Hoosier Banker 43 The key to sustainable core deposit growth, for core relationships as well as time deposit money, is a balanced strategy that includes a good sales process. Myth No. 4: Increasing fees does increase fee income. There are several ways to increase your non-interest income, but raising or implementing fees is the least sustainable. It leads to higher attrition, fewer customers and less fee income. Value-added accounts that offer services for a fee may be a good solution for the 10% to 20% of customers willing to pay. If you push customers into this type of product, attrition increases, and long-term fee revenue suffers. Attrition with these products can be as much as three times the average. You can offer services with associated fees, but it provides limited growth. For sustained growth, a better option is to expand your customer base. Myth No. 5: We can focus on the business segment only. There are quite a few mid- to large-sized banks focusing only on business customers. The reason: A business relationship is four times more profitable than a consumer relationship. But when we analyzed about 500,000 business relationships, we found some interesting correlations: • For 55% of businesses, the checking account is the product initiating the relationship; • For 31% of business customers, the consumer account was the first relationship with the FI. That means one-third of all business accounts come from consumer relationships. So if a community FI only chases business customers, it is limiting profitability. This may work for large FIs with thousands of customers per branch, but not community "We visit the site!" www.floodplain.com F C I Floodplain Consultants Inc. FIs with branch capacity to spare. Today, customer experience and convenience is defined differently. As an industry, we need more to earn trust and build relationships. The branch is one channel, but we need to serve customers well in all channels. An omni-channel approach in delivery, as well as our marketing, is key to our long-term growth and success. HB
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