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May 19, 2010

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. 


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. 


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