|For nearly 70 years, members of Signal Financial Federal Credit Union have trusted the institution with their financial health. Located in Kensington, MD, the credit union serves a variety of employer groups, neighborhoods, affiliations and individuals at branch locations in the Washington, D.C. area.
One of the member services provided by the credit union was an overdraft program that they had executed with a third-party provider. Sometime after the program was implemented, credit union leadership made the decision to maintain it on their own. But as regulatory scrutiny on consumer financial products increased, management became concerned about potential compliance issues with the dynamic limits associated with their existing program. They decided to take another look at their strategy to make sure they were offering members a fully disclosed, totally compliant overdraft option with static limits. They met with representatives from JMFA and implemented JMFA OVERDRAFT PRIVILEGE®
Strong provider partnership leads to across-the-board improvements
Going into the agreement with JMFA, the credit union was committed to making sure that all staff members who were involved in the program management, daily processes and member interaction had a thorough understanding of the program to avoid any compliance issues, according to Andi Covington, member services manager and overdraft program administrator.
“We realized that with JMFA’s guidance and compliance expertise, we could stay current on the type of issues that have resulted in lawsuits for some institutions,” she said. “I love the fact that we don’t have to worry about that.”
Bill Kowall, vice president, member experience, concurred. “The extent to which JMFA keeps us up-to-date on how to maintain a successful, compliant program is really important for the credit union’s 360-degree member experience,” he said. “That is why we follow their recommendations to a ‘T’.”
Since implementing JMFA OVERDRAFT PRIVILEGE® and following JMFA’s guidance, the credit union has seen impressive improvements in program maintenance and member service.
Better training and support
“Employee training is much more comprehensive than our previous program, or what we could do when we were managing the program on our own,” said Covington. “Before, it was up to the folks who had been involved with the old program to train their colleagues, so there wasn’t a lot of cross-training available for all staff. JMFA provides comprehensive training materials, along with in-person and webinar sessions that explain how the program works. They also send us updates about new regulations and best practices, or if there is something that we need to change to get better results,” she continued.
“Plus, our contacts at JMFA are very proactive by scheduling quarterly meetings to see how we are doing. Or, if we ever have questions, they are just an email or phone call away. This comprehensive approach helps us to make sure that all employees have a full understanding of our overdraft program and how it works. For new employees, this starts from day-one.”
Covington believes JMFA’s approach to training and communications has made a difference in the institution’s ability to maintain a successful program. “While member service personnel have a good grasp of the program since they work with it every day, branch employees don’t have the same daily exposure,” she explained. “If we see that any staff members are having difficulty understanding the program or explaining the service to our members, we step back and review the training manual JMFA provides to make sure everyone is on the same page. This ensures our members are getting a consistent message.”
She continued, “We are committed to maintaining awareness of the whole cycle of what goes on with a member’s account. It begins in the mangers’ meetings where, for example, we discuss how to respond to a member who might have a difficult question about how the overdraft program works. After that meeting, managers go back to their departments and discuss with their staff the type of compliant responses that help members to better understand how to use their overdraft privilege whenever they find themselves with a big ‘oops’ or an unexpected financial need.”
Improved penetration and Reg E opt ins
Before implementing JMFA OVERDRAFT PRIVILEGE®, only 48 percent of the credit union’s member accounts had overdraft coverage. After increasing access to the privilege for a larger percentage of the membership at the time of account opening, the rate increased to 85 percent. Member opt ins for extended coverage on debit card and ATM transactions increased from 11 percent to 45 percent. Because of this increase, the credit union’s missing income decreased from 18.27 percent at baseline to 4.85 percent within less than two years.
On-going member communications
In addition to speaking with members on the phone about the proper use of overdraft privilege on debit and ATM cards, credit union staff utilize the communication tools provided by JMFA to keep members updated on their account status. “I appreciate this resource because it allows us to keep track of when notices are sent to members,” said Covington.
“When members call to say they don’t understand why their overdraft privilege was removed, we explain that we sent the details to notify them of their account status. If they say they don’t remember receiving it, we can easily pull up their account information and verify the date it was sent and ask if they are still living at the address we have on record.” Phone scripts provided by JMFA are also used as a helpful resource for staff to use when explaining the program or answering member questions.
For Kowall, knowing the information provided in the letters and scripts is always in line with regulatory expectations is also a plus. “I really appreciate that JMFA keeps us current on the correct verbiage to use – as well as what not to use – when we are communicating with our members,” he said. “We just recently updated our materials based on their recommendations, so I am confident our messages are compliant.”
Focused program management
A key element in the success of any overdraft strategy is having the right perspective and right person managing the program. According to Michelle Fox, JMFA regional director, Signal Financial FCU has worked diligently to create an effective team environment for maintaining the credit union’s overdraft program. “Andi and Bill work together closely to ensure the program works effectively,” she said. “This is a huge factor in the credit union’s success.”
According to Kowall, running an effective overdraft program became a focus very quickly on Andi’s member services team. “It was something that became part of the daily conversation, not just an afterthought,” he explained. “To improve service consistency, I have implemented with my staff in the branches what Andi is doing. By involving both member touch points, we can keep track of accounts more effectively and are able to provide a superior member experience.”
Covington added, “Having a focused approach allows there to be more detail and better program oversight.”
The right program components lead to increased revenue to support strategic initiatives
Since implementing JMFA OVERDRAFT PRIVILEGE®, the credit union has seen a 95 percent increase in non-interest income over base, which has been a tremendous boost to the institution’s yearly earnings and has helped with achieving its strategic plans. Covington and Kowall point to JMFA’s focus on core components of compliance, updated member communications, staff training, and on-going responsiveness and support from the expert consultants as key reasons for their program’s success.
“We are very happy with the results we have achieved with JMFA OVERDRAFT PRIVILEGE®, Covington said.” She advises other credit unions who are looking for a compliant source of non-interest income and improved member service options to commit to the time and staffing necessary to achieve their desired outcomes. Kowall adds that listening to JMFA is key to great results. “Otherwise, straying from their recommendations or not doing part of them will impact the success of the program.”