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How to Increase Non-Interest Income for Your Financial Institution

Increasing non-interest income while staying true to your financial institution's mission can be tricky. Income is obviously necessary to run a successful business, but lenders sometimes feel that seeking out income and fees feels too pushy and runs contrary to their service missions. Some lenders also fear that adding or increasing fees and other charges may drive borrowers to competitors.

These are legitimate concerns, but think about it—without income, your institution would cease to exist and you would be unable to provide borrowers with any services at all! Like any other business, it’s fair for financial institutions to charge for services that offer convenience and time savings.

Generating non-interest income for your financial institution ultimately benefits borrowers by defraying costs, decreasing loan rates, and increasing savings rates. One way to do so is by introducing new products that complement your current offerings and bring value to your new and existing consumer base. In this blog post, we’ll discuss several strategies for increasing non-interest income for your financial institution.

Fees for Premium Services

Businesses often allow customers to use a limited version of a service for free, then upcharge for a premium service; your financial institution can follow suit. For example, perhaps you could offer multiple service levels of identity theft protection, with a slight increase in price for each level. Consumers decide which level they find most valuable and are charged accordingly.

Another option is to bundle services together at different price points. Consider aligning higher tech offerings, such as remote deposit capture, with premium checking accounts. Consumers understand upgraded services command a higher price.

Financial Services

As part of your mission to serve your borrowers, you can assist them in important financial matters, and fortunately, generate fee income as well.

  • Offer the financial protection of voluntary auto, home, and life insurance through your financial institution or a business partner who specializes in this arena.

  • Offer investments and financial guidance through a retail investment service that will work with account holders to establish retirement and future goals, create estate plans, set up college savings plans, and fund investments.

Voluntary Protection Products

You're probably already familiar with voluntary protection products, even if you don't recognize the term. Voluntary protection often takes the form of small-ticket protection, such as insurance or extended warranties for cell phones, discounts, and emergency services. It also encompasses small, specific-purpose protection, such as travel insurance.

For lenders, offering voluntary protection products is a great way to generate non-interest income for your institution while supporting your borrowers through hard times. The coronavirus pandemic has made this more important than ever, as consumers are not feeling very confident about going out and making big purchases in an uncertain economy. Lenders could benefit by shifting their focus from a “Low rates and great service” mentality to messaging and product offerings that center on offering peace of mind to the anxious consumer—you don’t want to come off as sounding too “salesy” by pushing products that aren’t going to be helpful to your borrowers.

One prime example of this kind of product is MPOWER+ Vehicle Return Protection. The first and only program of its kind, MPOWER+ Vehicle Return Protection gives your borrowers the peace of mind that if they run into hard times, they can return their vehicle and walk away from their loan while keeping their savings accounts and credit rating intact. Offering this option to your borrowers can help increase confidence in their long-term financial security and will encourage them to build a long-lasting relationship with your institution, allowing you to enhance your risk management efforts while increasing borrower loyalty and generating non-interest income for your financial institution.

Increasing the non-interest income your institution needs to survive, thrive, and provide outstanding service doesn’t mean compromising your mission. Fortunately, there are a number of ways to create value while generating income and remaining true to your mission and supporting your borrowers. Click the banner below to learn more!

CTA: MPower

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Brad Eral

As the Account Vice President for SWBC’s Financial Institution Group, Brad Eral services financial institutions throughout the Midwest within lending services, insurance, and loss mitigation programs. Prior to joining SWBC, Brad worked in the software space helping retailers leverage technology to improve their customer experience.

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