Hoosier Banker 41 each new customer as a marginal investment that can spin off multiples in revenue. While not all customers drive the same level of fee income, it is important to create and grow primary financial institute relationships. Data from analyzing millions of core banking relationships over many years indicate that, for 73 percent of customers, the checking account is the foundation of the relationship, creating opportunities to provide additional products and services. Understand Risk - Remove Ineffective Filters Most financial institutions use some type of screening service during the account-opening process, but they need to understand that these services report only negative information, which is rarely updated. Client data consistently shows these systems are not doing what banks think they are doing: reducing fraud. They are instead reducing opportunities to grow fee income by turning away customers who value overdraft services. What other filters are you using? • Do you require a spouse to be present to open a checking account? If yes, you need a better process for adding joint signers after account opening. • Credit scoring? Stop it. There is no viable reason to evaluate a credit score prior to opening a checking account. • How many forms of ID do you require to establish a relationship? Review your current procedure, as it may be exceeding what you need in order to be in compliance. Think through why your bank is saying no today, and develop strategies to say yes more frequently. Review OD/NSF Services Policies Provide everyone with up to $100 of overdraft credit at account opening. People who value this service will not wait 30 or 60 days to utilize it. Be there when your new customer needs you. An analysis of the subsection of new customers who had overdrafts in the first 30 days found that, over a seven-month period, banks were seeing a 51 percent closure of accounts where the bank required a 30-day waiting period. Looking at banks, however, that paid overdrafts early within the first 30 days, there was only a 36 percent attrition rate. This result meant that 64 percent of the new customers were still active, and 79 percent of them continued to use overdraft services. Banking is a business of high fixed costs, with low marginal costs for the next Providing Creative Financing Solutions to Support Community Development Since 1993 We have an unwavering belief that all people deserve the opportunities provided by living in healthy communities. • $7 B in Community Impact • $3.7 B in Total Investments • 65,000 Jobs Created • 101,000 Homes Created for Families in Need By working closely with investors, developers and local stakeholders, we bring the expertise, capital and resources to markets in need and improve lives. advancing community cinnaire.com 844-4CINNAIRE customer and high additional revenues. Nearly every bank has tremendous capacity. In addition, client data continues to show more accounts equals more profitability and opportunity. The focus should be on growing core customers and making sound decisions in the process. HB
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