Will Text Banking Impact Overdraft Opt-In?
Imagine standing in the checkout line at your local grocery store.
As you near the cashier, you suddenly realize you may not have sufficient funds in your checking account when pulling out your debit card to pay for your groceries. In fact, if you are like most consumers, you have no idea as to your current balance.
A couple of years ago you might have panicked and began looking for the credit card you also carry in your purse or wallet. Or you may have reached for the checkbook – or that blank check you carry for emergencies – to write a check.
Or, you may have made the decision to simply overdraft your account and pay the dreaded NSF fee.
Today, if you are among the growing number of banking customers signing up for text banking, a few quick keyboard entries on your cell phone will produce your current checking account balance.
In fact, more likely, you checked your balance before entering the grocery store so that if your funds are low, you can either visit a nearby ATM for cash or, better yet, use your cell phone to transfer funds from your savings to your checking account via mobile banking.
Since you are not manipulating your account, with text banking there’s no need to log-in using your password. It’s basically a simple, one-step process to obtain your balance.
So the question is this: What impact, if any, will the combination of mobile and text banking have on the future of overdraft protection and the forthcoming opt-in requirement?
Most likely, it’s difficult to say right now. On the other hand, over time mobile and text banking should result in a decline in the use of overdraft protection as checking customers have immediate access to their bank accounts 24/7.
What got me to thinking about this situation was the article, “Banking via text message gains ground as bank balances shrink,” which appears on page 4 in the April 9, 2010 issue of the Sacramento Business Journal.
The article focuses on two local Sacramento credit unions – one that just added text banking earlier this month and the other that’s been offering it since March 2009. Both institutions report high interest in, and enrollments for, text banking.
Wells Fargo was mentioned as introducing text banking in October 2007 for registered mobile service customers. It expanded text banking to all customers just last February.
One thing is certain, having instant access to your checking account balance no matter where you are makes it much easier to manage your money – including avoiding overdraft situations.
Whether it ultimately reduces the use of overdraft protection is yet to be seen.