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Curinos Finds Competition Drives Overdraft Disruption in New Study

Study highlights how a renewed focus from policymakers and the COVID-19 pandemic have drawn fresh attention to this issue as millions of Americans struggle with urgent financial needs

NEW YORK — December 1, 2021 — Curinos, a global data intelligence business serving global financial institutions across lending, deposits and digital banking solutions, today released its ‘Competition Drives Overdraft Disruption’ study. The study found the current wave of changes to bank overdraft programs is being driven more by competition than regulation. Furthermore, the study shows the market rewards organizations that overhaul their existing overdraft programs or develop alternative products and institutions that are slow to act will lose customers to more aggressive competitors. As a result, financial institutions must continue to innovate and provide more low-cost liquidity options, with or without regulatory changes.

“Overdrafts have been an important topic among stakeholders for years, but a renewed focus from policymakers amidst the economic impact of the COVID-19 pandemic have shown a greater spotlight on the financial needs of Americans,” said Hank Israel, Director of Innovation & New Markets at Curinos. “These pressures, combined with the introduction of new overdraft products and policies, presented the need for a new round of research on this important topic, and actionable recommendations for the industry.”

Backed by Curinos’ proprietary research, the report methodology encompasses both consumers on the demand side and financial institutions on the supply side. On the demand side, Curinos leveraged an annual online consumer research study on checking purchase behaviors of approximately 12,000 respondents, and a targeted online consumer research study on overdraft behaviors. On the supply side, Curinos utilized a survey of disclosures and offers from 38 financial institution websites, matching a 2015 Pew Study where possible, along with an anonymized survey of behavioral data from 14 financial institutions with $2 billion to $100 billion in total assets, representing $637 billion of total U.S. consumer deposits.

Findings indicate intense competition within financial services is driving recent changes in overdraft policies and programs and that:

  • Overdraft fee revenue is down significantly: U.S. overdraft revenue fell approximately 57% from $40 billion in 2008 to $17 billion in 2019.
  • Fewer people use overdraft: The percentage of regular overdraft users (those with 10 or more transactions annually) fell by 40% to 4.9% of the population between 2010 and 2020.
  • Challengers that adopt consumer-friendly policies, win market share: New entrants, including fintechs and challenger banks, have created solutions to better manage or reduce the cost of overdraft. These entities have experienced a 40% improvement in account acquisition since 2017. Financial institutions that haven’t adopted overdraft innovation have experienced a nearly 30% reduction in consumer acquisition.
  • Consumers understand overdraft: Consumers, especially overdraft users, continue to demonstrate a deep understanding of overdraft and available alternatives. More than 60% of overdrafts come from consumers who intend to use the service. More than 80% of overdraft transactions come from consumers who opted into debit card overdraft programs with the clear intention of using it to cover their payments. And two-thirds of consumers indicate that, while overdraft can be expensive, they don’t want to see reductions in their access to the service.
  • Consumers want more short-term liquidity choices. Consumers seek convenient and relevant alternatives to overdraft. The emergence of alternatives in the market is driving consideration of new checking purchases.
  • Larger transactions now trigger overdraft. The proliferation of overdraft grace balances and changes in posting order practices have reduced the number of small purchases that are tied to overdraft. As a result, the average size of purchases that trigger overdraft fees has nearly quadrupled from $50 to almost $200.

The study was initiated at the request of the Consumer Bankers Association (CBA) to fill a research gap in better understanding consumer sentiment, and CBA provided funding for the market research survey. Curinos independently designed, analyzed and documented the research results.

Click here to access the complete study.

About Curinos

Curinos is the leading provider of data, technologies and insights that enable financial institutions to make better, and more profitable, data-driven decisions faster. Born out of the combination of two familiar industry powerhouses, Novantas and Informa’s FBX business, Curinos brings to market a new level of industry expertise across deposits, lending and digital experience solutions and technologies. Through access to comprehensive datasets and analytics, intelligent technologies and connected behavioral insights, Curinos is the partner of choice to help you attract, retain and grow more profitable customer relationships. For additional information, please visit


Zach Allegretti, JConnelly

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