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CASE STUDY

Five Key Characteristics of a Successful Overdraft Solution

Expertise and effective strategies yield valuable results

For more than 100 years, Navigant Credit Union has provided financial services to individuals and families in the Blackstone Valley area of Rhode Island. Incorporated in 1915 as “La Credit Union de Notre Dame de Central Falls,” the financial institution was the state’s first credit union. While the name was changed to Navigant Credit Union more than 80 years later to reflect the ability to serve a larger geographic area, the unwavering mission to improve the financial lives of its members has remained the same.

From humble beginnings, Navigant CU has experienced significant growth. At the end of its first year in operation, the credit union recorded assets of $22,000. Today, with more than $1.9 billion in assets, 80,000 members, and 18 locations throughout Rhode Island, Navigant Credit Union is among the largest credit unions in the state and one of the strongest in the country.

When the institution’s leadership began looking for ways to help members avoid the costs and embarrassment of having insufficient-fund checks returned, they considered implementing an overdraft program. Given their long-standing commitment to the financial well-being of members, it was paramount to find an overdraft provider with a fully compliant program – along with an abundance of expertise in regulatory compliance, and a track record of great service and results, according to Kathy Orovitz, chief retail banking officer. After completing vendor due diligence – which included obtaining references from several credit unions, Navigant CU selected John M. Floyd & Associates (JMFA) and JMFA OVERDRAFT PRIVILEGE®

“JMFA has a reputation in the credit union community of providing a reliable, turn-key solution that incorporates compliance-tested best practices and a high level of support,” said Orovitz. “After receiving positive recommendations from a number of the company’s clients, Navigant was very comfortable choosing JMFA OVERDRAFT PRIVILEGE®.”

Orovitz joined Navigant CU after the implementation of JMFA OVERDRAFT PRIVILEGE®. But she was familiar with JMFA and remains confident that the company’s overdraft program and compliance expertise continue to support the credit union’s member service philosophy in the following ways:

1. Focus on compliance and best practices ensures program integrity and credibility
According to Orovitz, an important difference of JMFA OVERDRAFT PRIVILEGE® is the guidance that is provided from day one. “Through quarterly meetings, on-going program oversight and interaction with implementation and compliance experts, JMFA provides the most up-to-date information on regulations and best practices,” she said. “By implementing all of JMFA’s recommendations, we have been able to stay ahead of the curve when it comes to regulatory mandates and compliance-related guidance.”

She went on to explain, “The compliance support we receive from JMFA gives us the opportunity to sit down in a room and ask, ‘what are the other things we should be doing or considering?’ We don’t want to wait for regulators to tell us what to do.”

2. On-going, high-quality training supports long-term program success
The training component of JMFA OVERDRAFT PRIVILEGE® is another important program benefit for Navigant Credit Union. According to Orovitz, the institution’s growth over the years is due, in part, to mergers and acquisitions. Some of the credit unions that have joined the Navigant CU family have had overdraft programs in place. But not all of them had in-house program management expertise or robust training programs.

“It has been so valuable to have the training resources available to provide on-going instruction for member-facing staff so everyone understands how the program works,” Orovitz said. “This helps to ensure that member service personnel are conveying consistent information to all account holders so they understand the value of the program and how to use it wisely.”

3. Account holder communications recommendations create consistent information flow
Consistent, easy-to-understand communication is an essential element of Navigant’s member outreach program. Orovitz believes that JMFA OVERDRAFT PRIVILEGE® has made the member communications process much simpler by providing the credit union with materials that can be used as is, or customized for special circumstances.

“I love the fact that JMFA provides comprehensive communications resources, such as opt-in forms, a newsletter and letters that we send to members,” she explained. “We know that all of JMFA’s materials have been vetted from a legal and best practice standpoint, so it is truly turnkey for our use.”

