The Prospect of Eliminating Overdraft Fees

Ally Bank has recently made headlines announcing that it would no longer charge its customers overdraft fees. Ally is a popular online bank that offers one type of checking account and overdraft fees only accounted for less than .07% of Ally’s revenue in 2020.  Ally Bank typically excludes consumers that use overdraft protection to begin with; of their 2.5 million banking clients, only about 1% have been subject to overdraft charges in the past.

When a financial institution decides to eliminate overdraft protection to their account holders, how does that really affect the consumer? First, if the account holder writes a check for more than they have in their checking account then that check gets declined (the check bounces) and sent back to the payee who tried to cash the check.  Once the check is returned, the account holder is charged an NSF fee and most likely charged a return fee from the payee or the merchant.  After a check is returned, the payee or merchant might try to re-deposit/re-present the check to see if the customer has the funds available.  If the account holder does not have the funds available then they are charged another fee.  Without overdraft protection these types of transactions can be very expensive because the consumer will have to pay an NSF fee, return fee and most likely re-presentment fee as well.  Also, the account holder will be inconvenienced because the check did not clear, meaning the payee has still not been paid.  Ultimately, the consumer will have to deal with the embarrassment of having their item returned.  Secondly, if an account holder doesn’t have overdraft protection on their account then that account holder is not allowed to have their debit card covered under an overdraft program.  Most consumers enjoy the convenience of having their debit card approved for a transaction that may overdraw their account rather than having those transactions declined.

After reviewing banks that are offering no overdraft fees accounts, Strunk has found that most of these banks are just setting up automatic transfer from another account or a line of credit to cover the overdraft items.  Also, if a bank is offering no overdraft fees there are some restrictions you may need to consider on the account.  Some of the restrictions to the account could be that the account doesn’t offer checks.  The bank may impose higher minimum balances or direct deposit requirements to reduce the occurrence of a transaction being declined, and if the account holder does not have the required daily balance or required monthly deposit amount then there is usually a monthly maintenance fee on the account. Strunk recommends that your organization consider all of these situations when evaluating an account type without overdraft protection.

Options to Display Your ODP Manager Information

Strunk’s hosted ODP Manager software features customized letters, comprehensive reporting, and advanced history tracking. It helps you access your financial institution’s overdraft program information in a format that is flexible and easy-to-use.

After the daily extract file has been imported into ODP Manager, letters due and management reports are updated and ready to view. This gives your users the freedom to decide whether they would rather generate letters first or review daily reports first.

Monitoring the percent of accounts with an overdraft limit and the percent of accounts opted in for Regulation E is important for maintaining or improving your ODP program’s performance. Strunk puts these important metrics on your ODP Manager dashboard. The Utilization Analysis and the Opt-In Impact reports also include more detailed information by branch and by product. Daily reports are accessible for the most recent seven import dates. If you choose to use the Report Archive feature in ODP Manager, you are able to have copies of your reports automatically saved in the ODP Manager software after each import is complete.

How are you able to view the data in ODP Manager at a more granular level? Filters on Reports and Account Inquiry allow you to limit your results to accounts that share specified criteria. You can search events to identify activity during a certain timeframe or to generate a list of specific letters sent or events tracked in ODP Manager. You can navigate to individual account details from your letter generation screens, from a report, or you can directly search for open or historical account data in Account Inquiry.

Hosted ODP Manager allows you to take advantage of multiple methods to view the data imported from your extract file and the information tracked in the ODP Manager software. Please contact Strunk Support at support@strunkaccess.com with any questions or for more details.

Repayment Plan Tracking in ODP Manager

ODP Manager requires you to update the software daily with the updated deposit information from your core processor but can it also help you manage information not included in your daily extract file?

Included in ODP Manager, you can choose to track your Fresh Start Loan repayment schedules within the hosted software. After completing your Fresh Start Repayment Plan assessment and approval process, you can enter the repayment schedule information directly in ODP Manager. The schedule can be used to populate your Fresh Start Loan agreement and will streamline generating the document for your customer to sign.

