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Credit Union Industry Efficiency Ratio Average is Declining

February 17, 2011

Per the creditunions.com article, The Inner Workings of the Efficiency Ratio, “Over the past two years, credit unions’ efficiency ratio has declined.…83.5% reported at the end of 2007…the U.S. credit union industry average for the efficiency ratio is 81.4% as of December 31, 2010.”  The efficiency ratio, a ratio that is typically applied to banks, in simple terms is defined as expenses as a percentage of revenue (expenses / revenue), with a few variations. A lower percentage is better since that means expenses are low and earnings are high.

What is your institution’s efficiecy ratio?  Are you in-line with the industry or are you doing much better or worse?  This comparative data is extremely helpful when measuring your performance.  An area where you can seriously impact your efficiency ratio is the management of your teller-line staffing levels.  An effective approach towards optimizing your staffing levels at the retail branch environment is to partner with a 3rd party reporting and scheduling provider.  Some of the attributes this provider should have include:

  • Monthly reports should be provided by the outsourced partner including an executive summary report and individual branch reports.
  • Monthly productivity rankings should be provided by the outsourced partner including all of their clients across the nation.  This will show you where your institution ranks amongst your peers in teller productivity.
  • A fully automated online scheduling engine should be provided by the outsource vendor.  This scheduling engine should be easy to use and ultimately should save your schedulers time – by allowing for a more efficient scheduling creation process.
  • Extensive training and support should be provided by the outsource solution partner including: best use seminars and full-day onsite introduction training sessions.
  • Ongoing on-site visits should be provided by the outsource solution partner to keep a dedicated focus on the program.  Coaching and consultative advice should be provided during these visits.  These consultants should have a banking background and you should feel very confident about their expertise in the subject matter.
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