The path to more fee income for financial institutions

fries-cross-sellingIt’s been discussed time and time again – banks need more fee income to remain stable in this volatile market.  For the past few years this type of revenue has been mainly based on fees from debit card use and overdraft protection. According to a recent Gonzobanker article, 80% of fee income comes from these two sources.

It’s no secret that these two sources are now in danger of falling off the cliff.  In this same Gonzobanker article, they suggest taking an account analysis approach to retail customers, similar to how small business accounts are handled to determine if certain fees will occur or not based on the accounts activity every month. While I’m not against this approach, I feel strongly that growing out a relationship versus changing up the way a customers existing services are priced has greater potential for both the bank and the customer.

One of the greatest opportunities for banks and credit unions to continue generating new revenue is by effectively moving existing clients into new products and services that go beyond the typical product scope.  Services such as investments, insurance or trust. Done right, a well managed brokerage insurance program can add significant revenue to an institutions bottom line.  According to Michael White’s recent News report, Oneida Savings Bank in Oneida, New York, had 4.24 million in insurance brokerage fee income in 2009 which was 76.7% of non-interest income at the bank.

Taking it a step further, if you use industry assumptions and take into consideration your branch network as the main referral source, the revenue opportunities start to look rather promising.


  • $2,000 Gross Revenue per Sale (based on all products and services)
  • 75% of appointments are qualified
  • 40% of those appointments make a purchase
  • Every lead = $600

If you assume that every branch has six employees who are potential referral generators (based on Truebridge survey conducted in 2009) and each employee generates just one more referral per month, you will have 72 referrals from that one branch in a year. If you take the above value of every lead into consideration, this branch would generate $43,200 of additional revenue just by simply increasing the activity by six new referrals every month. But don’t take our word for it.  Plug in your own figures and see what comes out.

Imagine the revenue you can generate if all your branches can make this happen. There’s no question that asking a branch to generate referrals and actually having them generate referrals that are qualified are not one and in the same.  For referrals to be qualified, you have to do more then just open up your list of maturing CDs and provide your sales represenatives with the names of each customer.  You need a strategic process that involves a customer service approach employees are comfortable using on a daily basis.  If it’s not simple and repeatable, then it’s not worth implementing and the account analysis approach Gonzobanker speaks of is perhaps your best option.

But if you’re willing to explore new approaches to both your marketing and customer service processes, then there’s no question that cross selling more services to existing customers will make you a much more stable and profitable financial institution for years to come.