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How does your overdraft strategy impact account holders?



Five ways to quiet the critics and increase service value

By Mark Roe, Executive Vice President of National Sales

Lately, there has been much criticism about overdraft programs, stemming from the lack of transparency inherent in some program strategies. Much of the current disapproval expressed by critics in the political and consumer advocacy arenas results from a lack of fairness and transparency. When it comes to providing right-on-time services that help your account holders effectively maintain their finances, an easy-to-use, easy-to-understand approach is always the right way to do business.

Prepare for a new normal in service delivery expectations

While the uncertainties of the pandemic continue, consumers most definitely have different expectations when it comes to their financial service experiences. To capitalize on the changing market, digital service providers continue to strategize ways to further increase their footprint. In this environment, financial institutions that fail to provide responsible, supportive services that positively impact their account holders’ well-being may face reputational risks and an erosion of trust among those account holders.

So how can your bank or credit union align your overdraft philosophy with growing expectations for fully transparent, well-communicated and consumer-centric services? You can start by asking yourself:

Amid all the talk about additional oversight of overdraft practices, the case for a fully disclosed, consumer-focused overdraft solution remains clear. When your account holders experience a situation where they don’t have enough funds in their account to pay their expenses, an overdraft service can be a reliable and valuable way to ensure their payments are being made.

Set the stage for a win-win

With the right strategy in place, access to a right-on-time overdraft service can heighten account holder confidence in their financial stability and strengthen their connection with your institution. Here are five ways to ensure your overdraft program makes a positive impact on your account holders in terms of value and peace of mind:

  1. Details regarding the benefits and responsibilities tied to program usage are easily accessible—whether in person or digitally—and whether at account opening or for account holders who have had an account for years.
  2. Disclosures accurately reflect all program procedures.
  3. Fees and item processing are reasonable and responsible.
  4. Ongoing communication helps account holders understand their account status and provides reminders about all their options, including financial counseling opportunities, when needed.
  5. Comprehensive training and tools (i.e., prepared scripts) strengthen employee confidence and help them to provide better value for your program and your account holders.

Minimize risk and strengthen relationships

To avoid risk, focus on providing transparent resources like a fully disclosed overdraft solution that supports your account holders when life throws them a financial curveball. You’ll not only save yourself unnecessary stress caused by ongoing news cycles, but you’ll also eliminate the negative impact inadequately disclosed policies and fees have on your account holders.

As you consider how best to strengthen account holder relationships going forward, be mindful that transparency is crucial for creating a successful overdraft strategy—one that meets all regulatory and market requirements and provides the support your account holders expect.

JMFA can provide guidance for many areas, including your overdraft-related compliance concerns. We are available to help you implement an effective strategy to help you meet or exceed your performance and service goals with confidence.


JMFA is one of the most trusted names in overdraft consulting, focused on communication, transparency and improving client outcomes with a 100% compliant overdraft service. JMFA can help you deliver measurable results with proven solutions. To learn more, please contact your local JMFA representative or call us at (800) 809-307.

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