Bank of America's Overdraft Announcement is Great PR

Yesterday, Bank of America announced its intention to end its overdraft fees on debit and ATM transactions beginning this summer. Instead of being assessed a fee, the transaction will be denied unless a customers wants to opt-in to overdraft protection. The advertisement in today's Wall Street Journal positions the decision as a way to help customers from overdrawing their accounts and to provide more control and choice for their customers.

The problem is, Bank of America isn't doing anything that isn't already required by the Federal Reserve. They are just avoiding the cost of communicating with all of its customers to ask them to opt-in (at least for now). Excuse me if I don't believe that they will just walk away from millions of dollars in OD fee income.


In fact, I suspect customers will soon be confronted by messages on ATMs and discussions in branches to encourage them to opt-in much like all other banks are doing. There may even be a program to automatically offer a line of credit 'advance' if a person is about to overdraw their account at an ATM or at a retail POS location. Much like a credit card overdraft, the transaction could be interrupted by the opportunity for a customer service call where a representative offers a small line of credit to allow the purchase to continue as desired.

And there would still be a fee for every transfer made between linked accounts or from the reserve account.

Credit Bank of America for a very well timed public relations announcement, especially in light of the poor communication done by Chase Bank in some of their opt-in mailings. But be careful to give too much credit when the goals of Bank of America at the end of the day appear to be similar to most other banks. And expect most competing institutions (except Citi where there are no overdrafts) to begin to tout 'choice' as their response to Bank of America automatically opting-out all customers.

It's Time to Require Email Addresses as Part of Account Opening Process

I have been in banking long enough to remember the roadblocks that stood in the way of collecting birth dates from customers before the government required this information as part of the customer account file. New account representatives complained that collecting the information was intrusive and impacted the privacy of the customer even though the information was already collected as part of other financial institution transactions (insurance and investments). Once the government required collection of this insight, the barriers came down overnight and marketers were immediately armed with an important tool in modeling households and targeting messages.

While it is doubtful that the government will ever mandate the collection of email addresses, now is the time to add this to the information your bank requires as part of the new account opening process. While some people won't have an email address to provide, this communication option is beneficial for both the customer and the bank.


With an email address on file, the customer can be informed immediately if there is potential fraud or identity theft on their account. They can also be informed of special offers and can help reduce the environmental impact of postal mail.

From the bank's perspective, the cost of mandatory and promotional communication is reduced immediately, while the ability to react to time sensitive opportunities and threats is enhanced. For instance, there is a western bank that can communicate with up to 60% of their customer base right after financial results are released, answering any questions that may be of concern. They can also immediately respond to competitive opportunities ranging from rate changes to mergers and acquisitions.

I am aware of at least two large financial institutions that are now requiring the collection of email addresses from customers with minimal negative impact. In fact, since communication includes community announcements and financial education opportunities, the opt-out rate on email is minimal.

The ability to collect (and effectively use) customer email addresses is already a competitive differentiator for some progressive institutions. How long will it take for other banks to catch up?

Be Careful of 'Mental Opt-Out' With Email Marketing

For those who read my Blog, you know that I feel strongly that the email channel is significantly underutilized by the banking industry. Not only do marketers not effectively leverage this channel in conjunction with other direct and mass marketing options, most banks do a terrible job at even collecting email addresses in the first place.

Unfortunately, for those who have begun to use email marketing in support of customer communication efforts, some have gone to the opposite extreme by viewing email as a 'free' marketing tool without giving adequate thought to the importance of relevancy. As many realize in their daily scanning of their email in box, overusing the email channel can have a detrimental effect of the value of this channel and negatively impacting the overall customer experience.


It was with great interest therefore that I read a recent op-ed in DM News written by Mark Smith from Portrait Software discussing the mental opt-out that occurs when a company bombards a customer with too much untargeted email marketing communication, only to have the reader open the email and then quickly hit the "delete' key. The impact of multiple irrelevant emails is to either explicitly receive an opt-out to future email or to implicitly lose the intended reader's trust and attention for future communication that may have been of interest.

As Mark mentions in his op-ed, if you get a reputation for sending irrelevant communications, you are basically asking for mental opt-out. And just because a customer's name doesn't appear on the do-not-contact list, it doesn't mean they are paying attention.

As financial institutions get more comfortable with this channel, it will be important to ensure that adequate targeting is done and that the focus of each email is to positively impact lifetime customer value.