Credit unions today face many obstacles, and there is so much information out there that you can find yourself getting lost in the numbers. One ratio that is relatively easy for everyone on your staff to understand is the efficiency ratio (expenses/revenue).
Here are a few key questions to help your organization improve that ratio without hurting the member experience:
Are we meeting member needs?
Before you look at expenses to cut, make sure you understand your members’ current needs. You do not have to hire an outside company, simply listen to your front line staff and call center; this should give you a great understanding of what your members need.
Do we have the right products?
Once you have a good understanding of what your membership needs from your credit union, take a look at your product line. Chances are you already have the products they need, but may have too many products for the members to choose from or fully understand. Analyze your products to determine which are working for your credit union and which aren’t. If a segment of the members are using one of the products you want to cut, consider outsourcing it to let someone who is better at that product handle it.
Are we keeping it simple?
Consider taking a Henry Ford-like approach and make your own moving assembly line at your credit union. It is beneficial to see and understand what other credit unions are doing, just remember to ask yourself: is this good for my credit union? and how might I apply this to my credit union’s unique situation?
Are employees seeking out savings?
Your employees should understand that everything they use has a cost associate with it. If your employees are using a certain type of software, encourage them to understand it fully by reading the manual, so that way they can better service your members. This small example can potentially save thousands of dollars by replacing training classes or avoiding having the vendor come in and do on-site training for your employees. Reward employees for seeking out ways to operate more efficiently.
Is our atmosphere conducive to efficiency?
In any business the atmosphere can be a key to success. You want to see your employees excited to come to work and leave feeling good about what they’ve accomplished. You want your employees to grow with your organization and love their job, remember happy employees make happy members.
When it comes to being efficient, it’s important to look at the efficiency ratio, but remember to look more broadly at your member needs first. Maybe you have too many products, maybe your staff doesn’t understand how big of an impact they can have or maybe your shop is too complex. Once you understand how each of your expenses relates (or doesn’t relate) to your members key needs, you can make the changes needed.