BIRMINGHAM, Ala.-Credit unions looking to continue growing in 2013 should look no further than the humble checking account, according to Dennis Dollar.

Dollar, principal partner with credit union consultancy Dollar and Associates, told Credit Union Journal he is seeing CUs place a "greater emphasis" on their checking products. He said credit unions are "dramatically increasing" their checking account penetration, which he characterized as "good news," because credit unions can make up in volume what they are losing in overdraft and interchange income.

"The checking account is a transaction account, it is the one that is most often used, and prompts the most interaction with a credit union," Dollar said. "A two-year CD might not cause any interaction for two years, a mortgage might not cause any interaction unless a payment is late, but with checking there are interactions every week."

Credit unions "excel" at offering good member service, he continued, noting the checking account gives them an opportunity to "show what they do best."

This increased emphasis on checking account is the "most dramatic" development Dollar foresees for 2013, but he said all credit unions will be looking to improve their efficiency ratios in the year ahead.

"The average efficiency ratio is 70 basis points. The average bank is somewhere in the 50s, so there is efficiency credit unions will continue to pursue," he said. "In fairness, there is an apples to oranges comparison because banks earn more income from commercial lending. Still, there is a recognition among many credit unions that they need to become more efficient."

Dollar expects credit unions will increasingly look to drive efficiencies by more closely watching personnel costs and closing branches in those cases where video tellers are a reasonable alternative option.

"A lot of credit unions are looking to contract for services such as call centers, regulatory compliance and bankruptcy management. Instead of internal staff, credit unions are handling those three areas with outside firms."

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