Protection tool

PNC sees the benefits of the overdraft protection tool

It would be hard to find anything more universally hated by banking consumers than overdraft fees.

According to a 2020 UCLA Study, about 30% of accounts have at least one overdraft per year, and accurate and effective policy communication is important, as overdrafts cost consumers about $ 10 billion.

And it’s not just the money, PNC Executive Vice President and Head of Retail Customer Segments and Deposits Bonnie wikert noted. The consumer is often caught off guard by the overdraft, does not quite understand how it happens and is deprived of all control; banks decide which fees are paid and which are reimbursed.

“Our research suggests that customers really wanted transparency and account controls,” Wikert said. “And fortunately, today’s technology allows us to do that. What the customer wants is the ability and the power to make payment decisions. And what PNC wants to do is really put it in the hands of customers rather than the banks that decide. “

The solution will not be the same for everyone, she said. PNC offers products such as intelligent access control that simply do not allow overdraft as an option. Once the consumer is about to spend more than he or she has, the charges will simply be rejected. But the Virtual Wallet Verification range comes with something PNC calls low cash mode and allows overdrafts. This is because sometimes the customer wants or needs this option and is willing to pay the fee to access it.

What PNC’s product essentially does is put that choice directly into the hands of the customer, making sure they are aware of the status of their account, where their overdraft dangers are, how they are can avoid them and describing the full range of consequences they will face, she said.

“We believe this sets us apart from the industry as a payment control feature,” Wikert said. “We actually reveal the transactions that cause the customer to overdraw their account and give them the ability to make decisions about whether or not they want to pay for those items or whether they want those items returned. So we really reveal that to clients and give them control to make the decisions. “

As Wikert said, if consumers choose to return an item, there is no charge. If they decide to charge for items by PNC, a fee is charged. However, if they correct their account or correct the negative balance position before the overtime window, which is at least 24 hours and often longer, the charges are removed completely.

Checking is not just the right thing for customers to do, she said. Giving them the tools to manage their checking accounts and control their overdraft spending has a positive effect. Piloting this program with nearly 20,000 clients who had previously opted for overdraft behavior resulted in a 60% drop in overdrafts.

The PNC has also seen consumers become more involved in their financial accounts, weighing up when and how to pay for or return items and strive to settle overdrawn accounts before being charged a fee, she said. . PNC has even seen consumers do rather unexpected things with the digital tools available to them. Card control mechanisms allowing consumers to temporarily suspend their credit or debit card in the event of a temporary loss were enforced by consumers who found their bank accounts low.

“By the end of the month, this will be available to our student virtual wallet customers, who represent approximately 1.1 million accounts,” Wikert said. “I’m sure we’ll gain more knowledge as our students start to use and learn from it. We have already seen some really interesting behaviors in the early application of the tool.

PNC, for its part, will waive around $ 125 million to $ 150 million in fees in 2021, she said. But at the end of the day, charging consumers who are universally hated isn’t a good deal, nor a smart business. There are better ways to make money than to capitalize on consumer mistakes, and banners that seek to remain relevant to their customers’ futures are better served by investing in them than they crave for. their customers’ fee money.

“PNC thinks this is the right thing for our customers to do,” Wikert said. “And over time, we plan to achieve growth through increased customer acquisition and retention. Our low cash mode is based on patent pending technology, but we certainly welcome and encourage other banks to find ways to help customers avoid overdraft fees. And we believe this is the right decision for customers and certainly the right direction for the industry.

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