4 Things to do AFTER August 15th

Despite your best efforts, your customers and members will likely learn about the Reg. E changes while shopping on August 16th.

You've sent them letters, called them at home, talked to them at the teller line and delivered emails ... but don't assume that your customers are ready for the Reg. E changes on August 15th.

In a recent survey by the Federal Reserve, only 3 of 9 participants understood the changes after reading an opt-in notice.

So, from a communications standpoint, August 15 is not the finish ... but the starting line. What should you do now?

1. Proactively Communicate with Declined Customers ASAP

The faster you can recognize and act on a declined debit card, the better. If you can call ... call. If you can send an email, that's fine too. If you have to, send a letter. The goal is to communicate with the customer BEFORE they call you to complain.

It's important for your staff to assume that EVERY declined debit card is a surprise to the customer and that it hit them at the most inopportune time and when they had no cash on hand.

• Be empathetic but not apologetic
• Assure them that this new federal regulation has impacted ALL financial institutions
• Let them know that you made several attempts to educate them and that you ultimately acted on their wishes
• Provide them with an easy way to opt-in now to avoid future declined cards at point of sale or at the ATM

2. Prepare Your Front Line and Call Center

• Again, make sure your staff is empathetic and assumes the worst case scenario for the customer
• Make sure that the team understands the Reg. E basics
• Arm them with a list and/or samples of all of the Reg. E communications that customers have been sent over the last few months
• Provide them the tools to help your customers opt-in immediately to avoid future issues

3. Add Opt-in to Your On-boarding Program

It's never too late for a customer or member to opt-in. Make sure that you're communicating, with real-world examples, what can happen if you opt-in (fee for convenience) vs opt-out (possible decline at transaction).

4. Communicate Reg. E Changes to Merchants & SEGs

This regulation will impact local merchants as customers will be declined more at the point of transaction. Use this as an opportunity to build relationships with existing and prospective local merchants by providing free education on the regulation.

Take care,

Eric

937-426-9848

egagliano@MarketMatch.com

Post August 15th

OK, Bankers. On July 1, Reg E goes into effect with all new accounts.

It effects your existing accounts on August 15. And your customers/members need to respond to your opt-in request by August 11 to not be effected at the deadline.

So what then?

You have been frantically trying to educate and motivate your customers/members to get a response to your opt-in requests, but are you planning your post-August 15 strategy? Here are some tips:

Be Proactive:

Despite your best efforts to educate your audience, you'll be amazed by how many complaints you'll receive when transactions are declined.

Communicate with ALL "opt-out" customers who are declined immediately. Email is ideal because of it's speed, a phone call is also fast (but more time consuming), use snail mail is necessary - heck even smoke signal if that's all you have!

• Explain that you acted according to their wishes
• Explain that you've attempted several contacts to notify of change
• Provide an opportunity to opt-in to avoid future declines

Prepare the front line staff and call center

• Reiterate the Reg E basics to your staff (they must be comfortable communicating about the regulation)
• Arm your staff with a list of (better yet, samples of) all Reg E materials sent to customers
• Provide staff the tools to help customers opt-in for future transactions
• Provide the questions your staff must ask to be able to recommend opt-in vs. opt-out

Add Opt-in to your On-boarding program

• New account customers who decline opt-in at first should receive communication within their first 90 days with your bank/credit union
• Simply provide "real world" examples of what can happen with and without overdraft protection

Don't ignore your opt-out customers

• Cross-sell alternatives to overdraft like lines of credit or savings sweeps

This is a Commercial/SEG opportunity

• Educate local merchants about Reg E and it's likely effects (this can be an invitation-only on-site seminar and/or your Commercial/BD staff can go on the road with meaningful information)

- Stick to the basics - you're not talking to regulators or compliance people here!

- Make sure it's clear that this effects ALL institutions, not just yours

• Provide merchants with material to give to customers who are declined so they can contact you to opt-in

Roughly 27.4% of non-interest income comes from NSF/Courtesy Pay - nearly half of that from POS and ATM transactions. I've talked to several institutions with millions of dollars at stake and we're weeks away from the deadline.

Take care,

Eric

Reg E Realities

Reg E ... Everyone's in a panic ... it's the End of fee income as we know it ... all Eyes are on Marketing to make it better.

Sounds like the Y2K scare a bit, huh? My bet is it's probably as credible.

The reality is that Reg E will effect less than 50% of your existing NSF income (debit and ATM only). And the 50% that's at stake, is driven by about 12% of your customer-base.

The trick is to target those heavy overdraft users and make sure they opt-in.

From a communication stand-point you need to:

• Educate: Stick to the basics of: what an overdraft is and what will be different on Aug. 15 than today.
• Motivate: The customer can make an informed decision if you provide examples of how fees will apply and when a card will be declined. Do they want the chance to buy a $30 cup of coffee, or do they want their card declined in the busy grocery line?
• Get a Response: Make it easy. Include a form with self-address and indicia in your customer letter. Make sure your front line staff know your heavy users and are pushing for a response in the branch and when the customer calls in. In the last 2 weeks, divide your heavy user list between your personal bankers and have them make outbound calls (provide a script).

The more heavy-users you can get to opt-in during the next 3 months, the less impact this reg. will have on your institutions bottom line. Come January 1, we'll all look back and wonder what the big hoopla was all about.