Reg E Opt-Ins, Part 2: Compelling Arguments

by Ron Daly 

Our last post walked through some of the headaches associated with Reg E opt-in programs at credit unions. Members are reportedly planning to throw away their opt-in forms and not bother with overdraft protection, and there's really not much we can do other than make a compelling argument as to why members should enroll.

An article from CU Journal from the 17th of this month has advice from Rory Rowland of Rowland Consulting. I thought some of it was worth sharing with you.

Some mistakes that Rowland says CUs are making: 

• Waiting to see what happens: "This is not a healthy strategy. Get a plan of action. Place an (opt-in) banner message on your website to encourage people to opt in. When members overdraw, send them and e-mail and tell them about the new regulation and that they need to opt in. If they are in the top 29% of your abusers, call them." 
• Lack of monitoring: "You need to know how much income you are making from courtesy checking-20% to 29% of your members give you 90% of your NSF income. Target those top 29% and get them to opt in before July 1."
• Front-line staff have no idea what they are doing: "Do you have talking points written for front-line staff to tell members how to opt in?"

Waiting It Out, or Just Not Getting On Board?

by Ron Daly

There's an old joke about a guy who lives at the foot of a volcano. The volcano erupts, spilling lava toward his home and his village. His neighbors hop in their car and say "Our car is fast, we can get away in time. Come with us." 

"No," says the man, "God will come for me and save me from the lava."

Later on, the lava has reached his porch and burned off the front steps and the siding. The man climbs to the second floor of his house and a military tank full of survivors rolls by and says "Sir, jump onto the tank. We can't get burned and we'll keep you safe."

"No," says the man, "God will come for me and save me from the lava."

The lava gets deeper, and the house starts to dissolve. The man must climb up to his roof. A helicopter drops him a rope ladder, saying "Climb up! Climb up!"

"No," says the man, "God will come for me and save me from the lava."

The man gets swallowed by the lava, and is reduced to ash.

He gets to Heaven and talks to God. "I thought you'd save me!" the man said to the Almighty.

God looked confused. "I sent a car, a tank, and then a helicopter - what more do you WANT from me?!?"

Which reminds me - Reg E is still an issue. 

Get with the program! 

Reg E is an issue that threatens everyone in the financial services industry - it's going to affect income and capital, it's going to affect member relationships, and it's going to affect the bottom line. Credit unions across the country are scrambling to try and find a way to get folks "opted in" before the deadline on August 15 (yes, there's a July 1 deadline on new members, but August 15 affects everyone). There's a lot of worry, as some credit unions/banks just can't do without the fee income. And when the next step is a choice that hinges on the members and customers, the results could be a blessing or a curse. 

Blessing: the income still exists, members just have to opt-in to overdraft protection (or courtesy pay, whichever you prefer). Which means they'll get their way at POS and pay for it later, and the CU can collect on the error.

Curse: everyone is automatically opted out after August, and that's going to mean a big hit on income. Whether they come back to overdraft protection or not is at their discretion. 

Everyone knows that Bank of America announced they were doing away with overdraft fees and came off looking like a good guy as a result. But they're still offering overdraft protection, they're just making it so that it takes the difference out of your savings or credit account and charging a $10 fee for it, according to this NYTimes.com article. When every headline related to that story says "Bank of America does away with overdraft fees" and you're asking people to CHOOSE to be assessed those fees, how do you win? 

What's worse, according to this CU Journal article, is that members are planning to throw out their opt-in forms when they get them, and somewhat more disturbingly: 

The findings should be noted by credit unions and banks, said [Brian] Beach, [CEO of ACTON Marketing], because those customers will not have overdraft protection when they overdraft, will start to have their retail purchases denied and most likely will move their accounts elsewhere. “The psychology of overdraft users is such that they are extremely averse to having their debit card transactions denied at retail,” said Beach. “If they begin to be denied, they will not just re-opt-in with their current bank or credit union. Most likely they will cut and run.”

So, here's the question: how obvious is your car, your tank, your helicopter? Will a person who is at risk to use this service you've provided to them for years know what happened when their transaction is declined? Or are they just going to blame you and leave for a bank? In a new, debt-conscious America, will people want the chance to go over the limit at all? 

The lava's on its way. Get as many folks on board as you can. And if they get "burned", remind them - they had (and still have) a chance.

Your feedback is always welcome. 

EDITOR'S NOTE: 

 Full disclosure time. DigitalMailer is offering a Reg E Opt-In package that uses email and secure online forms/databases to record member opt-ins and encourage more sign-ups. 

Email us at info@digitalmailer.com, let us do a walk-through of the system for you, and if you tell us you're a Soapbox reader, we'll give you a discount on the system. 

This is your call to action - get started now. 

Tired of the Bank? CBS Says "Dump That Sucker"

by Ron Daly

We've been talking about the "Move Your Money" movement for a while now. CBS's EconWatch published a story earlier this week titled "Hate Your Bank? Dump That Sucker For a Credit Union!" It came with the video below and spelled out the differences between banks and CUs. [Note -- email readers, please click over to the website to watch the video.]

We've had quite a few of these in 2010. Do you find your credit union gets more memberships/inquiries because of them? What do you wish these videos would say? Are videos like these something you share with members via email or your website, like TDECU does on their home page? 

Tell us all about it in the comment section. 

