Sending out an SMS: Automatic Enrollment Experiments for Overdraft Alerts

Michael Grubb, Darragh Kelly, Jeroen Niebohr, Matthew Osborne and Jonathan Shaw
Additional contact information
Darragh Kelly: Google
Jeroen Niebohr: London School of Economics

No 1073, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: At-scale field experiments at major UK banks show that automatic enrollment into “just-in-time” text message alerts reduces unarranged overdraft and unpaid item charges 17–19% and arranged overdraft charges 4–8%, implying annual market-wide savings of £170–240 million. Incremental benefits from additional “early warning” alerts, triggered by low account balances are not statistically significant, although economically significant effects are not ruled out. Prior to the experiments, over half of overdrafting could have been avoided by using lower-cost liquidity available in savings and credit card accounts (FCA, 2018c). Alerts help consumers achieve less than half of these potential savings.

Keywords: overdraft fees; early warning alerts; liquidity (search for similar items in EconPapers)
JEL-codes: D14 D18 G21 G28 G51 (search for similar items in EconPapers)
Date: 2024-05-08
New Economics Papers: this item is included in nep-ban, nep-exp, nep-pay and nep-reg
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Citations:

Forthcoming, Journal of Finance

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Working Paper: Sending out an SMS: automatic enrollment experiments for overdraft alerts (2024)
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