Strategies for Increasing NonInterest Income NII

1
Strategies for Increasing Non-Interest Income
(NII)

• Presented by
• Tim Holt, President and Founder
• Profit Resources, Inc.

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Presentation Outline

• Traditional NII Strategies
• Free Checking
• Electronic Transactions and Respective
  Opportunities
• Mortgage and HELOC Related NII
• Non-Traditional NII Sources
• NII and the Effect on Bank Culture

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Traditional Strategies

• Deposit Products
• All deposit products must be
• Simple
• Competitive
• Flexible

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Traditional Strategies

• Miscellaneous Fee Income
• Miscellaneous fees are not shopped
• Publish / disclose all possible fees
• NSF/Returns and Stop Payments
• Returned deposited items
• Safe Deposit Boxes

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Traditional Strategies

• Market Compare
• Build a database of all competitors in market
• Identify non-bank competition
• Identify true competition
• Compare products and pricing
• Make location considerations
• Update the grid at least annually

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Traditional Strategies

• Pricing
• Determine pricing strategy cost or market
• A true competitor is price sensitive
• Price near the top
• Adjust as often as the market allows

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Traditional Strategies

• Fee Collection and Waivers
• Establish separate g/l accounts
• Establish procedures for both automated and
  manual entries
• Make someone accountable for waivers and revenue
  target
• Include goals in compensation for branch
  managers/ retail administration

8
Free Checking

• The basics
• The concept defined
• Free turns into FEES (types and options)
• Thank you check cashing stores!
• Customer service is improved

9
Free Checking

• Performance Measurement and Benchmarks
• Overdraft fee income per DDA account per year
• 100 acceptable
• 125 good
• 150 excellent

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Free Checking

• Best Practices of Successful Programs
• Customers know
• No fear of charge-offs
• Multiple tiers of dollar amounts
• Single focus for overdraft protection
• Eliminate the number of restrictions ( of
  checks, presentment order, minimum amount, etc.)
• No promotion, no notification of overdraft
  protection

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Free Checking

• Free Checking Must-Do List
• Set the proper minimum amount
• Give access to everyone and as soon as possible
• Choose a marketing-based name
• Ensure debit card use
• Treat electronic transactions as checks
• Open option to business customers

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Electronic Transactions

• Debit vs. Credit Card Fee Income
• Debit card interchange fees
• Ensuring use of debit card
• Signature vs. PIN
• Credit card
• NSF Fees

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Electronic Transactions

• ATM Fee Income
• Foreign transaction fee income basics
• Customer foreign ATM fees yes or no?
• Remote ATM considerations
• NSF notifications/fees

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Mortgage and HELOC Related NII

• Income from Mortgage and HELOC
• Bi-weekly payments
• All non customer transactions (servicing only)
• Defer a payment
• Miscellaneous fees (returns, etc.)

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Non-Traditional Sources

• Insurance
• Travel
• Brokerage / Wealth Management
• Condo fee and apartment rent management

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NII and the Effect on Bank Culture

• Heard in the halls
• We are a community bank
• We are the low cost provider
• We have never charged the school district
• We are getting just like the big banks
• We tried that once and our phones rang of the
  hook with complaints
• Customers will never give up their passbooks
• You cant charge minors Etcetera, etcetera

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NII and the Effect on Bank Culture

• Are your associates acting ashamed?
• How do they explain fees to the customer?
• Do they understand the services being provided?
• Do they believe they offer valuable services?
• Do they understand the need for services/fees?
• Will they recognize the opportunity to serve?

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NII and the Effect on Bank Culture

• What is Service Culture and why is it important?
• The capacity and willingness to provide service
• The recognition of the opportunity to serve
• The recognition of ones own service limitations
• Internal customer service is reflected in the
  External customer service
• We are good, we provide value, and we know it!

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NII and the Effect on Bank Culture

• How do we change?
• Develop a team (consider outside facilitation)
• Develop a plan
• Identify the best in class
• Start with internal service
• Develop Service Level Agreements (SLA) between
  delivery and support departments
• Enable delivery and customer contact departments
• Evaluate and segregate associates based on
  service skill set

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Strategies for Increasing Non-Interest Income

• Presented by
• Tim Holt, President and Founder
• Profit Resources, Inc.

800.576.2374 tdholt_at_profitresources.com www.Profi
tResources.com