Order matters

Did you know that some banks take all the checks in receives on any given day and processes them by paying the largest one first, then the next-largest one, and so forth.  Not a problem if you have a large enough balance that they all clear.  But if you overdraw, this process results in a lot more overdraft fees.

“Payments Puzzle Persists at Banks,” Wall Street Journal, July 29, 2014 C1  Most banks processes checks in the order received.  Could this be an effort to maximize the income from overdraft fees?

Is this information governance?  Certainly, if the banks are making a conscious decision to use the information they have (daily number of checks written and the rank order from largest to smaller) to make more money, then it is.  Customer service?  Maybe less so.  Would it be more defensible to process all checks received on a given day based on the check numbers? Or based on when the checks were received? Or in some other profit-neutral fashion?

Do you use your customers’ information to benefit the customers or to benefit you?  What does it look like?

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Filed under Controls, Internal controls, Use, Value

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