800-809-2307
Four Letters. Infinite Potential.

Life is uncertain: Protect what you have

By Cheryl Lawson, Executive Vice President-Compliance Review

image of locks

When it comes to maintaining financial stability these days, a great deal of uncertainty comes into play. For financial institutions, on-going regulation on existing non-interest income sources, a lack of new revenue stream opportunities, as well as increased competition from non-traditional financial service providers can paralyze a bank’s performance if steps aren’t taken to find reliable earnings solutions.

For your customers, any number of unexpected situations can create a ripple effect that puts a heavy burden on a tight budget for extended periods of time—like forgetting to record the amount of an unusual purchase. Or, a health crisis or fender bender that results in medical bills, costly auto repairs and potential increased insurance premiums that can be difficult to afford when there is no emergency fund. According to a Bankrate survey, just four out of 10 Americans have savings they could rely on to cover an emergency expense—while three out of five had experienced a major unexpected expense last year.

In both situations, relying on the status quo to ride out uncertain times typically leads to unfavorable results—continued low performance for your bank, and your customers dealing with unexpected situations and financial obligations.

 

Compliant overdraft solution adds certainty across the board

One proven strategy that addresses the financial uncertainty for both banks and their account holders is a fully disclosed overdraft program. Implementing a program for the first time—or updating an existing one that has become stagnant—provides a reliable source of non-interest income to help achieve performance goals and more. At the same time, a discretionary overdraft program extends a safety net to help account holders address temporary financial shortfalls and can help them avoid additional fees when used correctly. 

And when administered by the following guidelines, banks can rest assured that their program meets all regulatory expectations and best practices:

  • Provide all the details up front. Sharing the information will help avoid any confusion among account holders about how the program works. Plus, they will be able to more easily understand the service and benefits, as well as how to use it responsibly. The bigger payoff is that customers will also see it as a valuable service should they find themselves facing an unexpected expense or temporary financial shortfall.
  • Stay on top of communication.  Strategic and effective communication with account holders alleviates compliance issues it goes a long way in terms of service. On-going communication provides customers with more clarity about what the bank has available to offer should they have a need. As a result, they will be more inclined to consider the bank a valuable resource when they need other financial services or trusted advice.
  • Keep staff training in focus.  Ensuring everyone understands the program internally and conveys the information to account holders with consistency and confidence is a must. Multiple branches or even employee turnover can present challenges which may lead to missteps in having everyone speak from the same page when explaining products and services. In a recent case, an account holder complaint about receiving inconsistent information about overdraft services from staff members seated in close proximity to each other led to increased examiner scrutiny. The financial institution was ordered to refund overdraft fees because it wasn’t providing all account holders with the same information about its program.
  • Monitor program results regularly.  Make sure a solid process for consistently overseeing the program is in place—including key data points and tracking documentation. It’s not likely to have the responsibilities tied to the bank’s loan portfolio to staff members in different locations with multiple duties and operational focus. Likewise, the bank’s overdraft program represents an important revenue source and beneficial service option that should be maintained with consistency and focus to achieve optimal results.

Address the unknown with certainty

As financial institutions remain on the lookout for potential revenue sources, regulators have continued to state that “there are currently no new regulatory amendments or specific timing for when a rule may be proposed on overdraft programs.” But it is important not to take a “wait and see” attitude while your customers continue to face economic challenges of their own.

A fully disclosed overdraft program—one that is based on the latest regulatory guidelines and best practices—can help to protect your revenue and erase your regulatory uncertainty. At the same time, it can put your account holders’ minds at ease when it comes to protecting themselves against unexpected expenses and multiple fees when they make an error on their account. From a service standpoint, that kind of certainty creates a positive consumer experience that leads to loyal, long-time customer relationships.

 

 

