One of the best ways to avoid crisis issues after a disaster is to be better prepared BEFORE a disaster. The following material, from FDIC, is good information to share with your customers about ways they can prepare beforehand. Effectively communicating these ideas to your customers can make all the difference in how well your institution is able to serve customers after a disaster:
The FDIC Offers Tips on Preparing Financially for a Natural Disaster or a Fire
Other topics in the latest FDIC Consumer News include personal payments by smartphone or mobile computer, plus solving mysteries of old bank accounts
|FOR IMMEDIATE RELEASE
September 7, 2011
Hurricane Irene, the earthquake that shook the East Coast and the deadly tornado that hit Joplin, Missouri are recent reminders that disasters rarely give advance warning and can happen anytime. That’s why it’s important for households to have a plan for protecting important assets and conducting day-to-day financial transactions in the event of an emergency. The Summer 2011 issue of FDIC Consumer News features tips on how to prepare financially for a natural disaster, a fire or another tragedy, especially one that requires people to evacuate their home and not return for days or weeks.
Other timely topics in the latest issue include what to know before signing up for person-to-person, or “P2P,” electronic payment services using a smartphone or mobile computer; how to solve mysteries of old bank accounts; and an update on new standards for and disclosures by mortgage loan professionals.
Here are examples of some of the consumer tips in the latest newsletter:
Preparing financially for the unexpected: The FDIC newsletter suggests that consumers:
- Anticipate what could go wrong by thinking about the most likely hazards for their community and periodically reviewing their insurance coverage;
- Consider services that can help access funds and manage finances away from home, such as direct deposit and banking by computer or smartphone;
- Have essential items in one or more emergency evacuation bags or boxes that are waterproof, easy to carry and kept secure; and
- Be on guard against fraudulent “charities” or “businesses” scheming to profit from the situation.
Making personal payments by mobile devices: As with any form of payment, understand the costs and potential risks of this increasingly common service from some banks and non-banks. Legal protections for P2P services may differ depending on whether the services are provided by a bank, and the security of the device should always be a concern.
Researching old bank accounts and, perhaps, recovering something valuable: A consumer who finds old account information should first determine whether the bank is open, closed or has merged with another bank. The FDIC’s Bank Find database at www2.fdic.gov/idasp/main_
Finding a mortgage loan originator: As a result of a 2008 law to enhance consumer protections and reduce fraud in the residential mortgage industry, a free, searchable database now provides useful information about all state-licensed and federally registered mortgage loan originators. In the future, the database will be expanded to include information about certain relevant disciplinary or enforcement actions.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information about financial matters, free of charge. The Summer 2011 edition can be read or printed at www.fdic.gov/consumers/
To find current and past issues of FDIC Consumer News, visitwww.fdic.gov/consumernews or request paper copies by contacting the FDIC’s Public Information Center toll-free at 1-877-275-3342, by e-mail email@example.com, or by writing to the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226.
There are two ways to subscribe to the quarterly FDIC Consumer News. To receive an e-mail about each new issue with links to stories, go towww.fdic.gov/about/
The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available. The publication may be reprinted in whole or in part without advance permission. Organizations also may link to or mention the FDIC Web site.
Automatic Renewal Clause – many contracts contain a provision whereby if notice is not given in advance (typically 180-365 days) the contract will automatically renew for some specified term. Even if you intend to renew with your current provider, notification under this clause will give you the flexibility to make a good decision on your time frame.
Early termination fees – especially since we are entering a period where we might begin to see more M&A activity, these fees should be identified and addressed, as they may be material to the purchase price of an institution. Typically, vendor contracts provide for substantial penalties, as much as 80% of the average monthly fees for the remaining term, etc. – you won’t be able to change how the contract reads today, but you’ll want to negotiate for better terms going forward with any vendor.
De-conversion fees. Should you choose, at the natural end of a contract, to move to another vendor, you’ll find that your current contract may be somewhat open ended (as in “blank check”) as to what your current vendor may charge you for deconversion assistance. Again, little can be done in your current contract, but you’ll want to negotiate for a reasonable, fixed fee in any new contract.
Core system contract and vendor negotiations
GLBA Risk Assessment for Operations and Technology
Teller Capture Vendor Assessment and Implementation Planning
Branding and Advertising Initiatives, including Internet/Social Media Strategies and specific product and service promotion
Remote Deposit Capture Implementation and Marketing Services
16: Graduate School of Banking, University of Wisconsin-Madison “Reinventing Your Bank’s Marketing Focus”
27: South Dakota Bankers Association Technology Conference, Sioux Falls
28: Wisconsin Bankers Association Technology Conference, The Dells
7: Washington Bankers Association Technology Conference, Seattle
Graduate School of Banking, University of Wisconsin-Madison, First Annual Technology
Trent’s Comments is published six times each year and provides insight into strategic topics facing financial institution executives. Please feel free to share this with your staff and colleagues.
Now that we have a ruling on debit interchange, I wanted to remind you that debit cards, used in place of checks, remain a significant advantage to the bank, apart from any interchange fees you receive. The transaction itself (especially if we look at average dollar transactions) is less expensive to process, and the long term impact of storage and retrieval (essentially an 80 to 100 byte record vs 25 to 50 thousand bytes for checks) is greatly reduced. While your interchange fees will drop, as a result of the cap on interchange, imposing fees for debit card use constitutes an economic barrier to acceptance that sends the wrong message to your customers who have already embraced debit cards. Due in part to costs, you may need to reduce or eliminate rewards programs associated with debit cards, but these are not the only driver of customer use of debit . . . convenience and purchase protection are equally important. In terms of incentives, take time to re-evaluate simple utilization incentives, perhaps partnering with merchants, that will serve to build more volume for your debit card program.
Long term, electronic transactions are the way to go, and you want to continue to foster that mentality. Let’s not overreact and destroy the benefits we’ve built with debit cards.