Overdraft Privilege - Solution from Pinnacle Financial
Posted on Thu, Dec 01, 2011
The Reg E Amendment was announced in November 2009 mandating significant changes to the ways in which financial institutions manage their overdraft programs. Pinnacle understood the potential impact this amendment could have, not just on community banks and credit unions, but also on consumers who rely on the “checking account insurance” that overdraft privilege provides. Early estimates had forecast a loss of more than 60% of fee income for financial institutions. Account-holders who were used to automatic coverage on their accounts would have to actively choose, or opt-in, for account coverage.
To help our clients comply with Reg E, communicate appropriately with account holders, and minimize the customer service impact as well as the potential loss of income, we developed a comprehensive opt-in strategy. 
The three-phased Pinnacle Opt-In Total Solution — step-by-step planning, comprehensive training, turnkey account-holder communication — was provided at no cost to our current clients beginning in February 2010. Pinnacle tracked login and document download activity on our Opt-in site to actively assist our clients with their Reg E opt-in and compliance plans.
Consistent with our approach to developing and offering consumer-focused services that build rewarding relationships with account-holders, we found that those financial institutions that were highly engaged and proactive modified their programs appropriately, effectively communicated the value of their overdraft privilege service and provided their account-holders with the information they needed to choose the best option for them. Clients who followed the Pinnacle program were able to comply with the Reg E amendment by the mandatory deadlines, effectively communicate the value of their overdraft privilege service, and at least maintain their revenue. A full 78% of Pinnacle clients retained 90% and more of their ODP fee revenue, and 40% of those realized overdraft fee revenue performance at 100% or better from Q3 to Q4 in 2010.