Predictive Analytics
Dynamic Overdraft Limits
- Up to 50% reduction in overdraft charge-offs
- Improved customer experience
- Greater fraud resilience
- Lower operational risk
Situation
Overdraft Losses Are Growing—and So Is the Pressure
Every month, banks and credit unions write off millions in overdraft-related charge-offs.
At the same time, regulatory pressure to reduce overdraft fees is mounting. Traditional overdraft protection models rely on static limits and punitive fees—but in today’s environment, that approach creates both compliance risk and financial exposure.
To make matters worse, bust-out fraud is on the rise. Fraudsters exploit incentives, establish transaction patterns, overdraft into the negative, and walk away—leaving institutions with unrecoverable losses.
What’s needed is a smarter way to manage overdraft risk—one that adapts to each customer’s real behavior in real time.
Problem
Static Limits and Flat Rules Don’t Work Anymore
Most overdraft systems assign fixed limits based on generic rules, regardless of the customer’s current financial health, risk profile, or transaction behavior.
This one-size-fits-all approach leads to:
- Overexposed accounts that can’t recover
- Lost revenue from overly cautious limits
- Charge-offs from customers with no ability or intention to repay
- Compliance and reputational risk in a shifting regulatory environment
Institutions are stuck between two undesirable options: either limiting overdrafts entirely and frustrating customers, or allowing them and absorbing the resulting losses.
But with dynamic, AI-driven limits, you don’t have to choose.
Solution
Dynamic Overdraft Limits, Powered by Private AI
- Each account is simulated to go into overdraft, triggering a model evaluation
- The model predicts which limits an account holder can realistically repay within a defined period (e.g., 45 days)
- Limits are updated at your desired frequency—weekly, monthly, or on-demand
- Explainable AI outputs show why each limit was assigned, supporting transparency and trust
- Results are integrated directly into the core system and digital banking platforms, so both institutions and customers stay informed
- Models are trained exclusively on your first-party transaction and payment history—no external data or black-box logic
- The solution is fully private, SOC II compliant, and free of features that carry bias risk
Impact
Up to 50% Reduction in Overdraft Losses
- Up to 50% reduction in overdraft charge-offs
- Improved customer experience by offering the right protection, to the right people, at the right time
- Greater fraud resilience, minimizing the impact of bust-out tactics
- Regulatory flexibility, helping institutions navigate evolving compliance expectations
- Lower operational risk through automation and explainability
Talk to an Expert
Ready to Take Control of Account Charge-offs
See how you can use dynamic overdraft limits to reduce charge-offs and improve customer satisfaction