She continued, “If there is ever any material that we need to customize, JMFA reviews the document for us to make sure it is compliant and includes all the necessary information. We don’t have to create anything from scratch – which saves us time and provides complete regulatory peace of mind.”

4. Comprehensive analytics provide accurate and efficient account tracking capabilities
With a higher than average adoption rate, maintaining accurate tracking of account activity is essential for effectively managing the credit union’s overdraft program. The analytics and tracking capabilities provided in JMFA OVERDRAFT PRIVILEGE® have helped Navigant CU stay on top of member use trends and provides insight into the program’s overall performance.

“The monthly reports provide useful data for tracking any time period we choose, i.e., month-to-month or year-to-year,” Orovitz explained. “This resource also gives us benchmarking data so we can see how our program is performing compared to our peers.”

5. Compliance expertise and program guarantee surpass competition
In an uncertain regulatory environment, Orovitz is confident in the compliance expertise and on-going advice she receives from JMFA. “When new regulations, like Reg E, are implemented, financial institutions that aren’t familiar with the nuances of the ruling must be careful about the potential risks and liabilities of how they implement programs and services,” she said. “I really appreciate that JMFA is out in front of the issues to recommend fully transparent practices, program changes and communications opportunities to help us avoid causing any service disparity among different member groups.”

She continued, “The opportunity to have those conversations and understand the situation, enables me to go to my CEO and say, “I want to introduce a new program or update our materials, and here’s why. Because of my connection with JMFA and the advice they provide, I can articulate the issue confidently.”

Orovitz also relies on the program’s compliance guarantee. “If you follow everything JMFA recommends and the guidance they provide, they have you covered in the event of any regulatory questions about your program; and that is great,” she said.

The dollars and member service sense behind a successful overdraft program
Since implementing JMFA OVERDRAFT PRIVILEGE®, Navigant Credit Union has seen more than a 300 percent increase in non-interest income. And while this positive impact on the bottom line has enabled the credit union to keep member service fees lower and expand other business lines, Orovitz points to the benefits that the program offers to members as its real success indicators.

And even though she knows that there is a segment of the credit union’s membership that may never use the overdraft service, she is glad that the program is available in the event they would ever need it. “We want to make sure our members understand what the service can provide if they ever find themselves in an emergency situation or make an error on their account,” she said. “It can save them a lot of embarrassment and a bunch of fees if items are returned.”

Reliable, on-going provider support is a plus
Orovitz has continued to be highly satisfied with the results of JMFA OVERDRAFT PRIVILEGE®. Other programs she has worked with didn’t have the comprehensive training, and on-going advice and consultation that JMFA provides. “In some instances, other providers get the credit union set up and then walk away – leaving the financial institution to find its own way around the program,” she said. “Too often in those situations, important compliance and regulatory issues are only discovered through audits.”

In contrast, Orovitz values the amount of overall guidance JMFA provides. “JMFA brings a tremendous amount of expertise and support to the table – I am pretty confident that they have the right folks paying attention to what it takes to have a compliant, successful program.”

When a program is implemented correctly, everybody wins
Since Navigant Credit Union initially decided to implement JMFA OVERDRAFT PRIVILEGE®, there have been substantial changes in the way a program is maintained to remain compliant and responsible. In this environment, Orovitz believes that an overdraft program is only going to be as good as the time spent on making it successful. Following JMFA’s recommendations has allowed the credit union to maintain integrity in the whole program while providing something very helpful to its members who use it.

“At the end of the day, you win as a credit union and more importantly your members get a direct benefit from an overdraft service when you do it right,” she concluded.

 



About JMFA

For more than 38 years JMFA has been considered one of the most trusted names in the industry helping community banks and credit unions improve their performance and profitability. Whether it’s identifying new revenue opportunities, reducing net operating costs, serving account holders better, delivering a 100% compliant overdraft program, or finding the perfect personnel fit―JMFA has the right solutions to help their clients not only meet, but exceed, their goals. We are proud to be a preferred provider among many industry groups.

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