Anthony Demangone of NAFCU: The 7 Deadly Questions

Anthony Demangone is the Director of Regulatory Compliance at NAFCU. You can read his thoughts on regulation, compliance, NAFCU and CUs at large over at the NAFCU Compliance Blog, and you can regularly hear him talk about current issues in credit unions over at...well, the Current Issues in Credit Unions podcast over at That Credit Union Blog. 

Recently, Anthony wrote an interesting article for NAFCU's magazine, The Federal Credit Union. I want every one of our regular readers to pop over to Anthony's blog and read the article in full. It's great food for thought and comes with this disclaimer: 

Editor's note: This has been a tough stretch for credit union compliance officers. Regulation Z, HVCC, the CARD Act, the FACT Act, Truth in Savings, Regulation E, MDIA, and HOEPA have all ganged up to throw myriads of new requirements at credit unions. If you want to get the most out of your compliance officers and preserve their sanity, please pass this article around to your non-compliance staff.

Please, give the article a read and let Anthony know what you think. We'll take your comments, too, if you prefer. 

Compliance officers get questions.  That is a fact of life.  We get big questions and small ones.  Complicated questions, and simple ones.  Some questions, though, give us heartburn.  These questions cause us to close our door and bang our head against the wall.  

In a perfect world, these questions wouldn’t exist. The world, however, is not perfect.  We know that.  All compliance officers want is to hold these questions to a minimum.

The following list shows what to avoid when asking a compliance officer a question.  Whenever possible.  When that is not possible, go ahead and ask. But come bearing gifts.  Or antacid.

1. "I heard it from a friend who heard it from a friend…" questions.  These questions often start with the phrase, “I was at a conference, and I heard that we have to do (insert issue).”  Ah, the wild goose chase.  Compliance officers do appreciate it when other credit union employees come to them with new compliance information...

2. Last-minute contract reviews. Often, these questions look like the following: Can you look at this contract?  We need to have it signed today, and we want to make sure that everything is OK...

3. Oversimplifying questions.  Some questions might seem simple, such as this one: What disclosures do we need to have on this (insert document, such as periodic statement, late notice, etc.)? That question is not simple.  It is fairly complicated. What makes this question so troublesome is that the answer turns on many, many variables...

4. Conference call questions.  (The phone rings in a compliance officer’s office.)  Hello. We’re in the middle of a meeting, and a question has come up regarding the Home Valuation Code of Conduct.  Can we do (insert question)? Don’t worry…we’ll stay on the line and wait for your answer...

5. Open-ended questions. These questions might look like this one: What do we need to know about this (insert subject)?...

6. The “onion” question.  I call this type of question the onion, because it involves layers.  A compliance officer gets a question, and they answer it.  But then the person comes back with additional details...

7. The “sneaky” question.  Often, credit union employees have disagreements concerning whether some action is permissible.  Sometimes, one of the employees involved in the disagreement will try to use a compliance offer to buttress his or her argument...

Click here to visit the NAFCU Compliance Blog and read the full article!

Bank Customers Are Mad As Hell, But What Else Is There?

by Ron Daly 

An article caught my eye on Monday about rallies against banks in major cities around the country. Citizens angry at big banks (with a particular focus on Goldman Sachs, still the whipping boy for public ire) mounted protests in places such as Charlotte, NC, New York City and Washington, D.C. One particularly disturbing protest involves a giant, inflatable banker chewing up people and spitting them out - as in the following video. 

Man, that's weird. 

Anyway, it made me wonder about how credit unions are doing with drawing new members away from their old banks.As a company that works with over 180 credit unions across the country, we know that there are a handful of credit unions willing to poke at the bruise left by the big banks to get new member's attention. 

Where Anger Fails, Marketing Succeeds

It seems like every six weeks, we get a new story about the "big banks" that drives people crazy, but we rarely see an "action step" coming from the other side.

Two opinions to consider when it comes to working with "Bank Rage" - that of Paul Lucas of Paul J Lucas consulting, and that of Ron Shevlin at Aite Group. 

In the April 12 issue of the CU Journal, Paul Lucas outlined three major action items for credit unions looking to sway the opinion of the non-member. 

1. Marketing Core Loan Products - That loan capital is capital you can count on, and do more with in the long run. 
2. Cross Sell Checking with Direct Deposit - says Lucas, "Cross selling at every opportunity is the hallmark of a smart, competitive credit union."
3. Keep Your Promises - "Knowing a member's name when she walks in the front door is not service. Handling her transactions with speed and accuracy is service." 

And speaking of service...I read a very thoughtful article on Marketing Tea Party, the new blog by Ron Shevlin. Titled "Moving His Money", the post tells the tale of a man with a long relationship with his community bank that, because of a series of unfortunate transactions, decides to move from a little bank TO a big bank. Says Shevlin in the post-story commentary: 

"This isn't a good sign for those marketers. The populist anti-big bank sentiment isn’t going to last forever. America loves to find new villains to crucify. Knowing when to jump off the #moveyourmoney wave is a decision that needs to be made."

My Rant: Why do credit unions always fight over the small piece of the pie left to them? Let's quit marketing against each other, continually moving our 6% market share between credit unions and let's figure out a way to collectively go after the 94% opportunity share out there and move it to credit unions before it's too late. 

Comments?