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Better searching helps keep Customers and Deposits

While several states have become more restrictive about the dormancy period associated with inactive accounts in a bid to gain control over these assets, the effects on financial institutions grows negative from the customer’s perspective. This perception could affect customer relationships and retention while creating a conflict with the business of growing assets and reputation management.

The primary reason for this loss is the customer’s perception that they have entrusted the financial institution with their assets and the institution has escheated them to the state. In addition to the loss of funds spent in outreach to acquire a customer, there is a loss of capital and accounts directly impacting the bottom line for the financial institution. It is therefore important to make a concerted effort to mitigate this by conducting an outreach to customers and instituting some form of a communication campaign to reduce the risk of escheatment and retain as many accounts as possible.

According to the information published by the National Association of Unclaimed Property Administrators (NAUPA), there are approximately 177 million accounts held by states across the country. A recent broadcast reported that one in seven residents of the State of Virginia has unclaimed property of some kind and it is believed that this may be true across the country.

The key to managing this risk is to make an effort to look deeper into customer contact, transactions, relationships and outreach while meeting the compliance requirements of the state.

The purpose of this software is to automate the process of identifying dormant accounts and searching related accounts for recent activity. If the related account has customer contact, the dormant account is reset to reflect that activity. For dormant accounts that do not have related accounts with activity, a mail merge file is produced so that the dormant account holder can be contacted by mail and made aware of the need for customer contact on their accounts. On customer contact, if any one of the related accounts shows an update to the dormant status, subsequent software cycles will use this non dormant status to mark any related account that may still be dormant. Additional considerations are also programmed in the software to manage Retirement Accounts and Certificates of Deposit. Accounts that are marked to be non dormant manually are also used by the software in subsequent cycles to commute dormancy. In the final pass, a report and extract file are produced that allow for the transfer of accounts that are truly dormant to the State.

The result is an efficient process with an overall reduction in accounts escheated to the State. This helps retain customers and assets for the financial institution. The reports and extracts in the first stage are designed to facilitate reasonable, good faith efforts to contact dormant account holders.