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Jeff Harper, President, BSG Financial Group

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Three Top Challenges Facing Financial Institutions (as told to us by those who know)

Posted by Jeff Harper, President, BSG Financial Group on Nov 7, 2016 8:00:00 AM

Like many financial institution executives this time of year, we at BSG Financial Group have recently participated in numerous industry trade shows and conferences.

In a two-month period beginning in August, we exhibited at or participated in a plethora of conferences, including those sponsored by the Financial Managers Society (FMS), Association for Financial Technology (AFT), Virginia Association of Community Banks, the Bank CEO Network Conference, Jack Henry Banking... to name a few.

Attending these events is very important to us, as they connect us with customers and potential customers alike. More importantly, they give us an opportunity to learn first-hand the most pressing challenges for financial institutions, while validating and ensuring that we offer the programs and services to effectively address these concerns.

Listed below are three of the top challenges that financial institutions face—as told to us by financial executives at these recent conferencesas well as our responses/solutions:

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Topics: Fee Income, Financial Institutions, Strategy, Profitability

The Whole Story About Overdraft Matrix Systems

Posted by Jeff Harper, President, BSG Financial Group on Sep 26, 2016 10:58:16 AM

An August 17, 2016 article entitled, “Disparate impact studies especially tough on dynamic matrix systems,” caught our attention. The article, in our opinion, attempted to cast a negative light on “overdraft matrix systems” or overdraft processes that can cause a customer’s discretionary overdraft limit to change from time-to-time based on the risk profile of the customer. 

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Topics: Dynamic Limits, Courtesy Overdraft, CFPB, Dynamic Matrix System, Overdraft Matrix

Your Account Holders Are Not Waiting for a CFPB Decision on Overdrafts. Why Are You?

Posted by Jeff Harper, President, BSG Financial Group on Sep 6, 2016 5:46:58 PM

The current state of the overdraft industry can be summed up in one word, “WAITING.” 

BSG Financial Group hears from some institutions that they are delaying offering an overdraft privilege program until the Consumer Financial Protection Bureau (CFPB) decides how financial institutions must manage consumer and business overdrafts.

This waiting reminds us of a quotation from the novelist Morris West who wrote, “If you spend your whole life waiting for the storm, you'll never enjoy the sunshine.” 

We—banks, credit unions and service providers—have all been waiting for more than two years for the regulatory agency to finally announce its conclusions. Now it looks like mid-2018 before any material changes might occur. And even then, the changes recommended by Pew Charitable Trust (hired by the CFPB to handle the research aspects of their regulatory review) seem rather minor: revised disclosures, reasonable fees, and standard posting order.

In the meantime… while we wait, your account holders seek short-term liquidity elsewhere and your bottom line pays the price.

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Topics: Overdraft, CFPB, overdraft privilege

Overdraft Privilege Myths Debunked

Posted by Jeff Harper, President, BSG Financial Group on Aug 16, 2016 11:59:28 AM

Most financial institutions acknowledge that overdraft fees represent a remarkable source of non-interest income. What may not be clear to some is the fact that overdraft privilege programs are more than just a source of revenue. Recent data suggests that the service offers as much of a benefit to the consumers who use it as it does to the institutions that provide it. 

Consumer Financial Protection Bureau (CFPB) director Richard Cordray has said on many occasions that his agency is not looking to do away with overdraft services (but is instead leaning toward minor changes in how institutions manage the programs). As such, it doesn't appear overdraft programs are going away. 

So how should community institutions view overdraft privilege in the current environment?

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege

Dynamic vs. fixed overdraft limits: And the winner is…?

Posted by Jeff Harper, President, BSG Financial Group on Jun 21, 2016 10:25:07 AM

In this corner… the Contender, Fixed Limits, challenging the formidable upstart, Dynamic Overdraft Limits….

Indeed it may seem like you’re in a boxing match when deciding which type of overdraft limits you will offer in your automated discretionary overdraft program.

Both types of limit-setting strategies enable your institution to automatically allow or disallow overdrafts for those account holders who utilize your service.

The Contender:
FIXED LIMITS provide a “one-size-fits-all” approach that is determined at account opening. All account holders who qualify to be in the program, receive the same overdraft limit; OR the limit varies based on account type (i.e., $550 for Free Checking and $750 for Premier Checking).

