BofA challenges neobanks with its new anti-discovery product
The news: Bank of America is add another offer intended to limit clients’ exposure to overdraft fees. He also revealed that his existing products are gaining traction.
The banking giant unveiled Balance Connect, which allows customers to create a priority list of up to five external accounts from which to automatically transfer funds in the event of an overdraft.
Separately, BofA disclosed milestones for the following:
- An account with no overdraft fees, SafeBalance Bank, crossed the 3 million mark for customers, with accounts growing by over 40% over the past year.
- A short-term liquidity assistance loan program, called Balance aid, is should cross the 100,000 mark for loans. The offering launched in select states in December 2020 ahead of its domestic debut in March 2021.
More on this: The bank’s rollout marks the latest sign of a growing backlash against overdraft fees in the United States:
- Legislation: A new state law in New York, banks that maintain checking accounts must pay checks in order of receipt. It also gives depositors with bad checks due to insufficient funds the right to have smaller checks honored if a balance is large enough to cover them.
- Marlet: More and more banking players have deployed liquidity assistance systems that limit clients’ exposure to overdrafts. The features are offered by neobanks like Carillon and Varo, as well as holders such as PNC and Fifth Third Bank.
The overview: BofA’s product reflects a growing trend of established banks, blunting what was a competitive advantage for digital challengers.
In recent months, cardholders have taken action against the fees:
- from TD Bank current account free of charge, announcement in June, that door a monthly cost for customers over 17 years old.
- Allied bank decision to definitively abandon overdraft fees.
- Huntington giving access to customer direct deposit up to two days in advance.
Approaches from established players complicate neobanks’ efforts to gain clients, including persuading them to choose challengers as their primary banks. Neobanks will also struggle to find new ways to stand out with their products in the future.