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Blog INSIGHTS

Finding Opportunity in 2024’s Challenges to Non-Interest Income

Through years of falling interest rates that dramatically compressed net interest margins, credit unions and banks learned to lean into non-interest income to keep the balance sheet, well, balanced.

Debit and ATM transaction fees and overdraft and Not Sufficient Funds (NSF) charges have become particularly important, especially as account maintenance fees such as monthly service charges and minimum balance penalties have lost popularity for competitive reasons and consumer disdain.

Regulatory and legislative actions, however, could sharply impact that cash flow and strategy as the Consumer Financial Protection Bureau (CFPB) moves forward on its proposal to eliminate so-called “junk fees,” which includes overdraft fees, and a bid to reduce interchange fees is before Congress again.

Meanwhile, the potential for predictable, stable, and increasing non-interest income (NII) continues to grow. In this regard, offering customers and members access to an enterprise-grade digital estate planning platform can serve both – promote personal financial wellness while also producing a remarkable, new NII revenue stream. 

But first, here’s a bit more on the regulatory and legislative front as 2024 begins to roll out.

CFPB and overdraft fees

The CFPB is expected to issue a final rule soon that could accelerate the decline of overdraft and NSF income, which are already about half of what they were industry-wide before the pandemic.

The new rule is expected to say that overdraft fees should be considered finance charges under Regulation Z. That could result in regulators such as the FDIC, OCC and NCUA tightening the rules on the number of times an overdraft or NSF transaction can occur and how much a bank or credit union can charge.

Recent fines totaling hundreds of millions of dollars against mega banks all the way down to smaller banks and credit unions for their NSF and overdraft protections also point to the need for diversifying non-interest income.

The interchange fee fight continues

Congress again has before it two bills aimed at lowering the interchange fees that banks, credit unions and the card processing networks share for their role in card transactions.

Proponents, led by retailers and consumer advocates, say the Debit Interchange and Price Competition Act and the Credit Card Competition Act would benefit consumers by allowing greater competition in the payment card network space.

Opponents, led by the financial services industry, say expecting any savings for consumers is unrealistic and that the changes would make it more difficult for issuers to fund rewards programs and for smaller issuers to offer credit cards at all.

This legislative tug-of-war has been going on for years, and whether these changes finally make it through either chamber, much less to the president’s desk, is an open question.

The bottom line about these possible changes is that credit unions and banks need to prepare for potential revenue loss by diversifying further with other fee-based services, especially those that may be less volatile in such a shifting legislative and regulatory landscape.

Diversify non-interest income with estate planning

Now is the time to consider offering digital estate planning documents through a turnkey platform for consumers’ holistic financial well-being, as well as your bank or credit union’s revenue diversification. It’s a win-win strategy for serving an aging population: Families get the peace of mind that comes with legally valid estate documents from a trusted provider, while the provider benefits from the recurring fee income and deeper customer and member engagement and loyalty.

Further, that demonstrated commitment to your customers’ financial well-being also opens the door for successfully offering asset protection, wealth management and other personalized, value-added solutions.

An ideal way to begin is with a white-label digital platform that meets the expectations of your most tech-savvy consumers without the integration and maintenance challenges of doing such work in-house. OneDigitalTrust’s platform also integrates directly into a financial institution’s digital banking platform, making access and usage even more seamless and easy for consumers.

The coming year could be a pivotal juncture for banks and credit unions regarding overdrafts, NSF fees and interchange income. Deploying seamlessly integrated digital will and trust services is a wise investment your institution can make in the growth and financial well-being of your business and, as crucially, that of the families and individuals you serve.

170M Americans need an estate plan. OneDigitalTrust offers a white-label, turnkey estate planning platform with pricing options tailored to the needs of individual credit unions, banks and financial advisors.

Contact us today to learn more!

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Blog INSIGHTS

Estate Planning Finds Purpose-Driven Entrepreneurship in Rocky Mehta

Sadly, most Americans have not done their estate planning or have let it get out of date.

That is part of the impetus for CEO Sonny Kapoor and co-founder Rocky Mehta to found OneDigitalTrust, a pioneering digital estate planning service, to help spare families during their darkest time, the complex and costly work of dealing with the estate of a loved one who died without a legally valid estate plan in place.

