The news: Regions is looking to make up revenue that it’s forgoing due to reducing its customers’ exposure to overdraft-related charges, per American Banker’s interview with the regional US bank’s chief financial officer, David Turner.
What changes did it make? In September 2021, Regions launched a new checking account, called Regions Now Checking, which doesn’t have overdraft and NSF fees. The newer account can be linked to other Regions accounts, and carries a $5 per month charge.
This month, Regions also announced that it will lower its customers’ exposure to overdraft fees. Measures that it will phase in his year include:
Impact on Regions’ revenue, by the numbers:
What revenue will replace the lost fees? In the American Banker interview, Turner outlined how Regions is diversifying its revenue mix through income generated from the bank’s three acquisitions, which wrapped up in Q4 2021.
Turner told the publication that Regions is exploring further deals in corporate banking, wealth management, and certain consumer products.
The bigger picture: Regions’ move away from overdraft fees represents the new normal for prominent US banks. In just over the past month, measures to lower overdraft exposure have been unveiled by Bank of America, JPMorgan Chase, Wells Fargo, Truist, and U.S. Bank.
The big takeaway: Regions’s adaptation to the loss of overdraft-related income is notable because of the company’s relative dependence on fees:
By aligning its policy with its competitors’ and helping consumers tap into other sources of short-term liquidity—while also successfully using deals to diversify its revenue sources—Regions is pointing a potential way forward for other financial institutions that rely heavily on overdraft fees.