Regions Financial Joins Fintechs in Ditching Overdraft Fees
(Bloomberg) -- Regions Financial Corp. introduced a checking account free of overdraft and insufficient-fund fees, the latest bank to adopt features popularized by fintechs.
The Regions Now Checking account charges a monthly $5 fee, the company said Thursday in a statement. It’s a turnaround for the Birmingham, Alabama-based bank, which relied on consumer overdraft charges for almost 5% of its 2020 revenue, according to a June note from Morgan Stanley.
“We’re here to meet people where they are and help them get to where they want to be in terms of reaching their financial goals,” Scott Peters, Regions’ head of consumer banking, said in the statement.
Pressure from lawmakers and competition from financial-technology firms have pushed banks such as Regions to move away from charges that overwhelmingly burden lower-income consumers. Regions said at a conference earlier this month that overdraft fees have been declining for years, and the bank is countering that trend with revenue from other products.
In April, PNC Financial Services Group Inc. introduced a feature that it said would help customers save between $125 million to $150 million in overdraft fees annually, with Chief Executive Officer Bill Demchak calling the charges an “unsustainable revenue stream.” Cullen/Frost Bankers Inc. recently introduced an overhaul of its overdraft policy meant to offer more flexibility. And Ally Financial Inc. announced it was doing away with the charges in June.
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