efficient credit union operationsBusinesses are always looking for ways to cut costs and increase income, and credit unions are no different. Knowing how to reduce expenses and increase efficiency is crucial for the survival of any credit union. One of the most productive ways for a credit union to cut costs while simultaneously boosting income is to utilize the right core system technology.

In today’s digital age, core system technologies have proven to be essential for all credit unions who wish to stay competitive. The right core processing solution should provide all of the fundamental features and functions allowing a credit union to increase efficiency and income all while reducing costs.

Reducing costs for your CU

Reducing expenses has always been one of the keys to a healthy credit union. CU’s that are inefficient and overspend are typically not able to provide superior support to members and will suffer as a result. It’s crucial to identify areas where inefficiencies and overspending are occurring while taking the necessary steps to eliminate them. 

  • Operating Expenses over Average Assets: Managing expenses more efficiently can significantly impact the reduction of credit union expenses. The operating expense ratio reflects both the operating efficiency and the operating strategy of a credit union. The metric is calculated by dividing operating expenses by average total assets. The breadth of a credit union’s product and service line will also have an impact on this ratio. CU’s that review this metric are likely to manage their expenses more efficiently and can be more competitive while creating more value for members.
  • Staff Efficiency:  If your core technology is successfully doing its job, you need less staff to address more members. The right technology should reduce the required amount of data entered by staff while providing less time between screens. If you find you are hiring more staff in addition to expanding your technology arsenal without seeing membership growth, then something is amiss and should be investigated. 
  • Seamless integration. Many credit unions want to deliver new financial technology but are leery to disrupt their existing infrastructure and agitate members along the way. A core system that is constantly innovating and developing new software will deliver seamless and direct integration to the products and services your credit union needs, without disrupting any system or product. 

While reducing cost is vital to maintaining a thriving credit union, generating income is a must. CU’s typically make most of their income from lending, so it’s important to find innovative ways to offer competitive loans to members. Fortunately, the right core system technology can boost your CU’s income in the following ways:

  • Increasing lending. Healthy lending practices are the lifeblood of any successful CU. Besides analyzing key lending metrics like your CU’s loan-to-share ratio, your core system should enhance communication with members and facilitate cross-selling to existing members. Most importantly, your core provider should provide digital lending services that offer consistency, a speedy loan review process, eSigning and other mobile features.
  • Non-interest income. This type of income is traditionally generated through banking and service fees. Fraud protection services, member loyalty programs, overdraft protection and ATM marketing are other ways a core provider can help generate avenues of non-interest income for your CU.

There’s no doubt that the right core system technology can reduce operating costs, increase overall efficiency, and boost your CU’s income. But it’s also important to put the needs and wants of your members first. With FLEX, you can improve efficiency and communication with your members during these tough times to keep offering the services they want and need.

7 Key Ratios for Core System Efficiency

Topics: Credit Union Best Practices, credit union growth

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