Service Charge Expansion

Updated June 27th 2012

This Recipe's Chef

Got ideas for new or different ingredients? The chef for this recipe is Dawn Moore.

Introduction

CU*BASE has many tools for generating credit union fee income, including many over-the-counter, interactive fees such as phone transfer fees, check and money order printing fees, and the like. (Read Fee Options with CU*BASE for more about these interactive fees.)

In addition, CU*BASE also has a very robust set of configurable programs for charging periodic Service Charges to member accounts. There are three types:

Minimum Balance Service Charges - Designed to encourage members to retain a minimum account balance by charging a monthly fee when the balance falls below the minimum.
Transaction Service Charges - Designed to offset the cost of member transaction processing by charging fees for certain type of transactions. These can also be set up as Transaction Rebates, where the member receives a credit for performing certain desired transaction types, such as using your credit union's lower-cost electronic services.
Account Service Charges - Designed to promote the value of a certain account type by charging a periodic fee just for maintaining the account.

The software is rich in the ability to mix and match service income concepts for new ways to earn revenue. All software is available to all CU*BASE clients free of charge, with just a nominal monthly processing fee for posting the charges to member accounts.

Project Overview

For the 2010 CEO School, we did a research project to document custom fee software we had written over the years for CUs – fees that CU*BASE standard programs could not handle. Now we want to try to incorporate the best and brightest ideas from this custom software into the standard CU*BASE tools, for all credit unions to use. Here’s a summary of what we’re planning:

This project expands the Transaction and Account Service Charge features so that special service charge programs can be assessed on loan accounts, and also so that fees can be assessed on an annual basis and/or based on annual occurrences (like a fee that is charged every year on the date the account was opened).

We’ll also be changing the configuration flow a bit for all three types so that it is easier to learn and more intuitive, with the ability to copy all of the parameters from one program to start another program. In addition, we’ll be adding an audit function so that Transaction, Account, and Minimum Balance Service Charges can easily be configured and tested, then activated only when the program has been verified as matching the credit union’s expectations. Finally, for CUs who wish to notify members when a service charge is assessed, we’ll be adding three new genericnotice events that can be optionally added to one of the credit union’s notice forms and sent to members after a service charge program runs.

Other miscellaneous enhancements:

Allow partial fees to be posted
Exemption if online credit card present
Exemption by Membership Designation
Same relationship and aggregate balance exemptions on all three service charge types
Fix so that the posting hierarchy features work (to charge something other than the account that had the activity, for example)
Change the names on the posting reports so they are easier to find in CU*Spy

In addition to making it easier and safer to test a program before it goes live, all of these changes are intended to help us reduce the number of custom service charges that a credit union must pay us to develop, make it possible for CUs to more easily understand what options they already have, and give all credit unions more flexibility in the types of income programs they can envision.

Related Projects on the Burner

Inventory of standard CU*BASE Service Charge programs. This project, which is targeted for completion by November 2011, will organize a listing of all service charge programs that have been configured by our online credit unions, using standard CU*BASE Service Charge tools. Part of our ongoing “Learn from a Peer” effort, we hope this list will give your credit union a few new ideas for your next business plan.
Inventory of custom fees developed over the years for CU*BASE credit unions. This project was completed for our 2010 CEO School event. Open the inventory and analysis. NOTE: Remember that these are custom programs, for which CUs paid special fees for development. Our hope is that after the expansion project, similar fee options will be available within the standard CU*BASE package, available to all CUs for no development fees.
Publishing new procedures for how custom fees are quoted and processed. We recognize that there will always be a need for the occasional “one off” custom programs that cannot be handled by standard tools. We are currently working on documenting some new procedures for how these special projects are quoted, developed, and implemented.

A word about custom fee programming: We will always be glad to take on these types of projects for our partners. But do remember that if the point is to generate service revenue, it’s a good idea to avoid falling in love with a small, unique wrinkle so that you end up having to pay custom programming fees, when 90% of the automation is already available to you for free. If you have questions about how to design a fee program that will take full advantage of existing, free software tools, contact a Client Service Representative. We’ll be happy to help you design a cost-effective new source of revenue!

Status

Development is nearing completion. Due to the extensive testing that will be required, we are now targeting the 13.0 release.

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