ACTON Study Asks Consumers About Overdraft
Opt-in Intentions

20,000 Consumers Share Their Ideas About Banks’ Overdraft Programs and
NSF Fees

February 22, 2010

Lincoln, NE – The Federal Reserve Bank projects that banks could lose nearly half of their overdraft protection customers after banks’ compliance with the Fed’s Regulation E. But Brian Beach, CEO of financial marketing firm ACTON Marketing, LLC, believes that such dire forecasts do not necessarily apply to the savvy bank marketer.

“If the future of the banks’ overdraft programs are dependent on the will of the consumer, we thought someone should study that will,” says Beach. “And that’s what we have our research division doing. From in-depth market understanding and concepts developed from the study, we can construct a marketing playbook for banks — strategies that optimize both response and positive opt-ins.”

To study the will of the consumer, ACTON Market Intelligence (AMI), ACTON’s research division, fielded a national survey of 20,000 American adult heads of household so AMI can determine what program and marketing strategies will result in bank customers responding positively to the mandatory overdraft opt-in. The study was developed in collaboration with top bank executives, government and elected officials, and selected marketing consultants across the country.

Beach also says, “Despite the current anxious atmosphere in the financial industry, the sky doesn’t need to fall on banks after August 15. Many banks feel it’s a certainty that they’ll lose significant revenues. However, we believe Regulation E offers aggressive bank marketers opportunities to maintain or even increase revenues from their overdraft programs. This is Opportunity Marketing. Snatching bank revenues from the jaws of Regulation E.”

The consumer study began February 9, as a random sample of 20,000 adult heads of household were contacted and received survey questionnaires. Zach Gabelhouse, M.S., AMI’s Director of Modeling and Statistical Analysis, says, “We’re studying all elements of an opt-in program — optimal point analysis, in-depth program features, and the alternative structures of an overdraft program. We’re also going into the psychometric elements of overdraft protection and the consumers’ feelings about having their debit card transactions approved or denied at the retail level.

“We’ll find the sweet spot for NSF fees and determine what the consumer will accept with regard to aggregating overdraft fees,” Gabelhouse continued. “Our study will determine the optimal mix of no-fee and fee-based overdraft coverage. And, we’ll compare study results by region and demographics. We anticipate the optimal overdraft program will be different by geographic region and by demographic segment. These findings should offer banks and credit unions valuable insight for building and marketing their overdraft programs.”

Results of AMI’s study will be available in March to banks and credit unions that have agreed to be study participants. Preliminary results are expected as early as the end of February.

Beach added, “Basically, we believe a bank or credit union that has done this kind of research due diligence will be able to structure and successfully market its overdraft program and get a high customer response with a satisfying number of opt-ins. So, no, the sky doesn’t need to fall on financial institutions because of Reg. E.”

ACTON Market Intelligence is a wholly-owned division of ACTON Marketing, LLC, Lincoln, Nebraska. ACTON Marketing is a full-service direct marketing organization that provides complete direct mail programs for financial organizations pursuing new account growth. ACTON Marketing was the first marketing company to promote free checking. Using decades of proprietary data, knowledge, and experience, ACTON Marketing continues to offer successful strategies, creative, and production services to clients nationwide. Besides its Checking Account Customer Acquisition program and its new Opt-in and NSF marketing programs, ACTON offers strategies for New Movers marketing, pre-approved auto loans, CD retention, cross-selling and more.

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