Has your overdraft program evolved to stay relevant?

By Ron Jennings,
Executive Vice President, John M. Floyd & Associates

As technology, regulations and consumer preferences continue to morph at a rapid speed, it’s essential for your service offerings to keep pace. Does your overdraft program have what it takes to continually meet these ever-changing demands?

Amazon did it when they went from shipping books and CDs to offering digital devices, downloads and home automation. Netflix did it when they branched out from renting DVDs by mail to streaming entertainment of all types and developing original content. And Apple was doing it long before the first iPhone ever hit the market.

They’ve all continued to evolve with the times to stay at the forefront of tech innovations and consumer demands.

All businesses should follow their lead and pivot, adjust or realign to stay relevant in today’s competitive marketplace.

For community banks and credit unions, one way to do so is to examine the overdraft solution they’re offering by asking:

  • Is it meeting consumer needs and preferences today and will it continue to in the near term?
  • Is it offering greater efficiencies, data analysis and automation as technology grows?
  • Is it adhering to the latest government regulations and industry best practices?

If you aren’t regularly evaluating your overdraft program, it’s likely outdated. In contrast, an overdraft solution that continually evolves can be a boon for both your account holders and your bottom line.

Not all overdraft programs evolve

Some overdraft programs simply meet the status quo, while others challenge it by pushing forward, innovating and delivering a true service for both the financial institution and the consumer. These businesses that continually evolve are leaders in the industry, just like Amazon, Netflix and Apple.

Research shared at the Adobe Summit 2019 reiterates this point: business-to-business (B2B) experiences are becoming ever more similar to business-to-consumer (B2C) experiences. As Forbes elaborates, B2B buyers expect vendors to know what they want and deliver more than just supplier value.

Does your overdraft program vendor deliver more, including 100% compliance assurance, training opportunities, advanced reporting tools and measurable results? In short, are you getting a modernized program that continues to evolve with the times so you can deliver the same level of advancement to your account holders?

Many banks and credit unions have discovered the difference a modern, continually evolving overdraft service can make:

  • When one Michigan credit union was asked by its core provider why they were switching to another overdraft program, when the core provider already offered tools to manage an in-house program, the credit union CEO explained that the core couldn’t match the intuitiveness, efficiency and reporting capabilities of more updated overdraft tools. Read more.
  • Ongoing, personalized monitoring of its overdraft program and compliance expertise helped a community bank in Virginia save time, money and a lot of headaches in the midst of changing regulations regarding customer communications and messaging. Read more.
  • A Northeastern credit union had previously used an ad hoc system for its overdrafts, which resulted in time-consuming manual processes, inconsistencies and limited revenue. Once they decided to work with an established, reliable overdraft program provider, their results soared, generating positive feedback from members and non-interest income that’s trending at $500,000. Read more.

 The next generation in overdraft

Just like many other consumer products, the overdraft service experience has evolved. You can provide superior financial peace of mind for your account holders and growth opportunities.  Here are a few important aspects to keep in mind:

  • More automation, to increase efficiency among your staff and better serve your account holders.
  • More continuing education and training opportunities, from on-site training to webinars and classroom experiences, to help you maximize your overdraft program’s potential.
  • More in-depth analysis & reporting, including tools to identify greater opportunities to enhance revenue.
  • Greater compliance proficiency, with ongoing support from experts, backed by a 100% compliance guarantee.

 A fresh look never hurts

The moral of the story? If your overdraft program isn’t intuitive for you or your account holders, if it doesn’t produce consistent and measurable results, and/or if you’re constantly worried about compliance violations related to its use, it probably hasn’t kept pace with the times. Taking a fresh look at the overdraft solutions available isn’t just a good idea—it could end up completely revitalizing your financial institution.