The two options are never equitably and successfully balanced, because at the end of the day, they’re very different efforts. Yet the pair are so braided within and amongst the strategies of most financial institutions that they almost don’t make sense alone. Yes, I know that we need to keep the lights on, pay our employees, return dividends, buy shiny new core systems, provide pizza on Fridays, and budget for those cool pens with our logos on the end. But we also have to consider and nourish the financial well-being of our members and communities, right?
For a long, long time, the credit union industry has been balancing the two, sometimes in favor of one over the other, sometimes with members top of mind and sometimes with the bottom-line top of mind. Though I think we often get confused about the banking direction, in general. Being seen for doing something good and actually doing something good aren’t really the same thing.
After 2008, credit unions had an incredible opportunity to huff and puff and show what this industry can do. Where were credit unions championing PPP loans for small businesses then? Where was the outpouring of 0% interest loans, elimination of NSF fees, payday lending solutions, ITIN consumer and mortgage, or risk-based lending? Losses that year still constitute over a trillion dollars in deficit to the average American.
Where. Were. We.
Unburdening consumers of overdraft fees has a real social impact. The number of underserved consumers who are constantly battered by economic shifts caused by market crashes and diseases and marginal wage gaps is astonishing. I believe that as credit unions, abolishing NSF fees additionally broadcasts a stout message about our commitment to the ‘people helping people’ mantra.
As credit unions and banks reduce or even eliminate overdraft fees and courtesy pay programs, we will begin seeing an all-too-common trend – the gold rush, so to speak – as credit unions chase the banks and one another. Just as in P2P, mobile banking and remote capture, ATMs, ITMs, AI, and all the other goodies we will continue to see, if it’s trending, chances are we’re only a few steps behind if not already within the curve.
Oh, and are we not still in an ongoing and epic battle to maintain our tax status in the United States, among other things? Our movement relies heavily on image. If there should be a step by any of the megabanks to kill overdraft fees…dominoes. How would we then claim to be the right alternative to those “big bad banks” if we continue to charge these fees after they eliminate them?
Sure, not every shop can afford to make such drastic changes. Yes, some of these programs are designed to train those D and E members. Yes, it’s a great source of non-interest income. Yes, it supports our profitable members.
But, in the end, there’s no law or regulation that states: credit unions HAVE to charge overdraft fees – it’s not in our charters, bylaws, core values, or origins. It’s become income we rely on; an archaic, ‘we’ve always done it this way’ thing that mustn’t be touched; something we’ve spent so much time talking about if we could, we never stopped to ask if we should (insert Jurassic Park theme here).