Four years ago financial institutions across the country implemented opt-in strategies for their overdraft privilege programs as a result of Reg E. Many institutions treated Reg E implementation as a one-time event and, with each passing year, their focus on overdraft privilege communication has dwindled, letting accountholders and dollars slip through the cracks. Getting overdraft privilege programs back on track requires proper staff training and ongoing communication with accountholders.
There are no one-size fits all overdraft privilege programs. Each overdraft privilege program needs to be unique to your financial institution and provide your staff with proper training. Through reasonable fees, expectations and conservative overdraft limits, your financial institution can provide accountholders with a valuable customer service they appreciate.
While many financial institutions have let their overdraft privilege programs slip by the wayside after the implementation of Reg E in 2010, others have achieved success using fully disclosed, automated overdraft privilege programs. Good overdraft privilege programs provide your accountholders with stability and convenience while avoiding the embarrassment of a returned item. While not all overdraft privilege programs are the same, a specialized program that fits your financial institution provides a distinct consumer service that your accountholders value.
Intense regulatory and economic pressure means that financial institutions, already operating leaner than ever, must become even more innovative to remain profitable. An integrated, automated overdraft program frees up more than 90 hours a week of staff time for other work and ensures that financial institutions implement their overdraft programs fairly and consistently.
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.