OBJECTIVE: Find highly profitable households that generate $500 or more per year in profit, where NSF income is a very small source of total relationship profitability.  NSF fees may be waived to help preserve the relationship or to offer overdraft protection.

Though NSF fees are a necessity, they may damage the quality of the relationship between you and your customer.  By creating a list of highly profitable/ low NSF households, your tellers, call-center service personnel, and personal bankers can quickly determine if they should or should not waive the fee if a customer complains about an NSF charge.

To identify highly profitable households who have little or no NSF activity, two data points are examined -- household profitability and annual NSF fee income.  This query is executed at the household level:

In this example 618 A households were found.  Printing a list of these 618 households and distributing it to your front line personnel allows them to quickly find out which households are "pre-approved" for NSF waiving.

Or you can try this tactic: identify all the households that are not A households who do not overdraw their accounts.  By creating this list, it is easy for front-line personnel to determine that they should not waive the fee:

This query found 53,541 accounts in 15,920 households.

IDEAS:  

• Create a list of customers who are "pre-approved" for NSF waiving and distribute to appropriate front line personnel. You can add any special exceptions to this list by hand.  Be sure to mark it CONFIDENTIAL, FOR INTERNAL USE ONLY, and train your people to treat the list as a valuable item.

• You may decide to restrict the list to supervisors and managers only.  This means that tellers and call-center personnel would have to go up one level to get waive approval, but the added security and experience may be worth it.

• Offer free Courtesy Pay to your A HHs with low NSF activity.  Offer fee-based Courtesy Pay or Lines of Credit to other households.   

CAVEATS: Clearly mark any such list as FOR INTERNAL USE ONLY.

Keep in mind that a certain percentage of A households are A households because of NSF fees.  You may consider creating a DO NOT WAIVE list for such households.

Consider if you want to waive only the qualified checking accounts in the A household, or if you are willing to waive for any checking account in the A household.  Typically, A households have more than one checking account and not all of them may meet the criteria specified in the query.  To see the difference this can make, run the query at both the account level -- which shows qualified checking accounts only,  and at the household level.

If your institution tracks the number of times an NSF is waived, this data point can be used to spot abusers -- people who have come to expect that their NSFs will always be waived.

You may also wish to  create a high balance list.

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