Wells Fargo plans to offer two new bank accounts that limit overdraft fees for customers, the bank said on Tuesday. The bank will launch a check-less no-overdraft fee account as well as an account that includes checks and limits overdraft fees to once a month in early 2021.
"We know many consumers are seeking low-cost bank accounts that help them avoid overspending and keep to a budget, as well as access to all our mobile, online, ATM, branch and phone banking services," Mary Mack, Wells Fargo CEO of consumer and small business banking, said in a statement. "These new offerings will help us satisfy the financial needs of more customers and further expand access to mainstream banking services."
Wells Fargo joins a growing field of traditional and digital banks that offer similar accounts.
"Wells Fargo is certainly not the leader in offering checking accounts that tout no overdraft fees," Simon Zhen, research analyst for financial comparison site MyBankTracker.com, said. "Rather, the bank is following the trend that has been years in the making."
Zhen said Wells Fargo’s new accounts, like many other check-less accounts, are aimed at a demographic that may have a troubled banking history.
"Check-less bank accounts have long been the trait of 'second-chance' checking accounts," he told Banking Dive. "A consumer — who overdrew previous bank accounts and left them unpaid — may have a tarnished banking history that prevents them from qualifying for traditional checking accounts. So, these second-chance checking accounts eliminate opportunities to overdraw the account."
Other banks have introduced their own no-overdraft accounts aimed at low income consumers, such as Fifth Third Bank’s Express Banking account, which launched in 2016, and JPMorgan Chase’s Chase Secure, which launched last year.
Bank of America and Citi have also offered their own no-overdraft accounts since 2014.
Challenger banks such as Chime and Varo Money have also embraced no-overdraft offerings. Chime’s SpotMe feature covers customers who overdraw as much as $100 past the amount in their account, while Varo covers transactions up to $50 over a user’s account balance.
A new look
Wells Fargo’s announcement about the new accounts comes ahead of the bank’s back-to-back hearings in front of the House Financial Services Committee, scheduled for next week.
As the bank grapples with its image in the wake of its fake accounts scandal, this new offering might be the bank’s way of showing regulators and lawmakers that it’s implementing positive changes.
The country’s fourth-largest bank has been under scrutiny from lawmakers and regulators since 2016, when Wells Fargo employees were found to have created roughly 3.5 million fake accounts to receive sales-based incentives.
The bank has also faced additional scrutiny after an August report by The New York Times revealed a policy that allowed Wells Fargo accounts to remain open even after customers thought they had closed them, prompting some customers to be charged thousands of dollars in overdraft fees.
While the San Francisco-based bank has settled a number of charges with the Department of Justice and the Securities and Exchange Commission in recent weeks in connection with the scandal, House Financial Services Committee Chairwoman Maxine Waters, D-CA, said the upcoming hearings "will make clear that the problems at Wells Fargo remain unresolved."
Wells Fargo CEO Charlie Scharf will testify Tuesday, and Wells Fargo board members Betsy Duke and James Quigley are scheduled to testify Wednesday.