Reviewing your overdraft privilege program during a pandemic
With the Covid-19 pandemic having an enormous effect on a financial institution’s overdraft privilege program, this is a great time to review your existing program to make sure it is running as efficiently as possible. Financial institutions pointed to government relief efforts, increase in unemployment benefits and the decrease in discretionary purchases that had a negative impact on overdraft privilege programs. Even with these obstacles in our way there are still ways to make sure financial institutions maximize their fee income from their ODP program.
- Clean up accounts to prevent creep-age. We find that most financial institutions, over time, experience a downward trend in percent utilization, which has a significant negative impact on fee income. By using reports that are produced in Strunk’s ODP Manager software, financial institutions will be able to gain a great understanding on how each account is performing.
- Evaluate your institution’s Reg. E opt in rate. The Federal Reserve Payments Study shows that roughly two-third of all transactions are done by debit card. Making sure customers understand what opt-in means for them and what happens if they don’t opt in is essential.
- Review how overdraft waives/refunds are being handled inside your financial institution. Waives/refunds are an area with two issues: Reduction in income fee and possible compliance issues.
There is no better time to do a complete review of your overdraft privilege program than during the Covid-19 pandemic. Strunk can perform a checkup on your program to help with compliance and profitability while also training your employees to ensure consistency within the program.