PNC customers now have more power over their checking accounts.
The bank, which has five branches in the Wilmington market, has announced Low Cash Mode for its customers who use the bank’s digital Virtual Wallet bank account and money management program.
“Low Cash Mode digital offering … is expected to help Virtual Wallet customers avoid overdraft fees through unprecedented account transparency and control to manage through low-cash moments or mistimed payments,” the Pittsburgh- based financial institution announced last month in a news release. While some customers already have access to it, PNC expects the program to launch nationwide in June and July.
Simply put, the new patent-pending tech offering lets customers know when a pending payment will cause an overdraft.
Customers can choose to pause the payment until sufficient funds are in the account, or go ahead with the payment and incur an overdraft fee.
It’s an improvement from the standard bank approach to automatically covering an overdraft but charging a fee, according to Jim Hansen, PNC regional president for Eastern Carolinas.
Low Cash Mode is part of Virtual Wallet’s Spend (checking) account and gives customers the ability to prioritize by determining whether certain debits (checks and ACH transactions) are processed that otherwise might result in overdrafts, rather than the common industry practice of the bank making the decision. Real-time alerts let customers know when their balance is low and – if it is negative – Low Cash Mode provides a grace period of at least 24 hours to prevent or address overdrafts before fees are charged.
“It’s something we’ve been talking about for some time and had the technology to do,” Hansen said. “COVID in particular has increased the growth of digital banking: 79% of our consumer transactions are now digital.”
Hansen added that PNC is also in the midst of regulatory oversight related to its planned acquisition of Houston-based BBVA USA Bancshares Inc. and its U.S. banking subsidiary BBVA USA.
“That pushed us to get this product capability in our clients’ hands,” he said. “While overdraft protection offered across the industry today allows critical payments to be processed, overdraft fees are a systemic frustration that drives dissatisfaction for all customers regardless of their financial situation.”
PNC expects to help its customers avoid about $125 million to $150 million in overdraft fees annually, the release stated. In a pilot involving nearly 20,000 customers, Low Cash Mode saved participants more than 60% in overdraft fees, according to the release.
PNC’s full year 2021 revenue outlook anticipated this fee reduction, and as a result is not impacted by this change, the release further stated.
“PNC is fortunate to have a diversified revenue stream. We’ve been developing this product and forecasting our revenue numbers for the year,” Hansen said. “We are forecasting a $125 million to $150 million drop per year as a result of Low Cash Mode. We’re not significantly impacted by this and, long term, we think it will grow our client base. Moreover, we believe we believe they will be very happy clients.”