The repayment plan will automatically leverage Strunk’s Reminder feature to create reminders when each payment is due. This will help your Strunk software users remember to check your core system to see if the payments have been made as agreed. Once you’ve verified the payment receipt and entered the data, ODP Manager will show the payments made and the outstanding balance on the repayment plan.

Each repayment plan can be viewed individually for each account. All repayment schedules are also summarized in a list that can be exported to PDF or Excel for reporting purposes.

By using the repayment plan tracking feature, you may be able to make managing Fresh Start Loan payments easier and facilitate reporting. Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more.

Taken Your Eye Off the Overdraft Protection Ball?

Have you been worried about taking advantage of account holders in a pandemic environment? Not clear on what regulators expect in terms of accommodating customer hardship situations? The last 14 months certainly haven’t been easy on our account holders. The last thing we want to do is appear to be taking advantage of a bad situation by pushing the envelope on overdraft fees. But where is the right balance? Strunk can help.

We don’t charge a contingency fee – so we’re not going to push you to generate more fees if you think that’s not the right thing for your client base. We also charge a very affordable fixed annual fee – so you don’t have to feel like you should justify the price you pay the OD vendor by driving more fee income. Our goals are to maximize the performance of your program – based on your strategy – and also to ensure compliance.

With StrunkAccess receive the latest hosted ODP Manager software, which will facilitate the generation of proper notifications & reports when they’re needed. ODP Manager is the most powerful tool available to help financial institutions get the most benefit out of their overdraft programs and remain in full compliance with the law. It is provided as a cloud-hosted application, taking full advantage of the latest software developments and eliminates the need for users to maintain a separate application in their own network environment.

Get started today by contacting us at info@strunkaccess.com or 800-728-3116.

Employee Overdraft Privilege Training

As more and more states are reducing their Covid-19 restrictions, we are seeing an increase in employees from financial institutions going back to face-to-face work environments. As workers start returning to their workspace in a safe fashion, this is a great time to have some additional training with your employees regarding your Overdraft Privilege program.

Strunk offers ODP training that is specific for your financial institution.  With each session tailored to your financial institution we can help identify issues that you may be having with your program while also ensuring that your employees fully understand the benefits of the overdraft privilege program. During this ODP training will review how to fully explain the ODP program to customers/members and this will prepare your employees to answer questions that they may receive regarding the program. The ODP training is excellent for both new staff that needs to learn about the service as well as a refresher training for other employees.

Another important item that Strunk covers with its training is the compliance perspective surrounding the program. We are all aware that Overdraft Privilege has been under the microscope of the CFPB, and we would like to make sure that your financial institution stays safe from any regulatory issues. Strunk’s training can be done in person and is still being offered as a webinar, which gives financial institutions the flexibility to choose how they would like their staff to be trained.

If you would like additional information on Strunk’s employee Overdraft Privilege training, please feel free to contact us at 800-728-3116 or info@strunkaccess.com.

Event Tracking in ODP Manager

A benefit of Strunk’s hosted ODP Manager is that certain significant account events are automatically tracked. There are three main types of events stored in an account’s history.

Each time a user imports an updated extract file into ODP Manager, significant account status changes are marked. If an account is now closed, if it is now overdrawn, or if it has now moved into good standing, an event is recorded. If overdraft limits have been assigned or removed or if an account has changed its Reg E election to opt in or opt out, ODP Manager will note the account.

Each time a user generates a letter, the hosted software updates the account’s history. The letter type, description, and date are recorded. A PDF of the letter is also retained and linked to the event history.

What happens if there are important events related to ODP that are not already marked based on the import or by a letter? ODP Manager users have the ability to create their own comment or reminder events. Notes can be saved to the account as a comment. Reminders can be created for follow-up items with a specific due date. Both comments and reminders are accessible to all users and can include attachments.

Within ODP Manager, events can be reviewed for a specific account or they can be looked up for a specified date range. The results can be exported to a PDF or Excel file.

Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more about ODP Manager’s advanced event history tracking.

For Clients: Account Details in ODP Manager

In Strunk’s hosted ODP Manager Account Inquiry section, you are always able to review the account level data that is imported daily from your core extract file. Account Inquiry is also where ODP Manager retains the historical information about closed accounts.

