Giving Members Another Chance

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RALEIGH, N.C.-SECU will begin sending text alerts of non-sufficient funds to members who are about to go negative, giving checking account holders "Another Chance" to cover a bad item before 5:30 p.m. the same day.

"The impact will be huge," predicted Rick Rhoads, SVP-e-services, State Employees' CU here. "This is a great opportunity for our member to recover from an occasional error and avoid the embarrassment and costs of bouncing a check."

When "Another Chance" goes live this summer members will be able to receive a text message on their mobile device telling them when an inbound item cannot be paid from a checking or overdraft account due to NSF, explained Rhoads. Members can opt to receive alert messages at the CU's secure website.

Before sending an alert, Another Chance will automatically search for sufficient funds in a member's designated overdraft accounts and transfer money into checking to cover the bad item. If the overdraft accounts lack sufficient funds, SECU will alert the member and give him or her until 5:30 p.m. the same day to make a deposit to cover the item. The CU charges 50 cents to process overdraft transfers.

"The service provides members with a low-cost solution to fix a problem after it occurred," Rhoads said. Another Chance supplements SECU's overdraft protection, offering members "an additional layer of protection" to prevent an NSF.

To accommodate Another Chance, the $21-billion CU moved all branches and online systems to a 5:30 p.m. cutoff from the current 2:30 p.m. cutoff. The back-end processing platforms was modified "extensively" to handle the bulk of exception processing after hours instead of at the beginning of the day, said Rhoads.

Inbound items such as "Check 21" files, ACH and cards are run through SECU's checking account system. Rejected items move to the CU's exception processing systems, which try to cover the items with an overdraft. If so, the overdraft system moves money from the protecting accounts into the checking account, and the exception systems present the item once again. If overdraft accounts lack sufficient funds, the exception systems will notify the CU's alerts system to contact the member.

At 5:30 p.m., any items remaining on the exception systems that are eligible for Another Chance will run again against updated balances to see if the member deposited sufficient funds. Items that can be covered will be posted. ACH and checks that can't be covered will be returned NSF and charged a $12 fee.

Another Chance serves only checking account holders enrolled in overdraft protection and the CU's new alerts service, which notifies members of an NSF via SMS text messaging or secure messaging. "I don't see a reason why any of our checking account holders wouldn't sign up for Another Chance," said Rhoads.

Currently, nearly 85% of the CU's 797,000 checking account holders is signed up for overdraft protection, he said. "We want members to take advantage of the overdraft protection service so they don't have to manually transfer funds or make a deposit to cover an item."

About 30,000 of SECU's 1.6-million members are using the two-way text and alert feature, which was launched two months ago. Fewer than 1,200 members have opted to receive alerts via the CU's secure website, said Rhoads.

Rhoads said he doesn't know whether Another Chance will generate revenue, though he said NSF volume and associated charges to the member should fall off. "If NSF volume goes down, then our members win."

Another Chance means SECU will make less on NSF fees-which is a "good" thing, Rhoads said. "That means our members are better managing their financial position, which is what we are here to help them do."

SECU offers overdraft protection by enrollment only and does not run courtesy pay or on-the-fly loans to cover an NSF.

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