Is Your Overdraft Program a Black Box? Ask Yourself These 10 Questions

Do you really understand how your overdraft management program calculates overdraft limits?

It shouldn’t be a mystery.

Once data goes into your system and produces an overdraft limit, you should be able to clearly explain to your examiners how that limit was determined. Further, if you understand the specific factors, trends, and overrides that determine the overdraft limit, you’ll be able to customize your overdraft program to provide superior service to your account holders.

Overdraft programs can benefit from the wealth of information you already have, such as consumer metrics, overdraft habits, and trends, and you should be able to easily access that data to make informed decisions about managing your overdraft program.

Unfortunately, many overdraft programs provide only pre-configured reports and charge extra for special queries, limiting your knowledge of the overall program. They also often use pre-configured settings to determine overdraft limits, which remain hidden from the financial institution. That makes your overdraft program a black box.

With today’s focus on fairness in overdraft programs, banks and credit unions need a system that manages risk appropriately for both the financial institution and the account holder, while ensuring overdraft limits are reasonable so consumers don’t end up in an overdraft hole they can’t recover from.

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This white paper is brought to you by CSI