Checklist: Is your overdraft privilege program at risk?
by Joe Gillen
With consumer groups and media focusing attention on overdraft privilege programs, overly aggressive or poorly managed overdraft programs can put your financial institution at risk of negative media coverage, consumer complaints, or even regulatory action. Whether your program was developed in house or provided by an outside vendor, use this checklist to make sure your bank is following best practices to provide a service that truly benefits both the bank and the customer.
Our program informs customers clearly about how our overdraft privilege process works before they access it, using a mailing separate from the monthly statement.
Our program offers customers the opportunity to opt-out if they do not want overdraft privilege.
Our program notifies customers promptly when they access the overdraft privilege service and incur a fee.
Our program shows customers their actual balances on their ATM statements, but allows them to access their overdraft privilege limit.
Our overdraft fee is the same as the NSF fee in place before we implemented an overdraft privilege program.
Our program does not add daily overdraft or other fees on top of the flat NSF fee.
Our program includes a conservative overdraft limit to prevent consumers from overextending too far.
Our program includes automated tracking and monitoring so that we can quickly help a customer who has trouble returning an account to a positive balance.
Our program includes support and education for customers if they need help returning their accounts to positive balances.
Our program's marketing efforts promote the service as a safety net for emergencies or exceptional circumstances.
Our customer feedback is overwhelmingly positive.
Scoring: 1-5 Danger! Your institution faces exposure to negative publicity and potential regulatory inquiries, if you haven't received them already, for questionable practices and poor customer service. You should rethink your approach to overdraft privilege.
6-9 Caution! Your institution needs to examine its practices to minimize the opportunity for negative attention and maximize your ability to retain profitable customers.
10-11 Congratulations! Your program is a model for best practices and your customers let you know how valuable the service is to them.
Joe Gillen is founding partner and CEO of Pinnacle Financial Strategies. With a background spanning more than two decades in banking, Gillen has experience in virtually every facet of the financial industry including sales, marketing, management, operations and program development. For more information on Pinnacle, call 713-868-3333 or send your request to info@pinnaclefinancialstrategies.com.
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