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Sure, fee income is great for increasing non-interest income. But ironically, that revenue comes at a cost. Or, a few costs, actually.
First, it damages your relationship with your members. I’m willing to bet that a significant portion of your complaints are about fees. In fact, I’d be surprised if it hasn’t lost you some members—and their revenue.
Second, it negatively affects your members’ financial wellness. Fundamentally, this conflicts with the credit union mission to provide better terms and rates. Plus, it disproportionally affects your lower-income members.
Finally, the future of fee-based income is uncertain. The new administration is expected to crack down on overdraft and NSF fees. If any of that legislation passes, fee-based income will be an unreliable income generator, putting credit unions at risk if they don’t change their strategy.
Consequently, it’s probably time to start thinking about that strategy change now, rather than later.
This should paint a slightly grim picture. Fortunately, there are solutions.
Keep Your Income, Keep Your Members
Getting deep into the legislative and legal side of the issue is not the purpose of this article. Though credit unions should certainly keep an eye on developments there, I don’t want to draw focus away from the point:
NSF fees are terrible for members. Most members who get them are already in a financial bind. The additional fees certainly won’t help.
Your credit union can reduce its financial risk while also empowering members for these transactions!
DoubleCheck is a new fintech that wants to eliminate the pain of NSF fees… while still covering your financial risk and providing income. Here’s how they let you keep your income and your members:
When a member’s account balance can’t cover their upcoming expenses:
- DoubleCheck alerts the member that they have insufficient funds before the charge hits the account;
- The member chooses how to adjust their payments by logging into their account, reviewing transactions, and choosing how to pay;
- Members may further avoid fees with other options, including a credit card, PayPal, Venmo, Zelle, and more!
These options ensure the member’s financial wellness. No more credit rating hits or unintended overdraft fees. And your credit union gets to retain a large portion of its fee-based income.
Credit Union Fees, but with Options
Here’s how credit unions can make members happy:
Give your members more control over their finances.
And make it easy. That will solve a good deal of issues. If you give members the option of paying bills from different accounts, credit cards, and more, they’ll appreciate the assist. They’ll also thank you for the increased account transparency.
Even if they still get hit with a fee, it will be their choice. That means a better long-term relationship… and one fewer angry call to your service desk!
We like what DoubleCheck is doing here. And we love that the bill themselves as not another overdraft program.
After all, it’s better to solve an old problem in a new way. The old ways obviously weren’t cutting it!
Want to learn more about the hottest new fintechs and technologies on the market? Ask about our Quarterly Fintech Call series, free for credit union leaders.
Also, join the Fintech Spring Meetup to meet DoubleCheck and other companies like them. It’s a one-on-one networking event for financial services professionals…
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