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Contract Renewal for Overdraft Privilege Vendors
by Joe Gillen

Question: Our contract with our overdraft privilege vendor is about to expire. Should I renew?

Answer: This is a good time to assess your overdraft privilege program and determine if it meets your institution's needs. Before you renew your overdraft privilege contract, ask yourself what services your current provider offers and how it has met your organization's objectives. Did it generate the revenue you expected? Was the program implemented correctly? Is there ongoing support in case you have a problem?

In our experience, a good overdraft privilege program not only generates income, but is also compliant with regulatory guidelines and gives your institution the means to manage risk. It also has some key components such as an extensive communication plan to both existing and new accounts. It sets conservative overdraft limits to give customers the flexibility they need without creating a vicious cycle of overdrafts. It is also monitored to correct any problems or problem accounts, and has reasonable overdraft fees so that customers can take advantage of the service.

If you are not satisfied with your current overdraft privilege program, maybe you have the wrong program in place. Don't just find a good overdraft vendor or program, find a great one. Does your current vendor train your staff on how to use the program? Do they have customer support personnel that are available to help you work through issues? Do they keep monitoring the program's effectiveness and make recommendations?

It is important that you find a vendor that makes your objectives their own and offers a program that is in line with how your customers bank. Overdraft privilege is a good way to generate income, turn a historically unprofitable customer into a good one and create customer loyalty. Make sure your program can help you make that a reality.

Pinnacle Financial Strategies, headquartered in Houston, Texas, is the premier provider of products and services that strengthen customer loyalty, enhance performance and manage risk for companies in the financial services industry. Pinnacle's "total solution" approach ensures timely, cost effective products and services that deliver increased value and expand capabilities and improve profitability for its clients. For more information, visit, email us at or call us at 713-868-3333.

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.

First published on 9/15/03

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