these competitive pressures may even prevent credit unions from charging for new payment vehicles such as mobile wallet."
Nissen acknowledged increasing fees does run the risk of public backlash, as big banks have learned, but it remains an option. "Without complete knowledge of costs associated with products or services and competitive information, CU may be underpricing their services while missing some opportunity for price increases."
Nissen urged CUs to leverage their higher profile.
"The cooperative movement is resonating with a public that has become disillusioned by big business," he said. "Having knowledge of local market conditions, membership composition and needs through solid business analytics will help the credit union determine which member characteristics lead to higher non-interest income. This allows the credit union to focus its marketing attention on that group of prospective members."
