Sending out an SMS: automatic enrollment experiments for overdraft alerts

Grubb, Michael D., Kelly, Darragh, Nieboer, Jeroen, Osborne, Matthew and Shaw, Jonathan (2024) Sending out an SMS: automatic enrollment experiments for overdraft alerts. Journal of Finance. ISSN 0022-1082

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Abstract

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

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Management
Subjects:	H Social Sciences > HG Finance
Date Deposited:	14 Jan 2025 17:09
Last Modified:	14 Jan 2025 19:03
URI:	http://eprints.lse.ac.uk/id/eprint/126884

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