Comments on: To Opt In, Or Not To Opt In — That Is the Question! http://www.theraddonreport.com/?p=2414 Research and Insight for Financial Institutions Wed, 25 Aug 2010 16:31:35 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Bruce C. http://www.theraddonreport.com/?p=2414&cpage=1#comment-2310 Bruce C. Tue, 23 Feb 2010 17:07:12 +0000 http://theraddonreport.com/?p=2414#comment-2310 It makes a lot of sense to immediately initiate the opt-in process. For many clients, repeated exposure to the message will be critical. However, an early start only makes sense if your core system can immediately honor the request of those clients who opt out of ATM/debit ODs, but want to retain the check OD option. The Fed makes it pretty clear that it's perfectly fine to start the opt-in process immediately if that condition can be met. I know our own core processor is struggling with the matter and are nowhere near completion. I suspect we're not alone on that score. Unfortunately, the OD opt-in edict is typical of our friends in Washington and their ready-fire-aim mindset. In many respects, it's similar to their handling of auto gas mileage requirements...pick an outcome and assign an arbitary implementation without regard to real world implementation issues and the Law of Unintended Consequences. It makes a lot of sense to immediately initiate the opt-in process. For many clients, repeated exposure to the message will be critical. However, an early start only makes sense if your core system can immediately honor the request of those clients who opt out of ATM/debit ODs, but want to retain the check OD option. The Fed makes it pretty clear that it’s perfectly fine to start the opt-in process immediately if that condition can be met. I know our own core processor is struggling with the matter and are nowhere near completion. I suspect we’re not alone on that score.

Unfortunately, the OD opt-in edict is typical of our friends in Washington and their ready-fire-aim mindset. In many respects, it’s similar to their handling of auto gas mileage requirements…pick an outcome and assign an arbitary implementation without regard to real world implementation issues and the Law of Unintended Consequences.

]]> By: CU Water Cooler » Blog Archive » CU Water Cooler – 12/23 http://www.theraddonreport.com/?p=2414&cpage=1#comment-2124 CU Water Cooler » Blog Archive » CU Water Cooler – 12/23 Wed, 23 Dec 2009 12:43:09 +0000 http://theraddonreport.com/?p=2414#comment-2124 [...] • To Opt In, Or Not To Opt In — That Is the Question! | The Raddon Report [...] [...] • To Opt In, Or Not To Opt In — That Is the Question! | The Raddon Report [...]

]]> By: Jatin S http://www.theraddonreport.com/?p=2414&cpage=1#comment-2117 Jatin S Mon, 21 Dec 2009 18:10:32 +0000 http://theraddonreport.com/?p=2414#comment-2117 Our bank doesn't allow debit card (pin & signature) and ATM transactions to OD, so our checking fee income may not impact as much due to the new regulation. However, over the years we have been making far less in checking fee income compared to our peers. Our philosophy has always been “doing the right thing for the customers”, which have limited our opportunity to maximize checking fee income. I recently completed a fee analysis that revealed that over 40% of our retail checking fee income is generated from OD activities. We believe that with the new courtesy pay regulation our fee income may decline by much as 10-15% a year. Over the last several months we have thought about ways to replace this revenue by: - Competitively aligning other checking/deposit/ATM fees to match our competitors - Introducing other “add-on” services to our retail checking customers (e.g. AD&D insurance, identity protection services, etc.) - Eliminating bonus rewards on our low end checking accounts - Limiting or eliminating some of the free check for life programs - Changing to free checking account - Annual or monthly fee for unlimited OD transactions - Reduce or stop offering additional free perks on our high end checking account (e.g. free safe deposit box, free cashiers checks, etc.) - Re-launch our OD line of credit product With new regulation banks will have no choice but to come up with creative ways to replace these fees by raising other fees, changing products, eliminating perks, and/or reducing rewards program. I believe that this regulation will not only hurt the financial institutions, but it will also have negative consequences to consumers, investors, vendors, and others that interact with financial industry. Our bank doesn’t allow debit card (pin & signature) and ATM transactions to OD, so our checking fee income may not impact as much due to the new regulation. However, over the years we have been making far less in checking fee income compared to our peers. Our philosophy has always been “doing the right thing for the customers”, which have limited our opportunity to maximize checking fee income.

I recently completed a fee analysis that revealed that over 40% of our retail checking fee income is generated from OD activities. We believe that with the new courtesy pay regulation our fee income may decline by much as 10-15% a year. Over the last several months we have thought about ways to replace this revenue by:

– Competitively aligning other checking/deposit/ATM fees to match our competitors
– Introducing other “add-on” services to our retail checking customers (e.g. AD&D insurance, identity protection services, etc.)
– Eliminating bonus rewards on our low end checking accounts
– Limiting or eliminating some of the free check for life programs
– Changing to free checking account
– Annual or monthly fee for unlimited OD transactions
– Reduce or stop offering additional free perks on our high end checking account (e.g. free safe deposit box, free cashiers checks, etc.)
– Re-launch our OD line of credit product

With new regulation banks will have no choice but to come up with creative ways to replace these fees by raising other fees, changing products, eliminating perks, and/or reducing rewards program.

I believe that this regulation will not only hurt the financial institutions, but it will also have negative consequences to consumers, investors, vendors, and others that interact with financial industry.

]]> By: Larry Hoffman http://www.theraddonreport.com/?p=2414&cpage=1#comment-2105 Larry Hoffman Fri, 18 Dec 2009 23:08:56 +0000 http://theraddonreport.com/?p=2414#comment-2105 Our institution does not "offer" Courtesy Pay on one time debit card transactions. We do use Courtesy Pay when transactions overdraw an account, however. On PIN and signature debit, we reject the transaction if funds are insufficient at the time of the transaction authorization. For debit, that is the end of the story. But for signature, the authorization approval only sets a hold on the funds. The transaction comes to us hours to days later for a different amount than authorized (gas pump or restaurant) or after other transactions have been presented to clear. We have no choice but accept the overdraft, and we charge a Courtesy Pay fee. We won't be able to in July. And lots of luck trying to explain that we need an "opt in" from the member but that it will only apply to your "signed transations". If we go opt in, we'll be forced to now apply Courtey Pay to signed and Pin debit. There is no possible way the Fed's action nor Congress can help the consumer. What will help the consumer: brains- the account is overdrwan. But the lack of that grey mass is more evident in DC. Our institution does not “offer” Courtesy Pay on one time debit card transactions. We do use Courtesy Pay when transactions overdraw an account, however. On PIN and signature debit, we reject the transaction if funds are insufficient at the time of the transaction authorization. For debit, that is the end of the story. But for signature, the authorization approval only sets a hold on the funds. The transaction comes to us hours to days later for a different amount than authorized (gas pump or restaurant) or after other transactions have been presented to clear. We have no choice but accept the overdraft, and we charge a Courtesy Pay fee. We won’t be able to in July. And lots of luck trying to explain that we need an “opt in” from the member but that it will only apply to your “signed transations”. If we go opt in, we’ll be forced to now apply Courtey Pay to signed and Pin debit. There is no possible way the Fed’s action nor Congress can help the consumer. What will help the consumer: brains- the account is overdrwan. But the lack of that grey mass is more evident in DC.

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