Sheshunoff | Bank Consulting Firm in Austin, Texas

As the refinancing boom winds down, many banks are seeing a significant reduction in a major source of revenue. BankNewport, a $900 million bank located in Newport, Rhode Island is no different. As the oldest mutual savings bank in the country, they have years of experience in how to turn market challenges into profitable opportunities.

"Just like most banks these days, we are experiencing compressed margins and declining income. To improve our overall revenue we looked at numerous alternative fee structures and service charge scenarios, but we lacked any real opportunity to raise fees," said Bob Maddock, EVP of Community Banking.

As a participant in the CEO Affiliation Program, Bob discovered many of his peers in the Program were generating fee income and improving customer relations by offering overdraft protection programs. Delivering superior customer service and improving the bank's bottom-line was a top priority for Bob. However, he was unsure if offering an overdraft program would be perceived as taking advantage of financially imprudent customers.

"I've heard both the advantages and concerns of overdraft protection programs. Once I finally got the real set of facts, I knew that a properly implemented program could benefit both our customers and the bank. That's when we decided to seriously investigate various overdraft programs," said Bob.

The Right Approach to Effectively, Fairly and Profitably Meet Customer Needs

Bob knew that offering an overdraft program was a major decision for the bank. The volume of work to process each NSF item was too burdensome and needed to be streamlined. Finding the best program was just the tip of the iceberg. A special steering committee was formed to review several overdraft protection programs. They began with an in-depth interview with each vendor, evaluated their presentations, reviewed each program's compliance and software strategy, and analyzed the potential financial projections.

"After evaluating each vendor presentation and the revenues they projected, our team felt that Sheshunoff Management's approach to overdraft protection fit our needs best," Bob explained. "SC+T offered a superior product hands down. So many factors came into play when we decided to go with their ABA endorsed Platinum Overdraft™ program. The program takes a conservative approach to projecting NSF income. The software is completely comprehensive and they even have a partnership with Fiserv SourceOne, our core system. SC+T did their homework when it came to covering compliance concerns, and they bring decades of best practices from their extensive consulting experience to our bank. SC+T will be around in years to come whenever we need them," said Bob.

Smooth Implementation

The first kick-off meetings took place in July. SC+T' engagement team worked hand-in-hand with the bank's steering committee all the way through the project to ensure that specific timelines were met and all questions were addressed. SC+T also helped the bank develop customized scripts for telephone conversations and auto-generated letters.

"Since the inception of our partnership, Sheshunoff Management Services and Fiserv SourceOne have worked closely together to establish a standardized Overdraft Courtesy program allowing for a seamless installation for our mutual clients," said Holly Martin, Fiserv Customer Service Team Leader. "BankNewport and our organizations worked very well together allowing for a successful implementation."

The implementation was a four month process that consisted of project due dates, weekly conference calls, and rigorous testing. It was a big task, but the committee knew the end results would far out weigh the work involved.

A Winning Strategy

Overdraft Honor was up and running by October. Within a few short months the bank started seeing significant bottom line results and the call centers were receiving positive responses from customers.

"The branches are delighted since the program has been implemented," said Bob. "It has significantly reduced item processing time. SC+T' overdraft program helps with all communication, letter and email writing, and phone scripts. It is an efficient program that makes deciding which accounts to cover easier and more consistent."

Recently, the bank had their annual regulatory exam. The regulators wanted to make sure BankNewport did their due diligence when finding a vendor. The exam went well and Bob was pleased that no concerns or issues were expressed. "The decision to go with SC+T' Platinum Overdraft was absolutely the right one," said Bob. "I was conservative in my estimate of a 30% increase in NSF income, but the program has already exceeded my expectations. I anticipate we will generate approximately $400,000 in additional fee income this year without having to raise any fees. Their support, extensive knowledge and conservative approach gave us the comfort and confidence level we needed."