Fly on the Wall

Here's an Idea for Washington: 'Unintended Consequences' Day

So... what if every financial institution in the country agreed to--on the same day--return ALL of their customers' overdrawn items? (Consider it a test of what might happen.)

How do you think your customers would react to being charged an overdraft fee, PLUS a returned check fee, AND possibly a late fee?  

Based on the Senate and House bills as they are written, most banks will have to resort to becoming a "return-all" bank, as in the scenario above. And this is apparently what the legislators in Washington think your customers want.

So maybe we should select a day and see if they are right.

We'll call it 'Unintended Consequences' Day. Is your institution in?

Review of DDA Charge-Offs Can Indicate Room for Improvement

Most financial institutions are looking for ways--now more than ever--to increase or, at the very least, stabilize profitability. One place to start is to review the number of DDA accounts that you charge-off per year, as compared to your insitution's total DDA accounts.

If the charge-off percentage is above 8%, you may want to investigate why.

BSG Financial has found that financial institutions with charge-off percentages above 8% may have overdraft programs that are not operating at their full potential and could be "leaking" income.

An overdraft program that offers pre-charge-off routines, such as automated letters and phone calling, can help bring the number of charge-offs back into line and increase profitability...not to mention customer service and retention. If you want more information about reducing charge-offs and how it could help your institution, email Hank Thompson, executive vice president, at HThompson@BSGfinancial.com.

Does your institution routinely assess charge-off percentages and make adjustments if they're too high? If your charge-offs are already low, how do you do it?

Game On!

Excellence is the unlimited ability to improve the quality of what you have to offer.

Rick Pitino, Univ. of Louisville, head basketball coach

The NCAA Division I men’s basketball tournament starts today, and according to the seeds, our city has the team to beat.

BSG Financial is located in Louisville, Kentucky, home of the University of Louisville fighting Cardinals—Big East champs and #1 seed in the tournament.

We do love our basketball in Kentucky and our interest in this year’s tournament is obviously high.

Rest assured, however, all of us at BSG Financial will continue to bring our clients "above-the-net" customer service and "slam dunk" profit-enhancing programs.

Even on game day.

Out and About

The "fly" periodically buzzes to industry tradeshows to make a presentation to conference attendees or learn more about industry trends and products.

The most recent conference we attended was the Wisconsin Bankers Association Bank Executives Conference, February 9-11. Much of the discussion there was, as expected, about the state of the economy and the banking industry. Despite the doom and gloom we hear every day, over 200 attendees partcipated in the conference and all of the sponsored booths were full to capacity.

A hopeful sign.

One new product that caught our eye is FirstBranch, a lead-generating, online marketing system. We have no affiliation with this program, but think it is intriguing, and want to share what we found. The service claims to help banks generate accounts (an average of 24 online applications per month) by utilizing the Internet banking environment. If you want to find out more about this offering, click here.

One of the highlights of participating in trade shows and conferences is the drawing for prizes at the end of the show. BSG Financial usually gives away a personalized Louisville Slugger regulation-size baseball bat or a bottle of legendary Maker's Mark bourbon (we are based in Louisville, Ky. after all!). One recent Slugger recipient requested the bat be personalized for his newborn son. He sent us a picture and we knew we couldn't keep it to ourselves:

Thanks, Dad! Monty Lafitte III with his personalized Louisville Slugger.

(son of Montague Lafitte, Private Banking Division, SCB&T, Columbia, SC)
 

 

 

Is your institution planning to participate in trade shows or conferences in 2009? If so, let us know what you learn!

Rage Against the Machine

The “fly” feels a rant coming on.

In case you haven't heard, the FDIC recently released findings of its 18-month study of automated overdraft programs (aka courtesy pay programs) at banks.

The Executive Summary (click hereto read it) is chock full of demographics and other numbers of interest. For instance—as with our own experience—75 percent of consumer accounts had no NSF transactions during the 12-month period examined; meaning, the overdrafts were written by only 25% of an institution’s accountholders, namely those who needed the service the most.

We at BSG Financial consistently hear how our overdraft management program helps consumers who get into a money crunch by honoring NSF checks, instead of returning them. Unfortunately, stories like this one in USA Today or this one from Fox Newsreport only the most negative aspects of the FDIC Study.

These types of articles fail to explain that whether a financial institution returns a check or not, the consumer incurs an NSF fee from the bank if funds are not available. If the financial institution honors the check, however, the consumer is spared return fees from the merchant, late fees, and negative credit.

The fact is: it is the 25% of consumers mentioned above that consistently and purposely use automated overdraft programs in order to avoid these problems. They understand how the service works and they appreciate its availability when they need it.

These reports also omit the fact that many financial institutions with automated overdraft programs responsibly remove repeat users or social security recipients from the program (although we have had client banks report that those removed often call and beg to be added back in).

The stories seem to gloss over the fact that all reputable programs INFORM the consumers of the service and OFFER EASY WAYS TO OPT OUT. In many cases, the consumer does not qualify for overdraft protection alternatives, such as automatic lines of credit, so their choice is to remain in the automated overdraft program.

Does your institution offer an automated overdraft program? If so, share your experiences and let us know if they match the ones reported above. 

A "Warm Fuzzy" Just Makes You Feel Good

When I was in grade school, the school counselor used the term, "warm fuzzy" (a little too often, I thought!), to encourage us to say nice things to and about one another. A recent email we received from a customer reminded me of this term, because it did, indeed, give us a good feeling. This compliment was especially rewarding, as it was NOT from a financial institution, but from the bank's customer, who is an end-user of our product, Re$ubmitIt. (FYI: Re$ubmitIt helps businesses--including school districts, municipalities and other "non-merchant" businesses--more successfully collect funds from NSF checks.)

The customer is the PTO Treasurer for an elementary school in Missouri, who has the unfortunate job of collecting funds from fellow parents whose checks do not clear. She writes, "Thank you for all of your help. I appreciate not having to try to collect money myself from other parents at my child's school. It makes my life much easier!"

Has a customer let you know that your institution is actually making a positive difference in his/her life? If so, let us know!