From profiting off overdrafts to preventing them: How FIs are evolving their revenue models
- Banks once relied on overdraft fees for revenue, but growing regulatory and consumer pressure has pushed them to rethink their approach.
- Here DoubleCheck, a B2B2C firm, steps in to fill the overdraft fee gap with protection and transaction management for FIs and their customers via integrations.
The Consumer Financial Protection Bureau, under the Biden Administration, finalized a rule in December last year that caps bank overdraft fees at $5 — significantly lower than the typical $35 charged by big banks and credit unions.
Banks historically depended on overdraft fees as a key revenue source, but increasing scrutiny from regulators and consumer advocates has led to a shift in their strategy. Many FIs are turning to alternative solutions that not only ensure regulatory compliance but also strengthen customer loyalty, trust, and provide a competitive edge.
As FIs reassess their overdraft revenue strategies, companies like California-based DoubleCheck are stepping in to fill the gap for both FIs and their customers.
DoubleCheck, who?
DoubleCheck offers overdraft protection and transaction management solutions for banks and credit unions through integrations. These integrations connect with a bank’s or credit union’s existing core banking systems and transaction platforms.
These institutions, in turn, offer DoubleCheck’s services to their customers – consumers and business account holders – enabling them to review and adjust transactions that might otherwise be declined due to insufficient funds, helping customers avoid overdraft fees.
“DoubleCheck, built by bankers for banks and credit unions, notifies account holders in real-time if they have non-sufficient funds in their account and allows them to alter the financial institution’s decisions on what gets paid, using a range of payment methods,” says Ashwin Rangan, the fairly new CEO of DoubleCheck.
“DoubleCheck’s offerings help FIs not only prove that their offerings are on the ‘right side of the law,’ but more importantly, that in both letter and spirit, their services are adding value to their end-customers.”
DoubleCheck was founded nearly a decade ago. The first five years were focused on identifying the problem area, exploring potential solutions, and securing intellectual property. It wasn’t until 2019 that the company began fully developing and implementing viable products.
“With over 5 years of effort behind [us], DoubleCheck is past the crawl and tottering walk stages. It is beginning to hit its stride,” Rangan notes. “I feel excited to be given this opportunity to take it from a walk to, eventually, a steady-paced, long-stride marathon run.”
The new face leading the charge: Rangan took the helm at DoubleCheck last month, bringing extensive experience from his previous roles, including tech executive at Bank of America, former CIO of Walmart.com, and most recently, chief innovation and information officer (CIIO) at the Internet Corporation for Assigned Names and Numbers (ICANN).
At BofA and Walmart.com, Rangan led much larger teams compared to DoubleCheck. His experience scaling both teams and technology is something he’s eager to apply at DoubleCheck.
Ashwin Rangan, CEO of DoubleCheck
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