The financial services playing field is no longer level ground for all financial institutions. With increased competition from digital non-bank providers and tech giants, such as Amazon, Google and emerging newcomers, traditional banks and credit unions face new challenges every day. Institutions that want to stand out in the field must focus on meeting the increasing demands for financial services that add value, convenience and stability to consumers’ lives.
For instance, in today’s transaction-driven environment, there are numerous avenues for acquiring cash in an emergency situation. Your credit union is hopefully offering a proactive solution to prevent the potential of having members’ transactions denied when an expense exceeds their ability to pay. If not, they will potentially look elsewhere for the services they want or need. The best way to preserve their loyalty is to consistently offer them a superior service experience.
Transparent overdraft strategy fills important spot in your program lineup
A fully disclosed, compliant overdraft solution can be the catalyst for strengthening relationships with members who occasionally find themselves in need of additional funds. It can also create new relationships with those who are looking for a financial services provider that offers the option in case they should ever need it. Not only does this improve the overall member experience, it can increase account retention and lead to growth and improved performance for the credit union.
To ensure your overdraft or courtesy pay program is providing momentum to your member service game plan, make sure it includes the following strategies:
- It is designed to provide all members with a strong financial defense
An effective overdraft solution should provide all eligible members with a reliable source of funds if an emergency occurs when their checking account balance is low. A fully disclosed program provides a clear route for empowering them to make informed decisions about whether to use the service to cover an expense until their next deposit. When members are confident that you are looking out for their financial well-being, they’ll have no reason to look elsewhere for back up.
- It avoids costly penalties by closely adhering to all consumer-focused regulatory expectations
Even though there are no new rules related to overdraft services currently on the horizon, the focus on protecting consumers from unfair or abusive financial practices is ever present.
Regulators continue to review comments related to the 2009 Reg E amendment that prohibits financial institutions from charging consumers fees for paying overdrafts on ATM and one-time debit card transactions without affirmative opt-in consent. Additionally, during the past few years law firms have targeted financial institutions for such violations as failure to obtain consumer consent before charging fees, as well as:
- utilizing misleading advertising practices that don’t disclose fees;
- re-ordering transaction processing that results in maximizing overdraft charges; and
- implementing sales incentives which encourage deceptive product marketing practices.
Implementing a fully transparent and user-friendly overdraft solution is the best way to avoid potential regulatory risk and legal headaches.
- It includes consistent and clear communication to strengthen service delivery
Relationships are soured when unexpected or unfair fees are assessed. A better way to maintain healthy, beneficial relationships is to offer a member-focused strategy that keeps your overdraft program option, fees and procedures visible for all eligible members through regular dissemination of prepared, compliance-tested messaging.
This includes effective staff training options, easy to understand disclosures, account status alerts and information about alternative services your credit union provides.
- It incorporates comprehensive data analytics for effective program management
Using manual reviews or software that doesn’t provide sufficient data to keep up with account activity and program results is neither reliable nor a good use of your employees’ time. Plus, it can be cumbersome and slow down your processes. Next generation data analytics provide a more efficient, secure solution for in-depth account tracking and analysis, and up-to-date reporting capabilities. A program that provides easy access to real-time data supports more effective problem-solving capabilities that lead to better service experiences and greater program results.
- It utilizes professional coaching for overall best results
Today’s environment of changing consumer expectations and growing competition doesn’t leave much room for error when it comes to maintaining market share. An experienced overdraft program provider with a proven track record of successful implementations and measurable results can help you avoid the pitfalls that can diminish your program’s service and overall performance. And ongoing consulting support can keep you updated on the latest developments and technology that will ensure you are providing the level of quality service that consumers expect from their financial institution.
Do you have what it takes to be your members’ MVP?
According to five-time NFL MVP Award winner Peyton Manning, “The most valuable player is the one that makes the most players valuable.” Your credit union can be the MVP by offering the most valuable service to the most members.
When your members are faced with a situation where they need additional funds, where do they turn? By offering a fully disclosed overdraft program strategy that provides convenient, reliable service, you can make it easier for members to consider your credit union their financial services MVP and remain loyal for life.