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Ask any bank or credit union about its mission and it will likely include u201cservice-centricu201d or some variation of the idea. Itu2019s something all smart institutions strive for. But excellent service doesnu2019t happen in a silo or start and end with tellers. Itu2019s an all-encompassing idea that should be at the forefront of every decision and every offering.nnYet some financial institutions forget this part of their mission when it comes to providing a solution for overdrafts. Some overdraft programs u2013 defined by data-driven algorithms that calculate unique and ever-changing limits for each account holder u2013 seem designed to fail important service expectations. By contrast, fully disclosed overdraft programs with static limits offer a simple solution that empowers account holders to make informed financial decisions.nnLetu2019s compare how each method of overdraft protection delivers onu00a0u003cstrongu003eserving an account holderu2019s best interest.u003c/strongu003ennu003cstrongu003eOverdraft Limitsu003c/strongu003enWith a data-driven overdraft solution, limits vary for each account holder based on factors like average daily balance, direct deposits, etc. These limits change as the data changes. So how can your account holders ever know how much they could overdraft? Unfortunately, they canu2019t. u201cData-drivenu201d feels safe to some institutions, and provides the feeling of having control, but it comes at the expense of providing first-rate service.nnIn a fully disclosed overdraft program, the limit is the same for everyone, all the time. Predictable, steady and reliable u2014 all things that account holders appreciate and count on.nnu003cstrongu003eAbility to Repayu003c/strongu003enWhile thereu2019s an argument to be made that individuals with higher balances may be less risky overdraft users and therefore deserve a higher overdraft limit, I think this makes too many assumptions. Your account holders could have accounts elsewhere, have varying degrees of liabilities, or any number of other scenarios. The ability to repay is based on a lending process to determineu00a0credit worthiness. We canu2019t know everyoneu2019s financial story from one account snapshot, so from a service standpoint, it only seems fair to treat all account holders equally.nnMoreover, overdrafts are not subject to Truth in Lending regulations, so care should be taken to avoid the appearance of a credit product.nnu003cstrongu003eTransparencyu003c/strongu003enOverdraft programs without an established limit by their very nature cannot be fully disclosed u2014 no limit can be stated at the beginning because it frequently changes.nnFully disclosed overdraft programs require account holders to opt in before ever using them. Being transparent upfront gives individuals the power to make an informed decision about whether to use the service or not.nnu003cstrongu003eEmployee Understandingu003c/strongu003enEver try to explain something you donu2019t fully understand? How about trying to do so to an upset account holder who keeps getting more confused by what youu2019re saying? Itu2019s not fun, and it is bad for morale. Data-driven overdraft solutions are designed to be unexplainable in simple terms u2014 theyu2019re highly technical, with ever-changing limits based on information a person may be uncomfortable being judged on.nnFor a more service-centric option, an overdraft program with simple rules that can be explained to an individual easily and concisely fits the bill. Employees will remain poised and confident during inquiries.nnBottom line: You canu2019t offer great service if you canu2019t even explain your service to the people who use it.nnu003cstrongu003eAccount Holder Understandingu003c/strongu003enIf your employees canu2019t explain your service, how is an account holder ever supposed to understand it?nnDo you want your account holder leaving confused, frustrated and suspicious? Or do you want them to feel empowered, grateful and satisfied u2013 which will lead to trust, loyalty and advocacy of your institution to others.nnThe solution is clear: u00a0If you want to offer excellent account holder service, offer an excellent service to your account holders. Fully disclosed overdraft protection programs line up with u00a0service-centric missions. And, if all else fails, use this litmus test:u00a0u003cemu003eIf I had limited funds available and needed to use an overdraft program, which type would I rather rely on?u003c/emu003ennFor more information on implementing a service-focused,u00a0u003ca href=u0022https://www.jmfa.com/Services/JMFA-Overdraft-Privilegeu0022u003efully disclosed overdraft solutionu003c/au003eu00a0with a 100 percent written compliance guarantee,u00a0u003ca href=u0022https://www.jmfa.com/Contact-Usu0022u003econtact your local JMFA representativeu003c/au003e.nnu003chr /u003ennu003cdivu003eu003c/divu003enu003cstrongu003eABOUT JOHN M. FLOYD u0026amp; ASSOCIATES (JMFA)u003c/strongu003ennFor the past 38 yearsu00a0u003ca href=u0022https://www.jmfa.com/u0022u003eJMFAu003c/au003eu00a0has been considered one of the most trusted names in the industry helping community banks and credit unions improve their performance and profitability. Whether itu2019s recovering lost revenue, uncovering savings opportunities, serving your account holders better, finding the perfect personnel fit or delivering a 100% compliant courtesyu00a0pay program, JMFA has the right solutions to help you not only meet, but exceed, your goals. We are proud to be a preferred provider among many industry groups. To learn moreu00a0u003ca href=u0022https://www.jmfa.com/contactusu0022u003econtact your local representativeu003c/au003eu00a0or call us at 800-809-2307.


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