IS IT TIME TO REALIGN YOUR LEGACY CONSUMER LIQUIDITY STRATEGY? Yes — Now More Than Ever BY TIM BARRETT Executive DDA Strategies, CSI With rising consumer expectations, growing competition and ongoing economic uncertainty, banks can no longer rely on outdated, one-size-fits-all overdraft programs or legacy small-dollar loan offerings. Yet many institutions are still using ad hoc or legacy systems that lack transparency, adaptability and actionable insight. If your overdraft system assigns limits or manages old-school loan risk without your team understanding the logic behind those decisions — it is time to ask the tough questions. TODAY’S LANDSCAPE DEMANDS MORE Regulatory agencies like the CFPB, FDIC, OCC, state regulators and others are sharpening their focus on fairness, transparency and consistency in overdraft and liquidity practices. At the same time, customers expect financial institutions to deliver personalized and equitable service. Ask yourself: • Do we have a strategy to attract profitable consumers who seek new forms of liquidity? • Can we explain, defend and adjust our overdraft decisions in real time? • Is our approach helping customers stay banked — not driving them away? • Do we offer loan options underwritten by deposit behavior? • Do we understand who is recovering from overdraft use — and who is not? If your answer is “no,” you are not alone — but now’s the time to act. DATA IS ONLY POWERFUL WHEN IT IS ACTIONABLE Banks sit on enormous amounts of valuable data — deposit trends, transaction behaviors, fees and recovery rates. But if your system does not adapt to risk, only provides canned reports, charges for peer benchmarking or hides key logic behind “proprietary” algorithms, you are flying blind. Worse, if you are applying the same limit to all accounts, you’re missing critical indicators of risk — and opportunity. A modern Consumer Liquidity small-dollar loan and overdraft program should: • React to individual account behavior daily. • Adjust limits automatically based on real activity. • Identify high-risk accounts before losses occur. • Offset risk from either the loan or overdraft use. 12 The CommunityBanker
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