The good news is that there are regulator-friendly steps that credit unions can take to help their members, including deploying some innovative technology solutions designed specifically to help address this issue. These include:

Faster approvals on small-dollar loans. Traditionally, getting a loan can take a long time with a lot of paperwork. That applies to loans of $500,000 down to $500. But new technologies, including some powered by artificial intelligence, have allowed for quick applications, decisions and funding of smaller-dollar loans, and this is even integrated into some online banking systems. These loans help members manage cash flow in a pinch.
Better communication tools. When an account is overdrawn, financial institutions are required to notify every customer, consistently. Many credit unions still send letters to members to let them know that their account had an NSF – but a letter arrives days after the incident happened. As witnessed with BofA, a lot of transactions, and repeat attempted transactions, can happen in a just few days, resulting in compounding fees for consumers and businesses. Rapid communication via text and/or email on what's happening with the account can not only help with visibility, but also increase member trust and long-term loyalty.
Putting transparency and control into the hands of account holders. Typically, members have had limited insight and knowledge of their options in an overdraft situation, which can result in high fees and high frustration levels. By providing account holders with increased fee transparency, and the controls to take action on their account to resolve transactions and quickly identify fraud, credit unions can provide members a path forward in a way that aligns with their own financial situation. Regulators have never complained about providing too much transparency and control to account holders. These kinds of moves usually result in a positive outcome for all parties: The consumer, the financial institution – and its regulators.

As a side benefit of evaluating new technologies such as these, credit union executives may discover outdated operational processes and proactively make member-friendly improvements.

Instant Insights /

Bank of America Teaches a $250 Million Lesson

Related Stories

Recommended For You