Within the first year subsequent to graduating from college, I moved from the Detroit suburbs to Chicago. I was working for a credit union headquartered in Michigan with a branch in the State Street Macy's store. As a single, early-career credit union team member, my budget was not robust. I found a small (think 450 square feet) apartment in a great neighborhood. It was close to the train and it was also about three houses away from a local pub called Southport Billiards & Lanes. It was not only a fun atmosphere, but they also made amazing comfort food including quesadillas.
One of the few things that matches my passion in life for credit unions is my passion for quesadillas. I rarely meet one I do not love, but these quesadillas were special. Southport Billiards & Lanes made quesadillas with real Chihuahua cheese and most importantly pesto. The zing and flavor this added was unmatchable and provided additional value for this quesadilla fan.
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With all of the continued revenue generation and expense pressures facing credit unions today, pursuing noninterest income opportunities is essential. In the Filene report, "In Search of Member-Friendly Noninterest Income," the path toward the best choices for noninterest income was illuminated by author Ben Rogers, Filene's Managing Research Director: "Credit unions should be uniquely concerned about their fee practices because their mandate is to be sustainable and profitable but not to the detriment of their member-owners. Fees at credit unions should be transparent and freely chosen, and they should add value for members."
As we search for the best strategies and tactics to deliver additional noninterest income, the best options are those that not only bring income to the bottom line, but also deliver additional value to members. We must provide pesto on our quesadillas.
Filene has been recently testing such a noninterest income opportunity with a pilot program, Larky. This web and mobile loyalty platform enables credit unions to delight members with point-of-sale discounts at local and national merchants via credit union customized and branded, location-based smartphone alerts and personalized messaging. The member receives the merchant discounts by utilizing the credit union's credit and/or debit card. The credit union branded alerts connect the member to the credit union at a time when they are going to save money and the credit union builds loyalty and noninterest income. The member saves money daily. The credit union gains more loyal members and grows noninterest income: It's the pesto on the quesadilla. As the pilot results are published later this year, we will have the data to show the impact such a program can have for credit unions and their members.
As you build your noninterest income strategies and implement new approaches, there is a story to tell. In "Choosing Relevance: How Credit Unions Can Harness Transparency and Show Impact," researcher Bruce B. Cahan said, "In this environment, impacts-aware products and services offer a renaissance moment for credit unions to rethink and rebuild relevance in attracting members from post-baby boomer generations, the 18- to 46-year-olds of today."
Imagine if you can not only create member friendly noninterest income opportunities, but also share how those are different and more advantageous to your members. Consider creating a fun and easy to understand dashboard that aggregates actual bottom line benefit through such programs. For example:
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Amount of aggregate savings through lower fees;
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Percentage of members with identity theft protection;
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Number of members transitioned to checking accounts through a second chance checking program;
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Amount of time saved through concierge programs; or
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Total money saved by members leveraging a credit union rewards program
Credit unions must be well run businesses in order to continue to serve members when they need them in the future. Building noninterest income is one way to amplify this effort. Noninterest income that is member-friendly will not only improve the bottom line, but also endear members to you for the long-term. A quesadilla is always great. A quesadilla with pesto is something to shout about from the rooftops.
Tansley Stearns is chief impact officer for Filene Research Institute. She can be reached at 203-859-2666 or [email protected].
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