While bank customers could still link their checking accounts to another Bank of America savings or checking account to cover overdrafts, the only other option they had to make the purchase and avoid the overdraft was using another form of payment like a credit card. Customers didn’t warm to that idea, and now Bank of America is rethinking its rigid policy.
It’s true that some bank executives had noticed that the March 2010 overdraft policy had led to positive responses from customers: Laurie Readhead, a retail banking executive, noted at a bank conference earlier this month that Bank of America had seen "a significant improvement in our customer experience since implementing the overdraft policy," but customers also showed signs of pining for the option of going ahead with the transaction anyway, even though they might incur an overdraft penalty.
"For the most part, they don't want to go back to the experience that they were having before, where they were consistently incurring multiple $35 fees," Readhead said. "We think the text message solution is a much better approach to let the customer choose, because the customer still wants to choose whether or not they want to proceed with the transaction."
Consequently, the move to a text app that overrides an overdraft block could be good business for Bank of America. The bank’s deposit service charges fell 26% in 2010, and any way it can restore some of those service fees will only help the bank’s bottom line.
And if the overdraft coverage makes bank customers happier, so much the better for Bank of America.