Credit union CFOs became adept at managing expenses during the recession, and must maintain that focus even as the economy improves.
Consider these seven ways to maximize your credit union’s efficiency, according to the 2014-2015 CUNA Environmental Scan Report:
1. Review in-house operations
Your processes and practices must be effective, efficient, and cost-justified.
New products and services must pass a litmus test: Do they increase income or reduce expenses?
2. Compare personnel costs
Are your salaries and benefits comparable to those of your peers? Use salary surveys from CUNA or your league to ensure you’re not inflating those expenses.
3. Investigate prefunded benefits
To combat rising benefit costs, take advantage of investment options that address defined benefit plans, group health insurance, 401(k) matching contributions, and more.
4. Consider self-insurance
Under the right circumstances, credit unions can realize health-care savings by assuming financial risk for employees’ medical care.
Keep in mind that this approach isn’t feasible for all credit unions, doesn’t offer immediate cost savings, and exposes you to catastrophic claims, so tread carefully.
5. Renegotiate contracts
Do your homework on other vendors’ offerings and pricing. Ask about bundling options or other discounts, ensure that every item in existing bundles was implemented, and eliminate underutilized or outdated products.
Scrutinize telecommunications contracts, which can be difficult to monitor because of their breadth.
6. Re-evaluate product lines
A free checking account that pays dividends might not be feasible in this low-rate environment. Analyze product adoption and utilization rates.
Give members incentives to adopt electronic delivery channels, which reduces paper, postage, and personnel costs.
Partner with other credit unions and credit union service organizations to capitalize on economies of scale—especially on back-office functions such as loan processing, compliance, and marketing—and potentially share facilities and employees.