Fee Income Focus of NAFCU Conference Sessions
NASHVILLE, Tenn. — Two educational breakout sessions at NAFCU’s annual conference provided ideas to produce fee income that also increase membership value.
One session that focused on income opportunities in a post-Durbin amendment world was described by moderator Dave Frankil, president of NAFCU Services Corp., as “speed dating combined with business development.” The session maximized audience time by featuring seven speakers that gave six-minute presentations on how to generate fee income.
Credit unions make money by selling money, said eZforex CEO Evan Shelan. His company provides foreign currency for more than 2,500 credit unions and leverages technology to offer a Web-based interface and access through the CU Service Center shared branching network.
eZforex also pleases both credit unions and their members with a currency price protection option, that allows members to return unused foreign currency after their trip at the same exchange rate it was purchased. One in three eZforex transactions include the price protection service, Shelan said.
Each transaction nets a participating credit union 30% of the revenue that is gained from the difference between the retail and wholesale exchange rates for foreign currency. Not only does the service generate fee income for credit unions, Shelan said, it also keeps members “away from banks and their products.”
Biz2Credit’s loan referral service feeds qualified business borrowers to participating credit unions. Some referrals are members, but others are merely eligible, which presents opportunities for additional sales, said Vice President of Business Development Tracy Kellaher.
Since 2007, Biz2Credit has referred more than 11,000 small businesses to 1,100 lenders and initiated a total of $650 million in business loans. The service is not just a search engine, Kellaher said, but a partner with established companies like Microsoft, Intuit and Equifax, which refer suppliers and customers seeking business loans.
Credit insurance and debt protection are not only popular with members during challenging economic times, the products generate fee income and protect against loan losses, said Securian Director and Actuary of Credit Protection Programs Kris Nelson.
Credit unions earn a percentage of the retail price to the borrower. Credit insurance income is regulated in some states, but credit unions can determine the level of mark-up on debt protection programs.
Success of the products “greatly depends upon management’s support of the program to loan officers,” she said.
Credit unions that want to get serious about fee income should look to insurance products sold on their websites, vendor Jeffrey Chesky said during his solo breakout session on the topic.
“Credit unions don’t think about their websites as e-commerce sites,” said Chesky, president/CEO of the East Windsor, Conn.-based credit union outsourced insurance provider Insuritas.
Instead, websites are only seen as a way to provide a free service like mobile banking or education. Credit unions are leaving fee income on the table by failing to sell products like insurance on their websites, he said.
Imagine if members could fill out an application for GAP insurance or other types of insurance products while applying for loans online, Chesky challenged session attendees. The insurance industry knows the traditional channel of selling insurance is under attack, because increasingly, consumers don’t want to sit face-to-face with an insurance agent or even speak with one over the phone. Instead, they are purchasing insurance online with no interaction from an agent or representative, unless through online chat.
Online chat help and a single shopping cart or checkout process are two things consumers want and demand from e-commerce sites, he said. However, beware of training requirements: Chesky told the story of one insurance provider that launched online chat but failed to train service representatives, and for three days failed to respond to customers initiating chats. However, once the firm trained representatives to respond to chat requests, 13 customers initiated chats the first day, and of those, nine purchased insurance online that same day.
“This portal is a hotspot for connecting, educating, communicating and getting member to buy products and services online,” Chesky said of online chat service.
The $1.4 billion FAIRWINDS Federal Credit Union of Orlando, Fla. was profiled as a best practices Insuritas client during the session. FAIRWINDS, which Chesky said challenged Insuritas to provide a better e-commerce experience for members, delivered home and auto insurance quotes to members as part of the online loan application process, and generated fee income while increasing value to members. FAIRWINDS also sells insurance online through its CUSO using shopping cart technology.
The credit union has done so well cross selling insurance products to members, Chesky said, 32.4% of sales emails are opened and members click through to linked product webpages.
Selling products online is also an opportunity to present disclosures in a way that is both cost-effective and timely, while at the same time meeting regulatory requirements. There is great regulatory value in capturing time and date stamps when members click a button that accepts disclosure terms, he said. And, having disclosures online instead of in paper form allows a credit union to make changes quickly and with little cost, as regulations and disclosure requirements change.
“The only way we will drive change is if we demand it,” Chesky said. “So during your strategic planning sessions this fall, challenge the conventional way your products are presented to members.”