Alternative revenue sources are an important source of money for banks, and they are eager to increase their profitability by utilising them. Some fee income sources have been accessible to institutions for a long time, but they have recently played a more prominent role in banks’ overall financial management plans. Deposit service costs, credit card costs, fees linked with electronic funds transfers, demat costs, and so on are examples.
Although banks have made tremendous progress in collecting traditional fee income, they must broaden their product offerings and strengthen their sales, relationships, servicing, and investment expertise to remain competitive with other financial institutions.
Securities brokerage, film finance, company equity participation, real estate brokerage services, real estate development, real estate equity participation, and insurance brokerage activities are all new sorts of fee-generating activities. Off-balance-sheet items such as loan commitments, note issuance facilities, letters of credit, foreign exchange services, and derivative transactions all provide fee income for banks (contracts for futures, forwards, interest rate swaps, and other derivative contracts).