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?

Overdraft Action Brings Positive Reaction

It's no secret that your financial institution's earnings are at risk. The overdraft programs that generate a large portion of a bank's income are under attack. (See related New York Times story here.)

Although most legislative bills are initially written in the harshest terms possible, then amended to a softer stance, it is BSG Financial's belief that overdraft programs as we know them will be significantly changed.

In fact, much of the overdraft income you enjoy today may be legislated away. And with the proposed consumer warnings and options, many of your customers may opt out of the overdraft program. As a result, most banks will simply start returning checks again.

But for every action, there is a reaction.

If this happens and more overdraft items are returned, the number of returned deposit items for your business customers will increase..along with the headaches of collecting these funds. As such, BSG Financial's Re$ubmitIt electronic check recovery program will be a key solution for your commercial customers AND your bank.

Re$ubmitIt helps business customers collect more NSF checks with less work. It helps your bank realize much-needed income to offset the anticipated lost OD revenue. It is simple to implement. It is completely compliant.

Strategically, there is no better time to consider the Re$ubmitIt program than right now.

Learn more here.

Contact BSG Financial today and start earning immediate income. We're implementing banks daily. Don't be at the back of the line!

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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?

Review of Overdraft Program Could Uncover "Found Money"

It's no secret that most financial institutions are looking for new ways to boost income. But before you unleash the new product development hounds, don't overlook the tried and true programs--like overdraft protection--you already have in place. With a few simple tweaks to this program, you could potentially double your income.

BSG Financial offers a COMPLIMENTARY, no-obligation Overdraft Review to determine if your program could be earning more income and better serving account holders. The results of Review may confirm your overdraft program is working to its fullest potential. Or we may uncover "found income." Either way, you have nothing to lose.

To begin, answer a few brief questions. BSG Financial will report any areas of opportunity we identify, and suggest tactical program modifications, if applicable. You can implement any of these modifications on your own, with no obligation whatsoever to BSG Financial, or you may wish to enlist our services.

Start the Review here. It only takes a few minutes, but could reap significant rewards!

Legal Challenge to Overdrafts...again

Every few years, financial institutions are legally challenged--without success--on the practice of recouping overdraft charges from accounts that have direct deposit of Social Security benefits. 

Here is an article from Reuters.com about the latest attempt, and failure, against Bank of America.

___________________________

Is your overdraft management solution meeting the expectations of your bank AND your customers? 

BSG Financial provides a NO-COST analysis to make sure! E-mail Hank Thompson, executive vice president, to request a no-obligation review.

Ending on a Good Note

The "fly" guesses that most readers in this industry are aware of, if not subscribed to, GonzoBanker, the online information resource published by Cornerstone Advisors. Each year at this time, the editors publish the GonzoBanker Awards, a recap of the year, both serious and irreverent.

 

Some of the awards we found most interesting and relevant are:

 

KUDOS TO…

Stand-up Banker of the Year Award
Goes to Berkshire Bancorp Chairman Moses Marx, who injected $60 million of his own money to save his community bank after its capital was severely impaired from an $82 million loss from (you guessed it) Fannie Mae stock. Nice to see a leader believing in his company.

 

NOT TO…

Best Temp Job in the World
Alan Fishman, final CEO at WaMu. Fishman was paid just under $20,000 a week and also got a massive signing bonus of $7.5M, plus 612,500 shares of (okay worthless) WaMu stock. According to this bloggingstocks post, Mr. Fishman pocketed somewhere between $11 million and $18 million for his three weeks on the job. Wow.

 

THIS IS JUST AMUSING…

Graffiti of the Year Award
 

Goes to this defamed WaMu branch lamenting our October financial crisis.

EVERYBODY NEEDS TO BUZZ!

Quietest Place in Cyberspace
Bank blogs. Turns out the Facebook crowd would rather watch Beyonce shake to “All the Single Ladies” or a new Mr. G clip than hear about a new checking account.

 

WE THOUGHT OF THIS TOO…

 The Most Critical Process at a Bank That is Perpetually Ignored Award
Capturing and maintaining accurate customer information. How can banks talk so much about the value of customer intimacy and spend millions on CRM systems while dumping responsibility for managing this information to clerical positions in the back office?

 

(For a related article, see our eNewsUpdate here).

 

COURTESYCONNECT, ANYONE?

Most Pitiful Attempt at Leveraging Technology
Bank departmental usage of the intranet. Other than the I.T. group’s use of SharePoint, online payroll/benefits and canned intranet packages, we see very little creativity coming out of the business areas within a bank to leverage Web technology.

 

Read the entire listing of GonzoBanker Awards here.

 

The “fly” and everyone at BSG Financial wish you safe and happy holidays! We’ll buzz back in 2009!

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.