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Maximize Non-interest Income through Member Relationships
Friday, July 5, 2013 2:40 AM

To grow non-interest income in today’s economy, credit unions need to focus on the areas they can control; in particular, building deeper relationships with current and new members, attendees were told at an America’s Credit Union Conference (ACUC) Discovery breakout session this week.

Bob Larson, financial support consultant for CUNA Mutual Group, engaged ACUC session attendees in a conversation about applying best practice strategies to grow non-interest income in a constantly changing environment.

“You will do better in today’s economy by focusing on what you can control, not on what you can’t control,” said Larson. “Start with understanding your current credit union membership as well as those who’ve just joined your credit union.”

“During the past 18 months, credit unions have added a great number of new members,” Larson said. “Credit unions need to make sure they tap into new members by cross-selling additional services: loans, debit cards, credit cards, bill pay, etc. The more services, the deeper the relationship,” Larson added.

In order to deepen member relationships, credit unions must make sure they have a strong, transparent sales culture focused on building lasting member relationships. The four key components for a successful sales culture are:

  • Champion – have top-down management commitment and communication;
  • Train – prepare staff to meet member needs with confidence;
  • Coach – provide staff with consistent recognition and positive reinforcement to align management and staff behaviors to support credit union goals; and
  • Track – inspect what you expect to obtain quantifiable data for coaching, training, and making improvements.

Larson explained that a credit union’s sales culture should start and end with the member.

“Let the member control the process because, as Roy F. Bergengren so eloquently stated, ‘the most important service of the credit union is the education of its members in the management and control of their money,’ which is exactly what ultimately drives your credit union’s sales culture,” said Larson.

Current market conditions have greatly impacted credit unions’ earnings. Now, more than ever, credit unions must explore every aspect of their income statement to leverage additional income and to keep their revenue stream flowing. Larson added that members’ and credit unions’ interests have never been so well aligned before, so credit unions should take advantage of this by aligning their sales cultures to meet members’ needs.

Larson ended the session by recommending that with the future threat of rising interest rates, credit unions should take time to develop a strategy to move some of the certificate dollars from the credit union’s balance sheet to the credit union’s wealth management program to help improve the loan-to-share ratio, which will generate additional non-interest income in the form of gross dealer concessions for the credit union.

“The time to act is now,” Larson said. “Focus on your members, and the rest will come.”