The Challenger:
DYNAMIC LIMITS are calculated automatically based on a myriad of account holder data points, including specific deposit and overdraft activity, related balances and more. This data enables your institution to establish a risk profile for each account and assign individualized overdraft limits based on the account holder’s ability to repay the overdraft and fees at any given time.

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Topics: Overdraft Compliance, Overdraft Management, Dynamic Overdraft Limits

Community Banks Can 'Up Their Game' With the Right Digital Lending Partner

Posted by Jeff Harper, President, BSG Financial Group on May 18, 2016 8:00:55 PM

American Banker published another article last week about the opportunities that exist for community banks to enter the digital lending space, which is now almost exclusively dominated by marketplace lenders, such as LendingClub and others.

Marketplace lenders are the online outlets that pair borrowers and lenders through the use of a digital platform without a traditional bank intermediary—often underwriting and delivering loans outside traditional bank debt capacity and coverage ratio underwriting and pricing. They are generally considered rivals to community banks, siphoning off customers who choose convenience over often high interest rates (some as high as 29%).

The article, entitled, "Marketplace Lending Was Just What Banks Needed" points out that, despite some recent bad publicity, marketplace lenders have succeeded in filling the needs of consumers who crave the convenience of being able to apply for a loan digitally and get funds quickly. Their focus on automating the small business lending process has helped them double their outstanding portfolio balances every year since 2000.

Their success has forced community banks to 'up their game' and become part of the digital revolution.

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Published article: Use the right overdraft provider to do the right thing

Posted by Jeff Harper, President, BSG Financial Group on Apr 12, 2016 7:00:00 AM

Published on CUInsight.com, April 8, 2016

I think we can agree that there are consumers who need short-term liquidity options. Among several recent studies, the Brookings Institution reveals that one-third of American households live paycheck to paycheck; and American Banker data cites that 54% of checking account customers are in poor financial health.

Financial institutions can provide a valued service by offering a compliant overdraft privilege program to help these individuals manage unexpected, ill-timed expenses. In fact, a recent study by Novantas said that 66% of overdrafts occur when consumers knew they have a low balance, but want the payment to go through anyway.

So how does your financial institution offer a cost-effective service without encouraging reckless behavior? A good place to start is to review how your third-party overdraft vendor is compensated, which can affect the way the program is viewed by regulators and how it is executed vis-a-vis account holders.

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Topics: Overdraft, Compliance, published articles

BSG Financial Group Announces the Addition of Business Development Executive Trevor Knott

Posted by Jeff Harper, President, BSG Financial Group on Mar 7, 2016 6:54:26 PM

We are pleased to announce the addition of Trevor Knott as Senior Vice President, Business Development, effective March 1, 2016.

Trevor will help us expand our footprint in the following states: Connecticut, Delaware, New Hampshire, New Jersey, New York, Rhode Island, Maine, Massachusetts and Vermont.

Trevor is a strategic marketing veteran who has spent much of his career developing and delivering products and services, as well as marketing and distribution programs for top-tier banks and suppliers to the banking industry. His focus at BSG Financial Group will be on generating new business in the northeast; forming strategic partnerships across the country; and advising corporate marketing activities.

Continue reading about Trevor.

 

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Is Overdraft Privilege Dead?

Posted by Jeff Harper, President, BSG Financial Group on Feb 23, 2016 5:49:35 AM

You might answer, 'Yes’ if you saw the headline, "CFPB Urges Banks to Ditch Overdraft Accounts," from an American Banker article published Feb 3, 2016.

However, if you read the entire article, you found that The Consumer Financial Protection Bureau (CFPB) director Richard Cordray was merely asking financial institutions—in a letter he sent to the nation's 25 largest retail banks—to consider providing products for consumers who cannot obtain checking services, and to "lower the bar" when it comes to screening them for those products.

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Topics: Courtesy Overdraft, Compliance, Overdraft Protection, CFPB, overdraft privilege

Article Roundup: (Positive) Overdraft Protection News

Posted by Jeff Harper, President, BSG Financial Group on Jan 13, 2016 11:21:57 AM

We're not sure if it's a trend or merely a coincidence, but there have been quite a few articles in the trades recently that paint overdraft protection in a more positive light than usual. We think it is beneficial to share these articles that substantiate our belief that overdraft protection programs are, in fact, helpful to many consumers in meeting short-term liquidity needs. Further, the majority of consumers who access overdraft privileges do so as the result of an informed and conscious decision. 

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Topics: Overdraft, News, Courtesy Overdraft, Overdraft Protection