Advantages of off-balance sheet revenue for small- to mid-size credit unions
By Chris Bower, President/CEO, Endurance Federal Credit Union, and Endurance FCU Insurance Agency
Large credit unions typically have the financial resources to withstand the adjustments of an ever-changing economy. Some have just started eliminating overdraft fees from their membership. Small- to mid-sized credit unions have a hard time competing when they struggle to generate fee income. Larger credit unions can develop new solutions in-house, partnering with or acquiring another organization like a fintech, and investing in and creating CUSOs.
There is a way for small- to mid-size credit unions to offer up non-interest income options to generate more revenue and support members. My $195 million credit union, Endurance Federal Credit Union, did just that. We started our own insurance company Endurance FCU Insurance, LLC, back in 2015.
As a credit union, you’re perfectly positioned to not only provide car loans but also the insurance to cover the vehicle. The same goes for other types of loans – like mortgages and recreation vehicles.
In these market conditions, it’s imperative to offer products and services that deliver tangible value to members.
Here are some reasons why your credit union should and can provide insurance services:
Build your credit union’s non-interest income
With a recession either already here or on the horizon, offering your members insurance can be a stable source of noninterest income. It helps maintain profit margins and offset the lack of new loans due to the increased rate environment. You can also earn extra revenue through insurance commissions and premiums.
Create a long-term relationship with members
By providing top-rated insurance options to your current members, you won’t just increase market share; you will increase the longevity of your members and your members will also experience outstanding benefits.
Fill a need
Your credit union members need insurance. Whether they are coming in to apply for a mortgage or a vehicle loan. They will need insurance.
Members, and even potential members who do not have these loans with you, still need insurance. And with the existing relationship and the trust your members have with your credit union, it’s a perfect opportunity to meet their needs.
There are turnkey partners out there
Some insurance agencies are available to offer their services to credit unions. Instead of providing insurance services by acquiring an agency or starting one from scratch, you can partner with an existing turnkey business unit.
In other words, your credit union can partner with an experienced insurance agency that’s ready to begin selling insurance to your members immediately. This can be a more sustainable business approach than starting an agency from scratch.
An agency should have the tools and technology to push ahead of its competitors. Your credit union can offer your members online shopping options and accurate price indications from some of the top insurers in the nation. Advanced technology also allows you to track metrics in real-time and personalize the member journey. With user-friendly price comparison tools and custom-fit insurance solutions, you can go above and beyond your members’ expectations.
By partnering with an established insurance agency, you’ll have all the resources you need to inform and delight your members. In addition to the technology and customer service aspects, a full-service agency can handle your insurance marketing needs. They should help you spread the word that you offer insurance in-house, while also re-marketing to current members so they stick with you long-term.
Lastly, never assume your members know. Make sure members know you offer insurance services. It is not unusual for members to be unaware of the range of services available through their credit union!
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