On September 6, 2022, Curinos published an update to their “Competition Drives Overdraft Disruption” study published in December 2021. Curinos was formed from the combination of two data driven business intelligence companies, Novantas and Informa’s FBX business.
As has been previously reported by the CFPB through a blog post and two December 2021 overdraft reports, which we previously blogged about here and here, many banks have announced innovations and policy changes in the past year to enhance their overdraft programs and reduce consumer harm.
Key findings from Curionos’ updated overdraft market analysis include:
- Based on the voluntary changes that have been announced as of Aug. 25, 2002, overdraft fees are expected to fall by 68% between 2008 and the end of 2023.
- These changes are expected to result in $167 in annual savings per U.S. adult by year end 2023.
- As of August 2022, at least 29 financial institutions with more than $10B in assets have announced significant reforms to their overdraft policies. Half of financial institutions above $100B, including 9 of 13 financial institutions above $250B, have announced or implemented overdraft reforms.
- Curinos projects financial institutions with pledged and adopted reforms will reduce overdraft fees by 50% in the period 2019 to 2023. If current trends continue, consumers could save more than $28B in the five-year period between 2021 to 2025.
- Overdraft revenue comprises less than 2% of annual industry revenue and less than 4% of industry net income.
The Consumer Bankers Association issued a press release in which CBA President & CEO Lindsey Johnson, commenting on the Curinos study’s key findings, said:
Over the past year, America’s leading banks have introduced new overdraft innovations to provide consumers even greater choice and flexibility to make informed financial decisions. As this Curinos data concludes, the impact of these changes are significant and wide-reaching, with overdraft fees expected to fall by nearly 70% by the end of 2023. Policymakers should be focused on encouraging more of this innovation, which has occurred without regulatory or legislative innovation, and is poised to yield meaningful savings for years to come.