WILMINGTON, N.C.-As the clock ticks down before credit unions must comply with the new overdraft opt-in rules on July 1, one vendor has stepped forward with a solution to help CUs respond and comply with changes to Regulation E.
Recent changes to Reg. E require all consumers to opt in, or affirmatively consent, to overdraft services for ATM, checking, and one-time debit card transactions before overdraft fees can be assessed.
Velocity Solutions has rolled out a customizable software solution to help credit unions manage the opt-in process, and at the same time boost service. The company's new program provides a host of educational tools - such as videos and online tutorials-that it says help members learn about changes to Regulation E and their potential impact on financial behaviors.
But more important, Velocity's solution allows members to seek as much information as they need to make the right choices about the new opt-in rules, shared Bob Giltner, consulting partner at Velocity.
"The best thing to do to help the credit union's revenue is give excellent service. And the worst thing about these changes is for members to be confused or frightened and think they need to make a decision that does not match with their needs. If credit unions do a good job of explaining and marketing these changes, there will be those who opt in and help CUs maintain the revenues they earn now."
In fact, Giltner contends, members educated on Reg. E eliminate ambiguity that currently "plagues" credit unions regarding overdrafts. "If you ask the average guy, he'd say, 'Yes, I want you to pay the check.' But financial institutions have been using averages," Giltner said. "We have not asked individuals what they want, and there are cases where individuals do not want you to pay the check. So we've had to make best guesses. This is a step forward to actually know what the customer wants."
Velocity's Reg. E Opt-In Solution helps the CU determine the members who need and want overdraft protection, and those who do not. The software is integrated within the credit union's website and asks members questions to determine their financial behaviors and need for overdraft protection, and what they may currently know about the new regulations.
"For some, you might simply ask, 'Do you want to opt-in? Click here.' Others might need to be taken through a wizard to make the best decision. That wizard might include videos or a brochure, depending on how the person likes to digest information. The program asks the individual how they like to learn and gives them options."
The tool also can be integrated with the credit union's database to track member behavior after they have made their opt-in decisions, and notify the CU if a member needs a reminder about the benefits of overdraft protection. "So you can see this is a step forward for service," Giltner said. "If we do what's best for the member that will go a long way toward helping keep the revenues we'd had."
Giltner said cost for the Reg. E solution depends on the size of the credit union and its membership. "That could be as little a few thousand dollars to much higher if the credit union wants a lot of customization," Giltner said. "But the expense, I estimate, is about 10% to 15% of the price tag for credit unions to develop something like this on their own."
