SAN DIEGO – Symitar Systems is now offering its clients a software add-on to its core system that will allow credit union members to enjoy the same bounced-check protections that bank customers have long had. In fact, Joe Gillen had credit unions in mind when he created Houston-based Pinnacle Financial Strategies about six years ago. "It's ironic. I had been running a share-draft processing operation on the Texas Gulf Coast for years and knew a lot of credit union presidents, and I always thought this was a solution to help them compete with the bank across the street," he said. "The original business plan and trademark were designed for credit unions, but when I tried to present it to one of them, I got a rude awakening," he recalled. The rude awakening was that NCUA rules didn't allow credit unions to advance money to members to cover account deficits without having a credit application on file. That rule, as part of the evolution of expanding credit union capabilities of the past decade or two, was rescinded in July 2000. Gillen went ahead with the project, however, and now more than 270 financial institutions are using his automated non-sufficient funds solution. No credit unions are on that list yet and Symitar is the first core processor to sign up to offer Pinnacle's Member Privilege program. The add-on, available to both in-house and service-bureau users of Symitar's core processing services, will be available in September. While not particularly technically challenging, implementation is a several-week process because of the inputting of parameters and other data. "It was a pretty easy decision for us," said Zandy Reinshagen, Symitar's director of product delivery. "We had several clients asking us for that functionality, and the Pinnacle product complements what we already were going to do with our core system to make that happen," she said. Pinnacle staffers will provide training, while "system-wise we'll be providing the mechanism to have the overdraft tolerance included in our draft-clearing process," Reinshagen said. The software will reside at the credit union and interface with any of five different databases common to the industry, from simple Access databases to sophisticated SQL systems, Gillen said. "The concept is to apply the process in a very systematic form instead of the individual member service representative having to apply the parameters and make the decisions," Gillen said. And while the Members Privilege program offers the potential of extra fee income, the core idea is to add another level of member service, the Pinnacle president said. He noted that credit unions already generally have lower NSF charges than banks and said Pinnacle's system "won't allow them to raise their existing NSF charges, only lower them." The system differs from standard overdraft protection, of course, because it isn't a loan and doesn't require an unsecured credit line, something out of reach for many credit union customers. It simply charges a fee with no interest involved, and is therefore an attractive alternative to payday lenders and "that endless cycle of debt," Gillen said. "This requires no credit application. Members don't even have to ask for it. They'll simply be given an option to opt out," he said. The Members Privilege system uses technology to both provide better member service and help level the playing field with banks, thrifts, insurance companies, brokerage houses and others in the growing field of financial services competitors, Gillen said. "I think credit unions of all financial institutions are in the best position, with a very bright future that gets brighter by the day," he said. "Their entire purpose for existence is focused around the member, while most financial institutions outside the credit union movement are focused on their regulatory position . on `this is what we can do,' rather than `this is what our members want,' " he said. As credit unions continue to expand their fields of membership, NSF programs like this will be another way for them to compete for consumers and retain their loyalty, Gillen said. -

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