It is no secret that, in recent years, the face of banking has changed in a big way. This is true from both a customer and lender perspective. One of the main ways we have seen this from the lender perspective involves revenue streams. In the past, financial institutions generated a large portion of income by way of overdraft fees and other charges. However, regulations have become much stricter in this arena, forcing financial institutions to think outside the box and look elsewhere for new revenue options. With the introduction of mobile banking and other technology-led services, it is important for lenders to take a step back and look at the bigger picture when it comes to creating revenue.
As the economy continues to change, financial institutions must get creative and look for different ways to boost returns. Many are looking at what they can do to trim expenses, while still keeping employees satisfied and bringing in new customers. It is important that banks and credits unions are cautious and don’t make too many radical changes right away, as they need to stay flexible and streamlined. Some smart ways to change the banking environment with the intention of cutting costs and bringing in new revenue include:
- Offer new services, such as fee-based checking
- Realign branch staff
- Introduce mobile banking options
- Look into less expensive marketing avenues, such as social media
Keep Operations Streamlined
While it may be tempting for financial institutions to quickly implement new strategies that will generate revenue, this isn’t always the smartest choice. Particularly when adding new services for consumers, cost can become a concern. In fact, smaller lenders may worry about adding those revenue-generating services because of the cost associated with them.
Outsourcing these services to a knowledgeable and capable third party is often the smarter option. This is especially true when it comes to software or technology-based services and upgrades, as these changes often require more time and effort than worthwhile, from the institution’s perspective. Instead of hiring new staff, investing in new training, purchasing equipment and staying up-to-date on all the latest relevant regulations, outsourcing allows the institution to rely on a third-party to handle all those important details, cutting down on costs while still driving revenue with the new service.
To find out more about the changing landscape of revenue streams and how financial institutions must adjust, be sure to download our recent ebook, New Revenue Streams for Financial Institutions. And if you have anything to add on this subject, please feel free to use the comment section below.