Grow Revenues with Both Overdraft Fees And Fees from No Overdraft Fee Accounts

It is now well documented that a segment of consumers want accounts that allow them to avoid any risk of overdraft fees.

·         Banks like Dollar Bank, Key Bank and Bank of America offer “no overdraft fee” debit cards or full service accounts.

·        Online banks like GoBank, Moven or BankMobile  offer no overdraft fee ever accounts.

·         Prepaid cards use is the fastest growing financial segment among banked customers because of their preference to avoid overdraft fees.

·          Research studies show a large market segment of customers want “no overdraft fee” accounts.

But also, overdraft revenues are holding steady and desired as a valued service for a segment of customers.  This segment of consumers, typically about 10% of an FI’s customers who pay most of the overdraft fees, have specific needs and wants.  Financial institutions have developed over many years overdraft services that are valued by some who willing pay for the service.  Even with the potential changes to overdraft policies by the CFPB due July of this year, we believe overdraft services as presented in our Whitepaper will be valued by a consumer segment and revenues will continue to be an important, although diminished, part of bank revenues.

Other segments, however, will gladly pay fees for “no overdraft fees ever” and access to alternative forms of liquidity.  Financial institutions have overlooked this large and growing revenue segment, only to see it be served by prepaid cards, online banks and digital lenders.  In fact, these consumers are different and have different needs.  Unlike overdraft users who rely on items paid, this segment wants items not paid or returned for spending control. 

Savvy FIs will understand this market segmentation and offer services for consumers and business who want an alternative to overdrafts and overdraft fees.  In this way, they can grow revenues from both segments, and particularly be prepared for coming changes in overdraft rules.  How do you appeal to this growing segment?  By offering the digital product, PaySound.^®