Less than three weeks later, and about three hours down the road from Madison, the $14 billion Alliant Credit Union in Chicago announced that it would immediately and completely dissolve its overdraft and non-sufficient funds fees for its members.

Paul Kundert

Does the Midwest know something that the rest of the credit union country doesn't? For Paul Kundert, president/CEO of UWCU, the answer to that type of question is built into what credit unions have always been and always stood for. "I think credit unions are the original social enterprise. What I mean is, organizations that are organized, not just to benefit shareholders, but to benefit their customers, their employees and society as a whole. So, this to me is totally in step with that and who we are."

And that step consisted of reducing overdraft fees and non-sufficient funds fees from $30 per occurrence to $5. This immediate policy shift by UWCU was due to the credit union's overall goal of creating a more equitable banking experience for everyone, while supporting the financially vulnerable.

"It was looking at what was best for our members and trying to choose a sustainable path for the organization," Kundert said. "And we just think sustainability is about making all constituents better off because of the organization."

About 10 years ago, UWCU made the then-bold decision to drop all overdraft charges around debit cards. And then last November, during the heart of the pandemic and while hearing of the financial pain its members were facing, UWCU executives met to figure out big and small steps to take to help members. Then, inspiration hit.

"Just over the months, as we started looking at talking about that, we knew we would do something this year, and then when Ally Bank announced that they were going to drop it altogether, we actually really moved up our implementation plans to put it into action," Kundert said.

Ally Bank, an all-digital bank, announced this summer that it was also eliminating all fees from its business.

The groundswell of financial institutions pondering the possibility of eliminating fees has grown in just the past month. Banks, such as Chase, are considering it. The Ohio-based Huntington Bank and the Pittsburgh banking powerhouse PNC have both recently revised their overdraft policies to include grace periods and lines of credit and/or notifications for consumers when their accounts are short on cash.

Even the Office of the Comptroller of the Currency is in the process of conducting a massive review of bank overdraft policies to crack down on what could be considered predatory behavior.

So, has the tide turned on overdraft practices? Is it becoming bad for business or is it an old-school practice left over from years past whose time has run out? Alliant indicated that the latter just might be the case.

In early August, the Chicago-based, all-digital national credit union made the surprise announcement that it, like Ally, was no longer going to charge its members overdraft fees or non-sufficient funds fees on all checking and savings accounts.

Dennis Devine

CU Times spoke with Alliant President/CEO Dennis Devine about the decision-making discussions behind the credit union's bold move. "It was driven by the genuine sense of what would make it as simple as possible in communicating with members, no new complicated terms – just eliminate the fee!"

Devine said he and his executives felt it was time to challenge the overdraft fee system. "We're able to do what is right by our members," he said. "And the idea of 'let's challenge historic norms,' to be the institution that our members want for the future as a digital member-first organization and challenging historic norms – that's exciting for everyone on the team." The reasons for challenging the fee structure system fall somewhere inside a Venn diagram, where DEI and progressive business decisions intersect.

According to UWCU officials, that intersection includes a variety of positives for nearly all corners of the credit union business structure. For instance, once the public sees that a credit union has taken this kind of equitable stance, and the credit union pays a living wage, not only do people want to become members, they want to work at that credit union.

Pam Peterson

"With the recent changes that we just made with our overdraft practices, it's just good for the business because it brings greater innovation, retention and business success," Pam Peterson, SVP and chief human resources officer for UWCU, said.

"I think over time, it's going to make us more relevant and it'll help us sustain our business as we open ourselves up to a broader audience and see the value of that, and with such a focus on inclusion in our work environment, that brings a huge benefit to us as being a great place to work."

Sheila Milton

Overdraft fee reduction or elimination encourages inclusion, which encourages gaining and retaining the best employees, which encourages community awareness of the credit union, which then leads to Sheila Milton, vice president of DEI for UWCU, and her efforts behind a relatively new DEI project – the UW Credit Union Fund for Racial Equity.

"This fund for racial equity, it's really like an extension of our brand mission here for everyone and it's really focused on removing barriers to economic mobility and access to financial opportunities for BIPOC members in our community," Milton said.

In short, the fund targets members who are Black, Indigenous and people of color (BIPOC), to help improve the financial well-being of those members through a series of grants.

According to Milton, the total grant fund reached $2 million recently as much of the money was distributed to winning applicants from 27 community organizations in and around the Madison and Milwaukee markets. Since UWCU doesn't have a foundation arm, it decided to collaborate with organizations like the United Way to help spread the word and assist with the grant distribution.

Milton said it's early on in this portion of a broader DEI goal with the grant program. "What we're doing now is we are very much in the relationship-building stage. Through the community partners and those in our marketing group, we're really working to build relationships and fostering more dialogue, like with these new partners, and figuring out ways that we can work with them beyond this monetary investment," Milton said.

From the micro- to the macro-level, DEI has become a successful business plan for some credit unions.

"I'm very proud of the work that we're doing on the business side and on the HR side, and that we're stepping back and really thinking about it from an equity and from a DEI lens – and not that it's this extra thing," Milton said.

Kundert said he hopes other credit unions begin experiencing realizations similar to ones he's had since moving down the DEI business strategy path.

"There are issues of rightness and justice here that are more about the heart or what's moral or what's right … and this is also good for business," he said.