For financial institutions, capturing customer-generated activity is the key to preserving customer accounts and reducing their unclaimed property liability, but sometimes this is easier said than done.
In this article, we will discuss the importance of recording and maintaining customer-generated activity and the challenges associated with it. We will also look at some best practices that financial institutions can follow to ensure that they capture all customer activity and maintain accurate records.
Why is maintaining and recording customer-generated activity important?
Recording and maintaining customer-generated activity is crucial for financial institutions for several reasons:
1. Prevents accounts from going into an inactive status–
Performing early outreach (less than one year of no activity) to customers has a greater success rate than statutory due diligence, which is typically performed after the account has been inactive for 3-5 years. By engaging in earlier contact, financial institutions can quickly reconnect with their customers and take proactive action to avoid going into an inactive, dormant or even an unclaimed property status. This allows banks to retain the customer’s business, which is a key component of any successful organization.
2. Reduces unclaimed property liability –
The cost of unclaimed property can be high for companies in terms of both labor use and finances. It is in the company’s best interest to monitor account activity and keep detailed records to help prevent additional liabilities.
3. Ensures compliance with state unclaimed property laws –
States have implemented laws that require financial organizations to perform due diligence to prevent unclaimed property. As a result, financial institutions must make sure to monitor and record customer activity on a regular basis in order to comply with these laws and regulations.
4. Preserves customer relationships –
Maintaining and recording customer-generated activity is a key component of preserving customer relationships because it enables organizations to understand the needs and behaviors of their customers. By analyzing this data, businesses are able to customize their services and communications to better meet the needs of their customers, thus building a better relationship with customers.
5. The cost of retaining an account is far less than opening a new account –
To remain fiscally successful, financial institutions must identify which accounts are active and which are dormant, as active accounts offer monetization opportunities through fees collected from transactions, while maintenance costs need to be considered with inactive accounts. Accurately tracking customer activity helps financial institutions identify the activity status of all accounts and allocate resources accordingly.
Challenges associated with maintaining and recording customer activity
Recording and maintaining customer activity can be challenging for financial institutions for several reasons:
1. Core systems often don’t provide fields to capture all the various forms of customer-generated activity –
Accurately assessing inactive accounts is key for financial institutions to act quickly. Determining which accounts are dormant can be difficult, particularly when customers have multiple accounts with the same institution, especially within the same core system. As an example, a customer could have two checking accounts, one savings account, and two money market accounts – but this customer only regularly uses one checking, and the other accounts are considered inactive. Thus, it’s essential to have a reliable system in place that can make this task easier.
2. Multiple disparate systems make linking accounts challenging –
Many core systems within financial institutions do not “talk” to each other, which makes capturing customer-generated activity a time-consuming manual process. For example, deposit accounts may be maintained in one core system, while mortgages and other loan products are maintained in another. Safe deposit box records may be maintained in yet another core system. This makes it difficult for financial institutions to determine if a customer is truly active.
3. Different states recognize different forms of customer-generated activity –
Financial institutions must ensure that they capture all modes of customer activity that state law allows. Not all states recognize the same forms of activity, so financial institutions need to be aware of the laws and regulations specific to their state. Typical activities consist of deposits, withdrawals, and transfers, but there are also other forms of activity that some states will recognize. Some of these alternate forms could be:
- Customer visits a branch
- Customer logs into online banking, but doesn’t make a transaction
- Customer has other active accounts within the same bank
- Bank statements are not being returned by the post office for a bad address
- Phone call or written correspondence to the bank
- Contemporaneous file note taken by a bank employee
Best practices for capturing customer-generated activity
Financial institutions can follow these best practices to ensure that they capture all customer activity and maintain accurate records:
1. Maintain updated policies and procedures detailing types of contact that can remove a dormant or inactive status from an account.
2. Train branch employees and call center representatives to recognize inactive accounts and properly document customer-generated activity if the customer visits a branch or reaches out to the call center. Be specific with what your state considers as “activity” on an account.
3. Perform periodic reviews to ensure the date of last contact is updated on the customer level in addition to the account level.
4. Capture online activity and update the date of last contact if a person logs in to their account.
Maintaining and recording customer activity is an essential task for financial institutions. Doing so helps to identify inactive accounts, perform early outreach to those inactive customers, and stay compliant with state laws and regulations. We at Dunbar recognize how complicated this can be, and we are here to help you. Our approach which highlights people, processes, & technology can help to minimize your firm’s risk, ensure top-notch customer service, and position your business for long-term success. We offer many services which include:
- Consulting & Advising – Providing solutions that are hassle-free and simple to manage.
- Unclaimed Property Reporting – We take a consultative approach to processing your data and filing your reports efficiently.
- Owner Location & Dormant Account Reactivation – We offer assistance to companies in reconnecting with their most important clients – those already existing.
- Corporate Asset Recovery – It’s possible that your company can own unclaimed accounts reported by other companies/holders. Our team specializes in researching and investigating such assets, and if any are found, we navigate the complex steps of asset recovery on your behalf.
Dunbar is a reputable provider of unclaimed property compliance services, offering a comprehensive suite (listed above) of solutions to help organizations remain compliant with all applicable laws. With a professional team with decades of experience, Dunbar is the ideal choice for businesses seeking a reliable and knowledgeable provider for their unclaimed property compliance needs.