Act Now to Grow Revenues While Overdraft Fees Continue to Fall

The Pew Trust published this week, Checks and Balances: 2015 Update, a study on bank overdraft fees.  Many see it as analysis and support just prior to new rules on overdraft fees to be proposed by the CFPB.  Their key recommendations from their study follow what we expected in our Whitepaper and BAI Article “New Crunch on Overdraft Fees Coming,” predicting new rules will reduce revenues 50%.   Surely no one today believes overdraft fees are going to rebound.  Regulation, and new technology, make overdraft service a waning product line.   But most are "waiting" to see what the CFPB will do.

Specifically the PEW study proposes familiar themes that the CFPB has embraced elsewhere:

  

1)      The elimination of overdraft fees on debit card POS transactions.

2)      Improved overdraft disclosures.

3)      Caps on overdraft fee items per day.

4)      No re-ordering of transactions.

5)      No extended day overdraft fees.

  

Interestingly, the Pew study pointed to a new trend they lauded a new revenue-generating service:

Some banks now offer a bank account that does not allow overdraft fees of any kind.

A great example is our digital, no-overdraft-fee-ever PaySound account which drives revenue growth to serve customers, provides low-cost digital liquidity to compete with marketplace lenders, and cannibalizes no existing fees.  Overdraft fees, like CD sales of music, are falling as regulation and new technologies pushes alternatives.  It is time for you to delivery liquidity services digitally, as music is delivered today not on CDs but single song downloads, to grow your revenues.  Far too many are "waiting" to see what the CFPB does.  It cannot be more obvious what is coming, and those that wait will pay the price.