Orlando, FL – March 26, 2015 – With tight interest rate margins putting the squeeze on banks, many are growing earnings by increasing service and penalty fees and eliminating tedious manual work. First Mid-Illinois Bank & Trust and a mid-sized Oklahoma-based bank each used Foxtrot software from Orlando-based EnableSoft to automate fee assessment processes, with the former generating $10,000 in new revenue within the first 60 days. By implementing the software, the banks ensure consistency in their assessment processes while reducing the overhead costs inherent in this repetitive, routine job. The ability to actually assess the fees has also given the institutions freedom to explore new revenue streams and charges that might not have been available before due to resource constraints.
Though a regulatory clampdown has hurt banks’ ability to assess new charges – industry totals have dropped 21% to $32.5 billion in 2013 from $41.1 billion in 2009 – service and penalty fees remain a critical component of noninterest income. When First Mid-Illinois Bank & Trust, a $1.5 billion bank with 37 locations throughout Illinois, instituted a $1 monthly account inactivity fee, they turned to EnableSoft’s Foxtrot to automate the assessment of charges to accounts that were already dormant. Because their core system would not permit staff to apply fees retroactively, the process would have required them to manually access each dormant account and apply the fees over the course of several weeks. Instead, the bank’s “digital employee” searched for dormant accounts, assessed the charges, and generated over $10,000 in just two months without any manual effort from bank employees. “Managing our overdraft protection had become overwhelming. It took 32 employee-hours to complete. If we had a larger-than-normal number of accounts that qualified, the process could take even longer.” said Rhonda Rawlings, Vice President at First-Mid Illinois. “Now we can do this entire process in about an hour, automatically.”
One Oklahoma-based bank with over $380 million in assets turned to automation technology to generate new revenues and save time. In 2013 the bank began using the software to automate a fee assessment process on direct deposit accounts (DDA) on hundreds of accounts each month. “We used to pull individuals off of other duties to assess these fees.” explained the bank’s Assistant Vice President of Operations. “Now we can assess these fees and need just one person to start the software.” Manually, the process occupied multiple bank representatives for an entire day. Done automatically, the customers are charged without employee intervention, generating thousands in revenue in just 24 hours. “Banks turned to fee revenue as a way to make up for the loss of interest income.” said Richard Milam, CEO of EnableSoft. “Now, as regulations restrict the types of fees they can collect, these same banks need to get more efficient and continue to seek out missed opportunity revenue streams to stay competitive.” Milam’s comments reflect the opinions of many financial institutions, who anticipate continued regulatory tightening for the foreseeable future. As long as this trend continues, banks and credit unions will continue to seek new revenues wherever it can be found.
About First Mid-Illinois Bank & Trust, N.A.
First Mid-Illinois Bancshares, Inc. is the parent company of First Mid-Illinois Bank & Trust, N.A. (First Mid) and First Mid Insurance Group. A community bank with over $1.6 billion in assets headquartered in Mattoon, IL, First Mid offers comprehensive banking, trust and wealth management, and insurance services. First Mid’s vision is to be the best financial institution in the region, where service is provided at a level above expectation, and to be recognized as such by customers, employees and the communities it serves. First Mid-Illinois Bancshares, Inc. stock is traded on the NASDAQ under the symbol FMBH. More information about First Mid is available at www.firstmid.com.