Independent Banker - January 2023 - 47

Be mindful
of fees
SEEK TO BOOST NONINTEREST INCOME
On the revenue side, it's important to find ways to increase
noninterest income. This is particularly true now, as banks lose
overdraft fee income due to regulatory and market-driven changes.
Banks make, on average, about $150 per checking account per year,
according to Cornerstone's Weikart. Eighty percent of this comes from
overdraft protection and interchange fees on debit. To replace nonsufficient
funds, community banks might consider making a concerted
effort to open more checking accounts. That could include doubling down
on marketing, making product changes, and switching to or increasing
their digital focus to attract younger customers, Weikart says.
Banks could also seek to boost their treasury management service
offerings, says Marcia Malzahn, president of Malzahn Strategic, a
management consulting firm in Maple Grove, Minn.
4
5
CONTROL FRAUD LOSSES
Software to help community banks curb fraud losses is becoming
more and more refined, David says. But it's not helping anyone if
banks don't stay on the " cutting edge of the fraud software, " he adds.
Having up-to-date software can be especially important since there's
a fine line between fraud control and making things too onerous for
customers, such as when they receive constant fraud alerts. Community
banks should expect debit fraud losses to be about 3.5 basis points of
purchase volume, according to an analysis by Cornerstone Advisors. If it's
higher than that, banks should reconsider their policies and procedures,
Weikart says.
»
As much as community
banks want and need
opportunities to bring in
noninterest income, they
have to be careful to weigh
this against customer
needs. " You can't punish
the customer because of
economic times, " says Jeff
Lee, senior vice president
and chief credit officer at
Grand Rapids State Bank in
Grand Rapids, Minn. " We're
there to help them, not to
hurt them. "
He offers the example
of the Great Recession
in 2008 and 2009, when
many customers were
struggling financially. At
that time, when banks
renewed customers for
loans or priced new loans,
they had to treat customers
with white gloves to avoid
placing undo economic
pressure on them. If the
customer wouldn't qualify
for a conventional mortgage,
for example, the bank might
have offered a balloon
mortgage with a 20-year
amortization.
The same is true today,
where banks have to make
sure products continue to
fit customers' needs. " They
might be qualified for a
different product that's more
advantageous for them and
doesn't hurt the bank either, "
Lee says.
independentbanker.org // 47
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Independent Banker - January 2023

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Table of Contents
Independent Banker - January 2023 - Cover1
Independent Banker - January 2023 - Cover2
Independent Banker - January 2023 - Table of Contents
Independent Banker - January 2023 - 2
Independent Banker - January 2023 - 3
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