With imminent changes to overdraft fee policies, banks must contemplate the impact and determine what to do.  Bank of America and Chase recently announced significant changes in their programs that go into effect as early as October.  Some were similar to changes being proposed in Washington, although each bank has elements that differ.   While the ultimate financial impact on a bank will vary based on their customer base, program design and other key factors, most banks are not aware of the complexity of the changes. 
 

At a minimum, programs will have to be modified to meet new compliance requirements.  Certainly, businesses and finance leaders will want to understand the financial implication of these changes, but what else should a deposit manager be considering?   Below are a few variables that must be considered, but a proactive approach would be more comprehensive:
 

Overdraft Program Design - While legislation may have some bearing, it is unlikely that every element will be mandated.  So how should caps, minimum overdraft amounts, number of items charged, etc. be configured, and what is the impact of each?  Should I tier my fees and how? 
 

Permissioned Overdraft Programs – Banks have historically offered links to savings and lines of credit as overdraft vehicles.  But in this new era, should they be viewed differently?  What alternatives should a bank allow, and under what parameters?
 

Marketing – For most banks, fulfilling the “opt-in” (or opt-out) provision might simply mean establishing a zero payover limit.  However, for those wanting to enable effective marketing of overdraft “opt-in”, numerous variables (date of change, reason, source, etc.) should be considered for data capture to assist in this regard. 
 

Product Design – Migrating checking from “free” to “fee” is not an easy endeavor, and one that must be approached deliberately.  Many variables may come into play, such as accounts that allow overdrafts and accounts that don’t, accounts with certain transactions allowed for free and those that are charged, etc.  
 

Responding to pending overdraft changes is a complex situation.  Winners will respond in a holistic fashion, accounting for the elements outlined above and more.  At Profit Technologies, our Deposit Performance Consulting team manages efforts across the various deposit areas mentioned.  We are experts in overdraft and fee management, debit card performance, product design, postage optimization, as well as other areas.  This holistic view of the deposit business allows us to formulate comprehensive solutions that cross multiple performance dynamics and customize those to the specifics of your business.