The bank is expected to launch Low Cash Mode, a digital solution that helps customers avoid overdraft charges, to its Virtual Wallet users nationwide later this summer, per PNC. The service will allow customers to control when certain debits from their account are processed; in contrast, when a bank controls this process, it can drive overdrafts. Users will also receive account alerts if their balance is low, and if it’s negative, they’ll be allowed a 24-hour grace period to rectify the issue. PNC’s new offering went through a robust pilot program of over 20,000 participants, who collectively saw a 60% reduction in overdraft fees. The bank expects this to translate to between $125 million and $150 million in customer savings annually.
Larger incumbents have become less dependent on overdraft charges and are shifting to solutions that help, rather than hurt, consumers through cash-strapped periods. PNC isn’t the first legacy bank transitioning away from the practice, and it certainly won’t be the last. U.S. Bank was one of the first to enter the fray when it introduced its small-dollar loan product in 2018, and Bank of America recently started offering emergency cash to customers for a small fee. The change in approach by larger banks could engender increased loyalty and engagement as overdraft charges move from being a crippling consequence to a rare mistake.
Products like PNC’s could weaken US neobanks’ position as fee-free alternatives to incumbents, but they shouldn’t just stop at overdraft solutions.