Recognizing an untapped opportunity to address the needs of the underserved and mass affluent, Kapoor and Mehta determined to follow their personal mission to build a platform that stands out in the competitive landscape by solving real-world problems.

Mehta sat down with co-founder of The Credit Union Connection, Sarah Snell Cooke, to share insights into the company’s mission and B2B model to help them reach more people quickly.

Sarah Snell Cooke: What’s OneDigitalTrust’s founding story – where did you get the idea for this company?

Rocky Mehta: OneDigitalTrust’s founding story has been the culmination of two things: Our CEO Sonny Kapoor and I have been in the financial services consulting space for most of our careers, and we saw this as an untapped opportunity for a digital estate planning service to meet the needs of the underserved and mass affluent.

Second, my co-founder and I have first-hand experience with family members with special needs, and we’ve seen a massive uptick in younger generations needing extra support. We felt we could make a difference by helping Americans afford to protect their families and legacies with our offering.

SSC: What problem are you trying to solve?

RM: All Americans should have their end-of-life affairs in order. No one knows when the worst could happen to us, but death and taxes are unavoidable. For whatever reason – putting off a morbid necessity or thinking you don’t have enough assets to worry about or trying to avoid the high cost of an attorney to create an estate plan, Americans don’t plan their estates.

Depending on who does the survey, an astounding 65% to 70% of Americans don’t have estate plans in place, or if they do, it needs to be updated. Both scenarios can lead to stressful and expensive work thrust upon their survivors. That’s the problem we’re solving!

SSC: Tell me a bit about your background.

RM: I come from a technical engineering and computer science background, and I went to business school afterward, which allowed me to serve as a liaison between technology and business. That helps me work with all of our teams from technology, legal, operations and sales & marketing to enable us to run a successful business to serve our clients and, in turn, their members or customers.

SSC: How are you planning to reach all Americans?

RM: I mentioned our mission is to support Americans to protect their lives and legacies, but it can be incredibly difficult to reach each of them individually. This problem has proven rather obstinate as the needle has barely moved over the last decade, which is why we believe that delivering estate planning through institutions (versus the status quo) will be the turning point when this needle moves. From the start, we knew we needed to work with other trusted businesses to enhance their services to their customers and members. Our partners are in the financial wellness field and include credit unions, banks, financial advisors, insurance companies, and employee benefits providers. This business model helps us to reach everyone faster and ensure they complete this vital task to protect their legacies and not leave a mess behind for their heirs to resolve. That can be very painful and expensive, as we all know from celebrities who’ve passed on without proper estate planning, including the King of Pop, Michael Jackson, and billionaire entrepreneur Howard Hughes.

SSC: How are you different from your competitors?

RM: The good news is that there is competition, and in the last two years even more competitors have entered the business. That means more people recognize that not having an estate plan is a massive problem that must be solved.

There is room for several players in this emerging market to help solve this brewing crisis across America in their own ways.

We have many unique advantages. We are an enterprise-level solution, and we partner with institutions to provide them the flexibility to configure, brand and price the value-proposition as they see fit to best serve their mission, target audience of ideal members and customers, and style of how they want to serve. With 170M Americans lacking an estate plan, OneDigitalTrust offers a white-label, turnkey estate planning platform with wholesale pricing options tailored to the needs of individual credit unions, banks, financial advisors, insurance agencies and HR benefits companies.

The real-time analytics capabilities offer our partners insights to better understand customer needs and identify opportunities to cross-sell and upsell. OneDigitalTrust provides financial services providers and financial institutions measurable opportunities to better support and understand their customers and members’ needs. I could go on and on with the capabilities and benefits of our platform, such as the plain-language documents, affordability, and extreme value. Still, the best way to understand our platform is to request a demo to show how OneDigitalTrust can best help!

OneDigitalTrust fulfills a burgeoning need to ensure more Americans complete their estate planning and keep it updated. We will further document estate planning need-to-know information, OneDigitalTrust, and the founders’ personal mission and entrepreneurial journey, so please be sure to sign up for our newsletter in the footer of this page and follow us on LinkedIn!