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?"

And some suggesting to drive up that income that I thought were worth sharing: 

• Employee heroes: "You need heroes (sales staff) to tell their stories about how they are having success cross-selling products. They need to demonstrate their success so that others follow."  
• Drive the member-to-services ratio: "There is high correlation between fee income and the member-to-services ratio. Most credit unions have a member-to-services ratio of 2.4. The top credit unions in fee income have four or more products per member. The more accounts you have, the more opportunities for fee income."
• Create a service-selling culture: "Get the right product to the right member at the right time for the right reason."
• Get a master loan agreement: "Use Loanliner Plus from CUNA Mutual. It allows you to sign members right away and they can get a personal loan or car loan over the phone."
• Run a credit bureau report when members join: "Turn those members into borrowers immediately. And have an all-in-one application. Have a line at the bottom of the membership application that gives you the authority to run a credit bureau. Next time they call you for a loan, you're ready to go and don't have to go through a full-blown application."
• Make relationship pricing simple: "The biggest mistake credit unions make with relationship pricing is they make it too complicated and members do not understand it."

[Click here to read the full article - it's worth your time.]

I'm sort of under the impression that anyone who's eager to drive up their opt-ins already has a program in place, but I could be wrong. What's the hold up, folks? At the minimum, there should be banners in your eStatements, your online banking and your website to inform members about the Reg E changes. That real estate we talked about over on our Click.Connect.Communicate. blog? It's available now and it needs your attention. 

As for lack of monitoring, I'm curious - how much of your membership makes up how much of your fee income? I'm a big fan of targeted marketing, so if you know about a portion of your membership that's more inclined to need this protection, why aren't you addressing them directly? A number like 29% of members should make you breathe easier because it means you only have to drill into three of every ten members the benefits of overdraft protection. A lot easier to do than ten of ten, wouldn't you agree?

I recently read a stat that said 76% of online banking customers visited a branch in the last three months or so. That means it's still important to have your staff make a "compelling argument" for Reg E opt-ins. Make it the talking point, get teller mats and buttons, get a greeter to hand out info. Do what it takes to make your branches into information centers.

You're going to have to remember the finer points of sales in the next month, because that's what you're doing - selling an upgrade to an existing service. You can't force anyone to do anything, you're going to have to cajole them. It'll take a lot of doing, but it will help you keep that income flowing. After the regulation deadlines have passed, it's time to start asking yourself "what other products might benefit these members?" Your credit union was probably around before overdraft protection was a possibility or a need, so get back to basics - what can you offer members that's useful to the way they live their lives? One thing that Rowland says in his article that I think is very important to the continued vitality of CUs is offering "the right product to the right member at the right time for the right reason." It's time we started getting better at meeting needs with your services as opposed to just providing services. 

Comments are welcomed, as always. 

 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. We have added automated calls to our system to help you reach those 20-30% of members that make up over 90% of your overdraft income. We are offering FREE "Brown Bag Session" webinars to explain the system to credit unions in need of more overdraft opt-ins.

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. 

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