Executive Summary
Credit union costs, like winter snow and ice, present two kinds of challenges. The first danger of a cost cave-in, where outflows are not sustainably linked to revenue, is catastrophic and obvious. The second danger of creeping costs is harder to spot and harder to remedy. Following on valuable lessons learned from the print media and newspaper industries, now is truly the time for credit unions to adapt or die.
What is the research about?
This brief, Credit Union Processing Efficiency and the Impact on Net Income, is the first in a four-part series that identifies and quantifies cost items at credit unions. The series does more than just identify the costs, however; it suggests measured approaches to minimizing costs by making informed decisions. This brief will be followed at short intervals by briefs focusing on branch staffing, balancing service with operational efficiency, and optimizing delivery channels. These briefs provide specific cost metrics based on average numbers from real credit unions and considerations for how to better align the costs you do incur with your organization’s strategy.
What are the credit union implications?
Processing efficiency, defined here in its broadest terms, considers costs common to most credit unions and subject to members’ behavior. Not surprisingly, inefficiencies abound. Although every credit union has to define its own brand of service excellence, the author challenges the idea that serving members in a branch is usually good for the credit union—and the member. The brief focuses on three areas:
- Account acquisition – Branch traffic is not a cure-all for cross sales.
- Transaction processing – In a world where member contact points include online, branch, ATM, kiosk, mail, mobile banking, and more, branches remain the most expensive way to interact with members.
- Account maintenance – There are good reasons to demand that members maintain minimum average balances.