CUSTOMER AWARENESS OF OVERDRAFT FEES

AND BALANCING ACCOUNTS

Presented to: “Ken”

Senior Vice President

Presented by: Pamela Noonan

Senior Claims Analyst

AGENDA

• Executive Summary

• Introduction

• Why Educating Clients is Preferable to Refunding Fees

• Issue Resulting in Plan Implementation

• Other Institution Design

AGENDA (CON’T)

•Alternatives

•Benefits and Risks to Educating Clients

•Recommendation

EXECUTIVE SUMMARY

Unknown Financial Institution should implement an initial customer education in regards to balancing checking accounts. Research has shown that customers who are informed on how to perform a check book balance are most likely to keep a positive balance, do not receive fees (and if they do, they understand why), and become loyal clients..

New clients would receive their education initially by a banking center Personal Banker or over the phone with a Customer Service Representative if the account is opened over the phone, prior to making the initial deposit.

EXECUTIVE SUMMARY (CON’T)

• Benefits

• Client Satisfaction

• Client Retention

• Profit

• Risks

• Cost: Increase staff and technology update

• Longer times to open accounts

• Recommendation

• Educate the client on fees and properly balancing checking account

INTRODUCTION

Checking/Savings Account OpeningDebit CardChecksDepositor Agreement

Call Center – Claims

Client account education

STAKEHOLDERS

Banking Center Associates

Clients

Call Center Associates

Call Center Managers

ShareholdersTechnology Team

Marketing Team

WHY EDUCATE VS. REFUND FEES

ClientLess fees

Less time calling

AssociateLess time de-escalating

Assist with critical issues - fraud

ShareholderRetaining clients

CLIENT SCENARIO

• Client uses debit card at a merchant. Since it is approved, the client assumes funds are available and there are no issues with the account

• Next day received overdraft fee.

• Five days later, an additional fee causing the original $20 to look as if it has cost the client $90.

OTHER INSTITUTE DESIGN

•UM Credit Union

•$500 loan tied to checking account

•No Extended Overdraft Fees

•Does not allow account to overdraw passed the loan limit

ALTERNATIVES

• Eliminate overdraft fees• Extremely overdrawn accounts putting the bank at risk for loss

• No consequence to overspending

• The bank has funds out as a “loan”

• Refund fees through customer service

• Call volume still increased

• Associates experience tough conversations

• Loss of clients and poor client satisfaction with the bank

BENEFITS TO EDUCATING CLIENTS

• Client is valued and valuable

• Client is familiar with fees and balancing

• Client is informed how to manage account

• Associates are able to more efficiently take care of critical matters

• Retained client relationships

• Potential growth with new clients

• Increased client satisfaction

RISKS TO EDUCATING CLIENTS

• More time to open an account

• Profit decrease initially

• Cost to add training material

• Cost to IT to add check box for educated clients

RECOMMENDATION

• Regardless of the risks involved in educating the clients on overdraft fees and how to properly balance their checking accounts, I see it is vital to the customer satisfaction and retention to implement the education. Clients will feel valued and cared for. Associates will be able to assist with more important issues. Shareholders profits will increase due to the customer satisfaction and retention.

REFERENCES

• Bell, Claese. BankRate.com. 9 May 2012. 2 March 2014 <http://www.bankrate.com/financing/banking/bank-customers-shift-focus-to-fees/>.

• Client. Cllient Pamela Noonan. 20 February 2014.

• Flagstar Bank. n.d. 2 March 2014 <https://www.flagstar.com/>.

• Hayes, Mario. No-Credit-Check.org. 6 June 2012. 2 March 2014 <http://www.no-credit-check.org/should-financial-literacy-be-taught-in-u-s-public-schools/>.

• UM Credit Union. n.d. 2 March 2014 <https://www.umcu.org/>.

• Shwom, Barbara & Lisa Gueldenzoph Snyder. (2012) Business Communication: Polishing Your Personal Presence.

• BSR. (2011) Stakeholders Mapping.

APPENDIX

Interview with client

Stakeholder Time Table

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