Users are able to combine different column views, query groups, and filters to identify accounts that meet desired criteria. Once the list is compiled, it can be exported to Excel to be saved or for distribution. Users can use this ability to get account level detail to supplement ODP Manager’s existing standard reports.

In addition to allowing ad hoc lists of accounts, Account Inquiry will also allow you to access the information for a single account, whether the account is open or closed. You may need to review an account’s contact information, event history, reminders, or comments to manage the account. If the account is under a Fresh Start Loan or has charged off, you may need to view the related repayment schedule or charge-off items and recoveries.

Make it easier for users to access information, review, and manage ODP Manager accounts by utilizing the Account Inquiry feature. Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more about Account Inquiry.

Do Business Accounts Have To Opt In To Reg E?

Over the years Strunk has been asked a number of times, “do business accounts that have overdraft privilege have to opt into Reg. E to have their debit card point of sale and ATM transactions covered in the program?” To understand this you must first understand that most consumer protection rules do not apply to deposit accounts held by a business. It is also important to understand that a business-purpose account can be held by a legal entity, such as an LLC or a corporation, or by individuals operating a business themselves as a sole proprietorship.

We need to take a look at Regulation E and break it down regarding this topic. The coverage of Reg. E is stated in section 1005.3(a). It applies to “electronic fund transfers” that debit or credit a “consumer’s account.” Paragraph 1005.2(b) (1) defines an “account” as a consumer asset account established primarily for personal, family, or household purposes. Paragraph 1005.2(e) defines a “consumer” as a natural person. The result is if an individual is using their deposit account for the purposes of operation a sole proprietorship or an account is held by a legal entity, it would not be covered by Reg. E either.

Reg. E coverage means that the “opt-in” for overdraft coverage of debit card point of sale and ATM transactions only applies to consumer accounts. Any application of the concept to other accounts (such as business accounts) is a matter of bank policy and should be addressed in the bank’s deposit account agreement for such accounts.

Conveniently Retain Report Copies

Strunk’s hosted ODP Manager solution allows you to export and save your institution’s reports as Excel or PDF files. In addition to data from your most recent extract file, you are also able to access reports from your most recent seven As of Dates.

If you typically refer back to past reports for further analysis as you have time available, ODP Manager can streamline your report retention process. Instead of manually exporting and saving copies of reports, Strunk can set up your reports to be automatically archived after each import.

Once Strunk has created your report archive with your requested reports, PDFs are automatically saved within ODP Manager after each import of your daily extract file. Archived reports are easily located within a special Archived Reports section and are organized by As of Date.

Don’t worry about locating past reports – let Strunk manage your ODP Manager report archive! Please contact Strunk Support at support@strunkaccess.com with any questions or to find out more about using this feature.

Strunk at the ABA’s Virtual Conference for Community Bankers 2021

For the first time, Strunk attended the ABA’s annual Conference for Community Bankers virtually. During the virtual event we hosted a virtual booth, met with many familiar and new faces via Zoom meetings and attended virtual sessions. While a bit different than being together, it remains one of the most anticipated events of the year and we made the most of the connections with bankers and enjoyed seeing everyone.

We welcomed the opportunity to discuss with attendees the latest features offered by our Governance, Risk Management and Compliance (GRC) software Risk Manager, which includes six GRC tools – Risk Assessor, Policy Manager, Controls Manager, Skills Manager, Issues Manager and Vendor Manager. Strunk’s Overdraft Program is always a hot topic of conversation and we were glad to discuss our approach with long-time clients and potential clients.

Attendees had the opportunity to hear from keynote speaker, former NBA star Earvin ‘Magic’ Johnson in his session ‘The Power of Magic’. On top of his athletic notoriety, Magic is a driven and successful entrepreneur who shared what it takes to truly make an impact.

Another interesting session was hosted by Ron Shevlin of Cornerstone Advisors on the five forces shaping the banking industry today. He detailed how challenger banks, big tech, embedded finance, artificial intelligence, and cryptocurrency are affecting our banks and provided areas of focus for community FIs.

Congratulations to the winner of Strunk’s giveaway, a $100 gift card to Amazon – Mayra Rinaldi of Columbia Bank!

We hope to see you all in person next year and to once again host the conference t-shirt station. Until then, stay well.