Net Income Per Full-Time Employee and Credit Union Efficiency

As the pandemic presses on with no clear end in sight and consumer habits continue to change, businesses are being forced to adapt to the new climate at a rapid pace. Although vaccines give reason to be optimistic, it’s unlikely the world will return to “normal” any time soon, and doubtful it will ever completely return to how it once was. Instead, the coming years will likely be trying for many types of businesses, including credit unions.

One major take-away from the pandemic is that we are now living in a digital age, where consumers want to complete transactions without the need for in-person interactions. This change in behavior has implications for all types of businesses, especially credit unions. It’s now clearer than ever that CU’s who seek to thrive must be able to provide the digital solutions their members’ desire. They must also do everything they can to eliminate waste and ensure their credit union is running efficiently. 

What makes a credit union efficient?

There are several key growth metrics that can measure the efficiency of your credit union. Among them are loan to deposit, loan originations per employee, and the return on assets (ROA) ratios. However, while these metrics are important, one of the best metrics to measure your credit union efficiency is the revenue per full-time employee (FTE) ratio.

The revenue per full-time employee ratio indicates whether your credit union is being run efficiently by calculating the CU’s net revenue and dividing it by the number of full-time employees (FTE). The higher the revenue per FTE, the more productive your employees are at generating income for the credit union. By comparing your current revenue per FTE to previous years, you can measure your productivity growth at the CU. On the other hand, an annual decrease in revenue per FTE may reveal that your CU has become less efficient, and that changes should be made.

How can credit unions improve their revenue per full-time employee ratio?

Many credit unions are becoming more efficient by making use of the latest technologies available, especially core system technology. By implementing the right core system software, your CU can generate more income without hiring more employees, which is the key to increasing your revenue per full-time employee ratio.

The best core technologies, like the FLEX core system, provide convenient member service tools that literally fit into your members' hands and are built-in to the core system. This includes services such as mobile banking, advanced card services, 360° lending options like mobile and web-based lending, eSignature, and other operational tools that can increase efficiency and generate more revenue for your CU.

Although we’re now living in a digital world, it’s important that credit unions don’t forget their fundamental mission: to serve the members in their community. Members now want digital solutions to traditional banking problems – and that is exactly what the right core system can provide.