Bank of America and Citi are taking the higher-and less profitable-road by not offering fee-based overdraft protection to debit card users who exceed their available balance. But many other banks in the industry can't afford to abandon the entire revenue stream, leaving them with a marketing and technical challenge to get customers to opt in or out of overdraft protection by summer. "The folks who really live on these NSF fees, they can't afford to follow suit. They can't even think about it," says Bart Narter, Celent's senior banking analyst.

The technical and operational challenges posed by the changes to Reg E hit three touchpoints: marketing, or how to effectively reach those customers who currently drive the most NSF/OD revenue; compliance, how to receive and create an audit trail for the requisite opt in or opt out decisions; and core banking, how to integrate the rules associated with the new preferences into the bank's core processing application.

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