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Attention Banks: Fee Income Solutions Are Not Sensitive To Interest Rate Changes
There is more need than ever for banks to have a balanced revenue portfolio when it comes to ensuring a steady stream of fee income.
According to this article on CBInsight, studies show C&I loan percentage is down. The impact on the bank is reduced income from interest on these seemingly nonexistent loans.
Banks revenue portfolios are comprised of many elements including bounced check fees, overdraft fees, credit card transaction fees, interest fees and product usage fees (such as Billpay).
Historically bounced check fees and overdraft fees do little to show growth in fee income for the bank. And while these fees earn the bank revenue, imposing them may make the customer reconsider their relationship.
Credit card transaction fees only drive revenue when customers are using cards to make payments. This goes for consumers and businesses.
Interest fees, as we discussed earlier, are dependent on the market and needs of commercial clients. Rates fluctuate and companies become more cautious of borrowing more than they need.
And if your clients are using your billpay offerings, it’s probably not driving the fee income revenue you imagined.
Banks need to consider all their options for generating revenues. One way is to focus technology investments on products that solve problems for the customer AND generate fee income. Products they will use and make their lives easier.
How is your bank addressing the C&I loan decrease?
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