100% 12 months 2020 2020 vision 40 years abusive abusiveness Academy account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders accountability Achieve achievements Advancements Advice Agreement analysis Analytics announcement Assistance ATMs Attendees attorneys attracting talent Automation B2B Balance Bank Bank of Pacific Banking banking services banks banks and credit unions batching Benefit best practices board governance board member board of directors Bob Layendecker bottom line branch equipment branch profitability branding Bryan Hanks budget bundling business business culture business environment business practices business processes business strategies career advice Career Goal case studies Case Study CEO CEO onboarding certainty CFPB Challenges change charitable Cher Cheryl Lawson Choose Chris Karstens claim clarity class action class-action lawsuit Classroom clients Cloud Cohron CommFirst Federal Credit Union commitment Communication communications communities community Community Outreach Referral Program Competition Competitive Complaint Compliance compliance examinations compliance risks compliant condition conduct Conferences Consistency Consistent consultant Consultation consulting Consumer Consumer FInancial Protection Bureau consumer protection Consumer-focused Consumers Contingency Contingency Pricing contingency-based fees Contract Contract Analysis Contract Negotiation contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts Convenience core processor contracts Cornerstone Credit Union League coronavirus corporate culture corporate governance costs Courtesy Pay COVID-19 CPE credits Credit Card credit card contracts credit cards credit report Credit Union credit unions Crissandra Fry CSS culture customer service cyber security Damian Data Data Analytics database Deal debit card contracts Debt deceptive Decisions Demand Letters Deposit Development Dick Miller digital directors Disclosed disclosures discounts Discussion Dodd-Frank Act donation Donna Sumrall Dynamic economy Education efficiency studies election Email Emergencies Emergency employee employee retention employees EMV migration enforce enforcement Engagement Errors evaluation Evolve executive search Expectations Expense expense management expense reduction expenses Experience Expert expert negotiations Experts Facilitators FastTrack FDIC Federal Reserve Federal Reserve Board fee Feedback fees Financial Financial Institution financial institutions financial services financial stability Financial Worry FinTech Fixed limits Floyd's Forum Free Analysis full disclosure Fully fully disclosed overdraft program funds Gen Z Generating Income generating leads generation Generation Z Gift Goals governance government Grow Gym Halloween Hammond Happiness health hiring HKW Holiday Holidays HR HR policies Hubur human capital human resources Implementation important Improved improved efficiencies improved results Inc. income income enhancement Industry Innovate Innovative Institution integrity interests interview strategies interview tips IT contracts Jackson Jai Jai Darden James Jamone Moore Jan Southern Jennifer Peoples Jennifer Simmons Jim Griffis Jimmy Nguyen JMFA JMFA Academy JMFA clients JMFA News JMFA Next Generation Overdraft Privilege Joe Marsh John Cohron John M. Floyd John M. Floyd & Associates judicial justification Kelly Flynn Kennedy law lawsuits Lawyer leaders leadership Learn Learning Legal legislative lending program Lesson Limit Limits Literacy litigation litigators loans local Long Term Long-Term lost revenue Maggie Thompson Maintenance manage management Mark Roe marketing marketplace Matrix Matrix-based measurable measurable results Member Members Midwest Region Millennial Millennials Mississippi Missouri Mobile Banking monetary Money Most Valuable Provider NAFCU NCUA Negative Settlement Negotiate negotiating contracts negotiator Net Operating Analysis New Decade New Year New Year's Next Generation JMFA Overdraft Privilege NOA Non-Compliant Non-Interest Income NSF fees OCC Officer Oliver Ireland onboarding Online Opportunities Opportunity Opt-In Organizational Health Outcomes outsourcing Overdraft overdraft compliance overdraft coverage overdraft fees overdraft practices Overdraft Privilege overdraft privilege program overdraft program Overdraft programs overdraft protection programs Overdraft Protection Service overdraft service overdraft services overdraft strategy overdrafts Overspending Partner Paul McFarland paycheck emergency payday loans Payments Pennsylvania performance personnel plan planning Plus4 Credit Union Policy POS Positive Swipe practice practices Press Release Privilege Manager CRM proactive procedure process process improvement Processing product profitability Productivity Products Professional Profitability Improvement Program Program Management programs prohibited project staffing Promotions Proposals Provider providers Quality Reactive reality Recruitment Services recruitment strategies refer referral Reg E regional director regulation Regulation E regulations regulators regulatory relationship Relationships Renegotiate Renewal Reporting Reputation resolutions Resources Results Retail Retaining Employees Retention Retirement revenue revenue enhancement review Richard Miller Right risk risks ROI Ron Jennings Roy Roy Seifert Rules Ryan Armstrong Sales Satisfaction savings Scrutiny secrets Security senate service service agreements service contracts service delivery Services Sessions settlement shareholders Sheila Bridges Shopping social distancing Social Events social media Software Solution Spending staff staff development staff spotlight staff training staffing staffing gaps staffing studies staffing study stakeholders standard Statistics Strategic Planning Strategies Strategy Stressful succeed Success success factors Succession plan succession planning Support survey Susan Prell talent team team members technology technology costs technology upgrades technology utilization temporary staff term Text Thing Third-Party Expert third-party providers threat three Tim Strandquist Time Tools Tracking Trainer training transaction Transparency Transparent Travel Treats trends Trey Martin Trust UDAAP unfair updates Upgrades Value Variable Vendor vendor agreements vendor contracts vendor performance vendors violation Walker Washington Webinars weeks Westmoreland Community FCU Whitney & Company Wish list women work Workshops