Account maintenance is a constant responsibility for bankers, but account use isn’t always constant for customers. In fact, financial institutions lose many accounts every year when they, by legal mandate, have to transfer or escheat to the states unclaimed funds in dormant accounts.
Whether checking, savings, certificates of deposit or even contents of safe deposit boxes, customer accounts can go from active to non-active status and then to dormant if not used for a certain amount of time (usually 365 days). Dormant accounts not only represent non-engagement for the banks, they also mean additional costs and regulatory responsibilities. High-volume banks need to be proactive to avoid dormancy for the following reasons:
• Cost of statement printing and postage for inactive accounts
• Cost of time spent managing the accounts
• Loss of funds and time during escheatment process
To prevent accounts from becoming dormant, banks can use Robotic Process Automation (RPA) software to mine their total account database and flag non-active ones. The web automation software can manage the non-active status accounts, including analyzing past transactions, communicating status with account owners and, if needed, move the accounts to a different status or with escheatment to the state treasury.
RPA software can quickly and efficiently eliminate account attrition and related costs by:
• Performing account maintenance tasks around the clock
• Generating mass mailers to dormant account holders for reactivation
• Reducing the bank’s exposure to dormant accounts
RPA Reduces Banks’ Exposure
Dormant accounts can be misplaced, mishandled and, of course, forfeited by law. Bank operations staff can rely on the web automation software to read and react to the dormancy issues simply by writing a script to mimic their exact account maintenance steps. After a bank reestablishes contact with inactive customers, it can use RPA software to change account status codes in a timely and comprehensive manner to prevent escheatment.
In a time when states are enforcing unclaimed property laws to increase revenue, if banks are not proactively resolving dormant accounts, they can be audited, which may result in penalties and interest charges, as well as incurring the cost of the audits themselves.
Another area of exposure involves the per-account billing model of some vendors. Banks without refined account maintenance capabilities and hundreds or even thousands of closed or dormant accounts still in their core system could face major expense as third-party service providers often charge by total account volume.
Extra effort with no payoff is not a winning formula for any business, especially one in the world of banking. Managing inactive or unclaimed funds serves the best interests of both the customer and the bank. With Robotic Process Automation technology, financial institutions can program a proactive approach to dormant customer accounts that both limits their financial exposure and reactivates revenue streams.