It is Time FIs Segment the Consumer Loan and OD Liquidity Market

Currently, many FIs primarily focus on overdraft programs and opt in for all, thinking overdraft revenue is their only profitable approach to serving the small funding needs of customers.  Current overdraft programs are designed to serve heavy users but not all customer segments. Programs bump heads with regulators and consumer advocates about how overdrafts may affect some customers. But many profitable segments exist beyond overdraft services for small dollar loans and liquidity, and ways exist today to better serve customer segments using OD services. Digital technology makes delivery of multiple loan and overdraft services efficient and profitable on a mobile device for specific market segments.

We segment loan and liquidity services into six segments below, and match up options like the Reg Z traditional loan, or a loan that does not require a credit score, or Mobile-$0verdraft® and other overdraft or liquidity services like account transfers.

For example:

• What about customer segments who would rather have a $500 loan at a safe 15% interest and the guarantee of no overdraft fees ever for a return-all checking account rather than a $500 overdraft limit.  Users of overdraft services would not want a return-all account, but many households earning less than $50k would love a 15% loan and no overdraft fees ever.  FIs can earn $280 per account with this segment strategy offering safe loans and accounts.

• What about customers that would like to easily occasionally use their debit card to create an overdraft, but not fully opt in under Reg E to avoid getting unplanned fees.  Is there not a service FIs can provide simply and compliantly to these consumers?  Our clients can have one.

• And for those that never want to pay overdraft fees and opt out, why is it not as easy today with digital technology to set up a Reg Z loan as it is to overdraft.  In fact, it is, and structures allow it to be highly profitable.  For customers who want opt out, let them with profitable loans strategies can meet their needs.

For more information of how our digital suite of loan and liquidity services can serve and segment your customers, visit us a www.rcgiltner.com.