High Touch and High Tech Fuel Reg E Opt-In Successes
o Reg E deadline to get new members to opt-in to overdraft services for debit card and ATM transactions when into effect on July 1. The deadline for existing members is Aug. 15.
o Ventura County CU has an opt-in rate of 95% from using a variety of methods to reach out to members. The most effect being in-branch communication.
o CO-OP Financial Services is offering its member center as a resource for credit unions to use for inbound and outbound calling to get members to opt-in.
o Washington State Employees Credit Union has a success rate of 97% with its staff-developed online solution. The credit union also cut costs by opting to create an online service.
Credit unions are scrambling to get members to opt-in to overdraft or courtesy pay programs by the Aug. 15 deadline in order to retain noninterest income.
The new requirements, called Regulation E, passed last November forced financial institutions to make sure that new customers opt-in for overdraft or courtesy pay programs for debit card and ATM transactions starting on July 1. They have until Aug. 15 to get existing customers to opt-in.
Ventura County Credit Union in Ventura, Calif., is aiming to get 17,000 of its 25,000 members to opt-in to its courtesy pay program by the August deadline.
So far the credit union has reached 60% of its goal with an opt-in rate of 95%. It started to reach out to members in April through e-blasts, mailing inserts, website banners, in-branch merchandising and communication through branches and the call center.
"The most important thing was that we started early," said Gavin Bradley, vice president of member service. "We started strategizing last year and have been having weekly meetings since January."
The most effective method for the credit union has been speaking to customers as they come into the branch. All staff members were trained on how to handle different questions and scenarios when explaining the new opt-in requirements to members. The credit union also sets monthly company-wide goals and incentives for employees who meet those goals. Employees hit the target two months in a row.
The credit union's IT team set up a notification system so that when frontline employees access a member's account, they can see if he or she has decided whether to opt-in or opt-out yet. The system also offers employees tips on how to ask members to opt-in.
"This deals with the service issue of having to ask members over and over again and it makes it easier on the staff to have that information in front of them," said Bert Herrera, vice president of IT.
Herrera added that his team is also trying to develop a system to give members the option to opt-in at the ATM to reach them at the point of need.
The credit union is currently on track to reach its goal of 17,000 by the deadline. The members who have chosen not to opt-in, Bradley said, explained that they never use courtesy pay and don't see the need for it. But the majority of members, he said, like things the way they are and are happy with keeping the service as long as it isn't being changed.
"We've definitely used all avenues to reach out to members and we feel that has been effective," Bradley added.
CO-OP Financial Services has been helping its credit union clients reach out to members through its outbound and inbound calling services.
Mark Chatfield, chief operating officer of the CUSO's member center, said that when a member calls to complete a transaction, employees at the call center expand the call to explain the opt-in requirements and prompt the member to make a decision.
Chatfield said one credit union that recently signed up for the service is averaging 600 opt-ins a week, which comes to 150 opt-ins a day.
"We're seeing strong adoption," he said. "A lot of members get the letter in the mail from the credit union but just haven't had the time to go and opt-in. Every opportunity to interact with the member is a chance to explain it and get them to opt-in."
Chatfield said that like Ventura County, most credit unions are taking a multi-tiered approach. They send out two campaigns to reach members, and if that doesn't work, they can use the CUSO's calling service.
For outbound calls, CO-OP will get a list from the credit union of members to contact and will reach out on the credit union's behalf. If a member does decide to opt-in, CO-OP then tells the credit union so it can follow up and complete the process.
Chatfield said credit unions have welcomed the service as an alternative to hiring temps to make the outbound calls.
"Credit unions understand the impact on the financial side, the difficulty members are having financially and the need for the service," he said. "It is important to have that conversation now because it saves the credit union from having to have a difficult conversation later when an overdraft is made and a transaction is denied."
For Washington State Employees Credit Union in Olympia, notifying members of the opt-in requirement was so important that it created a team last December to develop an online solution to the problem.
The credit union's "Life Happens Team" found that 72% of its members are also online banking users, so it decided to create an online system to get members to opt-in or out of the service. So far the credit union has an opt-in rate of 97%.
In addition to the online solution, the team created a mail solution with a bar code that employees could easily scan when the member returns the form with his or her decision.
For the online solution, the credit union worked with technology provider Access Softek to build the specifics.
When a Washington State member logs into his or her online banking account, a screen prompt comes up explaining the change and giving the member the choice to opt-in, opt-out or decide later. The credit union limited the number of times the member can request to be asked again to 50.
The credit union also had the option to change the message at any time. DLou Stewart, vice president of support services, said having that option was very important.
"After we had time to think we changed some of the wording in the message to explain the change better and it made a big difference," she said. "It doesn't sound like a lot, but it was seven months of hard work to put it together."
Stewart said the online solution is even helping the credit union secure opt-ins from members who didn't use the service before.
For the few who decide to opt-out, the credit union sends a follow-up letter to remind them of what will happen on Aug. 15, Stewart said.
In preparation, the credit union has also added a new service to its overdraft program. While in the past members could only connect their savings account to a checking account or line of credit in case of an overdraft, they can now choose to use a Visa card, though few have chosen that option so far, Stewart said.
Thanks to the online solution, the project will come in way under budget, she said. The credit union had originally budgeted for the possibility of having to hire staff to make outbound calls, but the high number of active online users among its membership prompted it to rule out that strategy.
If any other regulatory changes come up down the line that require members to opt-in, Stewart said the credit union can adapt the solution to be used again.