Reg E is not the Reg E is not the

EEnd of fee incomend of fee income

Reg

Reg

veryone

is in a panic

Reg

It’s the nd

of fee income

Reg

yesAll

are on Marketing to make it better!

Discussion Overview

The Reg E Reality

What Members Want

Getting the Message Across Targeting Communication Training

Measurement

After the Reg E Deadline

Reg E Reality

The Basics

Reg E goes into effect for new accounts on July 1 Existing accounts on August 15 Members must respond by August 11

Checking and ACH transactions not impacted

Only involves Debit/POS and ATM transactions

Members must opt in for Overdraft Service

The Basics

27.4% of CU non-interest income comes from NSF/Courtesy Pay

Source: Callahan & Associates’ Non-interest Income Survey

The remainder is from: Debit/Credit Card Interchange Lending Fees ATM Fees Etc.

The Basics

NSF Transactions by Transaction Type

Source: FDIC

Callahan & Associates estimate that roughly 56% of your

total Overdraft Revenue will be in flux.

The Basics

NSF Transactions by Transaction Type

Source: FDIC

The income at risk is driven by about 12% of your member-base

What do Members Want?

What do Members Want?

Members want complete transparency

Communication should be simple to understand

Options should be painfully obvious

Many members will gladly pay for convenience, but the choice must be

theirs.And the options must be clear.

So how do we get the message across?

Targeting

Your High Overdraft Users Are The Key

Remember, about 12% of your members drive this revenue.

Targeting beyond initial contact to all effected

Primary Target: All Members with 10+ ODs in last 12 months

Secondary Target: Model Primary Target Checking account balances What is the average low balance of the month

Everyone else

Option 1

Primary Target: All Members with 10+ ODs in last 12 months

Secondary Target: 1-10 ODs in last 12 months

Everyone else

Option 2

Targeting beyond initial contact to all effected

Communication

Educate

Motivate

Get a Response

Educate

Stick to the basics

What is an overdraft and what will be different on August 15

Motivate

Help the Member make an informed decision

Provide “real world” examples with and without opt in

Get a Response

Make it easy for the member to opt in

Always provide a means to act

Opt in form on Letter

Secure form on Website

Link to form from eMail

Phone & URL in

Statements

Tools to Front Line

Staff

Outbound Calls if

necessary

The Message

Intro LetterIntro Letter

EDUCATE: Reg E basics. Keep it simple

MOTIVATE: Real World Examples with and without opt in

GET A RESPONSE: Include the form with self-address and postage indicia. Make it easy.

Intro LetterIntro Letter

What is an Overdraft?

What are the standard Overdraft practices?

Real World Examples with and without opt in

Form with opt in AND opt out options

What fees will be charged if CU pays Overdraft?

I want it! How do I authorize this?

For a copy of this letter, email egagliano@MarketMatch.com

Other Media

Use this same messaging and methodology for all other forms of communication.

Educate

Motivate

Get a Response

Staff Training

Staff Training

EDUCATE Reg E basics Cheat Sheets Real World Examples

MOTIVATE Teach basics of fee income to CU bottom line Consider small incentives for ANY response Set goals and report weekly progress

GET A RESPONSE “Hit Lists” by Branch (High Overdraft Users) Buck Slips with real world examples Train to ask the right questions

Buck Slip Sample

Buck Slip Sample

Educate

That means…

Fee details

Get a response

Educate

That means…

How this is different

Get a response

The 7 Right Questions

It’s about being Consultative and taking an Advisory Approach.

The 7 Right Questions

1. Do you use debit cards frequently to make purchases because it’s convenient or you often do not have enough cash or other forms of payment with you?

The 7 Right Questions

2. Do you often get close to a zero balance on your account by the time you make a new deposit?

The 7 Right Questions

3. Are you often not sure of your account balance before making a purchase or cash withdrawal?

The 7 Right Questions

4. Do you often use your debit card when you are out of town and away from a XYZ Credit Union branch?

The 7 Right Questions

5. If you need to use your debit card for an emergency or unexpected purchase, would it be important for that transaction to be approved regardless of your account balance?

The 7 Right Questions

6. Though you do not anticipate taking your account to a negative balance, would you consider paying a fee for the convenience of completing a transaction if it took your account to a negative balance?

The 7 Right Questions

7. If you were trying to make a purchase for an amount of more than what is left in your account, would you rather pay a fee to avoid the embarrassment of being declined?

The 7 Right Answers

0-2 “Yes”No real need

to opt in

3-4 “Yes”Don’t plan to use but may

be nice

5-7 “Yes”Definitely

need to opt in

Measurement

MeasurementMeasurement

Set Goals: % of High Overdraft Users % of all others

Measure opt in AND total response if possible

Report weekly to management and staff

Total #

# of Opt ins

% opt ins

# of Opt outs

% opt

Outs

Total Reponse

s

% Response

sGoal

High Users

170 75 44.1%

30 17.6%

105 62.0% 90%

Medium Users

300 90 30.0%

80 26.7%

170 56.7% 80%

All D.C. Members

1,000 400 40.0%

300 30.0%

700 70.0% 70%

Sample ReportSample Report

After August 15

After August 15 After August 15

Proactively communicate with members that opted out when you decline their debit transaction Explain that you acted according to their wishes Provide an opportunity to opt in

Prepare the front line staff and call center Reiterate the Reg E basics Arm them with a list of all Reg E materials that

members received Provide them the tools to Opt members in for future

transactions

Add to On-Boarding Program

Despite your best efforts, you’ll be amazed by how many complaints you’ll receive when transactions are declined.

After August 15 After August 15

Cross sell / pre-qualify members for other options to protect against overdraft like Savings Sweeps.

What about those members that opt out?

This is an opportunityThis is an opportunity

Have “The Talk” with members How to create and keep a budget“Whether you opt in or opt out, there’s NEVER a fee if you

don’t overdraft. Don’t spend what you don’t have.”

Avoid debt “Just say ‘NO’ to credit cards.”

ID Theft“NEVER provide information to someone that contacts you.”

“eStatements are safer than paper statements.”

We can differentiate ourselves from our for-profit counterparts

This is an opportunityThis is an opportunity

For those companies that may decline cards at POS Educate about possible effects of Reg E (In-house

seminars)

When your members are declined at POS: Provide retailer with opt in tools (phone numbers,

online, etc.)

What about our commercial friends and SEGs?

Wrap UpWrap Up

Run EVERYTHING through compliance Keep ALL COMMUNICATION as simple as possible Provide the Member with smart options Educate … Motivate … Get a Response Use all of your touch points Measure and Report August 15 is only the beginning

Eric GaglianoEric Gagliano

MarketMatchMarketMatch

SVP, Client ManagementSVP, Client Management

egagliano@MarketMatch.comegagliano@MarketMatch.com

866-501-2233 x 106866-501-2233 x 106

Thank You