As the industry consolidates, merging banks can retain customers with the help of a new software product that simplifies deposit insurance calculations.
Great Pond Technologies Inc., Augusta, Maine, has designed Fed Dep Ins Calc to help banks structure their customers' deposits so as much money as possible is insured. It also includes a training program to help bankers understand the often-confusing rules better.
"Many people have misconceptions about these rules," said Melvin W. Morrison, executive vice president at Border Trust Co. in South China, Maine, who uses the product. "This is a good way to help bankers get the right answer."
When banks combine, deposits can lose insurance because a customer may have funds in both banks, totaling more than the $100,000 limit per account. In such cases, customers sometimes choose to take their accounts to other banks, believing a single bank cannot protect all of their funds.
With Fed Dep Ins Calc, a banker enters the type, number, and dollar amounts for each account a customer holds, along with whether it is held individually or jointly. Using those data, the software totals how much of a person's money can be insured and gives a printout describing the results.
Great Pond president Ronald W. Smith said the software also can be used to recommend ways the customer can move funds among accounts to obtain more coverage.
For example, a husband and wife, each with their own account plus one held jointly, could have $300,000 in insured funds between them.
The Federal Deposit Insurance Corp. tried to clarify its deposit insurance coverage rules in 1993 with a 16-page, question-and-answer pamphlet detailing how much of a customer's money could be insured in various scenarios. But the agency's explanation left some people scratching their heads.
"Right now these rules are confusing," said Wayne Barnes, a consultant at Professional Bank Services, Louisville, Ky. "Bankers get confused about how a couple or a family could structure its funds to get the most coverage."
The training portion of the product can help alleviate that confusion, according to R. Stephen Bolles, Great Pond's marketing director. The product quizzes the banker on the rules and then gives detailed answers.
By becoming more familiar with the rules, bankers can gain confidence that they are giving the customer accurate information, Mr. Bolles said.