It is not news to us in the financial services industry thattimes are tough. Yields are low, margins are non-existent, and loanrates (if we can make loans at all) are at historic lows. Yet withthese almost insurmountable challenges, we are expected to continueinvesting in our businesses, continue to improve service delivery,and in the end … add to our capital position.

The troubling aspect about this, from my point of view, is ourwillingness to first seek out “fee” based solutions that directlycome on the backs of our members. If we are truly a member-centricindustry, we should pause to think outside the box. The answershould not be to look at what banks are doing to increase theirrevenues!

In addition to buying higher-yielding loan participations,increasing “punitive” usage fees, and growing penetration ofexisting products within our current membership, there are a coupleof other simple initiatives that should be explored. The creditunion mantra is that, “we improve the financial lives of ourmembers.”

We cannot continue to claim this differentiation if we fee likethe banks do. In Connecticut, we have formed strategic partnershipswith companies that provide products and services to our membersthat they already have, but at lower costs and better terms. Thesepartnerships have resulted in literally hundreds of thousands ofdollars of noninterest income for our credit unions, and at thesame time, lowered expenses for Connecticut credit unionmembers.

The next recommendation should be apparent to any business, butis the most over-looked aspect of revenue generation. It is theability to examine our processes and identify inefficiencies andlong standing functional, bureaucracies. As not-for-profits, everydollar not expensed, translates to a dollar earned.

Therefore, the more efficient we become (thus reducingexpenses), the more income we generate for our members. Whether ornot you agree with Walmart’s business tactics, it has beensuccessful by constantly increasing operational efficiencies andridding its processes of bureaucracy. We have the ability to dothis as well.

In most cases, a thorough process analysis will uncoverbureaucratic inefficiencies and unnecessary and expensive methodsthat have been implemented over time. An effective internalanalysis allows management to identify internal barriers toefficient operations, whether it is people, unnecessary processes,or unnecessary expenditures.

At one organization, I did an analysis on thepurchasing/requisition function of the company (that had been inplace for more than 20 years). The results of the analysis showedthat there were 129 individual and distinct steps involved in therequisition process. By identifying each step in the process, I wasable to eliminate 108 unnecessary steps. This obviously resulted ina more efficient, cost-effective system being implemented. Everyweek I inquire of someone in a business as to why they are doingsomething a certain way, and most frequently the answer is, “we’vealways done it that way.”

Rather than falling back on the old paradigm and thought processof seeking new, revenue-generating products, it may be beneficialto stop and think about it from the members’ perspective. The pointis that there are other ways to “skin a cat” and accomplish thegoal of increasing revenues, but that will still allow us to keepsaying, “We are here to improve the financial lives of ourmembers.” Also, ask yourself: “Is my credit union the mostefficient business operation that it can be?”

Anthony L. Emersonis president and CEO of the Credit Union League ofConnecticut.