Kristin Moyer

Stessa Cohen here. One thing that is hard for an industry, for an organization that has a long tail of history and relies on “the way things have been done” is change. Big surprise, right? So, naturally, when some bankers read about the Obama administration’s plans to add more regulatory controls, they must be worrying about how these plans are going to impact (and probably not for the better) credit card fee revenue.

While I don’t want to dismiss the importance of that, I want to focus on another - different – aspect of these proposed and rumoured changes that bankers should – and may not even think about – consider.  Seen from another perspective, the proposed changes address some trends we’ve been seeing for a while: consumer desires fore more communication and transparency with their banks.  As the American Banker article noted:

According to several sources, the administration wants to force card issuers to get their customers permission before charging them a fee for exceeding their credit limit. That provision is tougher than one in the card reform bill by Rep. Carloyn Maloney, D-N.Y., which would require companies to give customers a chance to opt-out before charging such fees. The Maloney bill passed the House Financial Services Committee on Wednesday.”

For those of you who have read this blog before, you’ll recognize these topics. I’ve blogged several times about the importance of communicating with bank customers – not only about the ongoing financial & economic situation but also about how to use social media such as microblogging tools.

In discerning among bank products, fees have become a primary selection criteria for consumers. To that end, consumers, of course, want more transparency about bank fees and costs, to know what fees their banks charge, when they will charge them, and how they, consumers, can avoid them – before fees hit their accounts and affect their credit scores.  They also want to reduce their debts, to manage their money better. Even more basic: at my SXSW panel, many people admitted that they didn’t know how to budget.  While they are still new, the emergence (and still emerging) of social personal financial management sites like Wesabe and Mint and SmartyPig attract consumers who want to stick to their budgets, reduce their costs, debts and bank fees and get more information from their banks about fees and features. Mint, for example, emails its users when a bank fee is recorded.

Two things in the proposal appear (who knows what will be in the actual legislation?) to address these consumer concerns and desire for transparency and communication:

The administration is also seeking to require card companies to disclose on monthly statements how long it would take to pay off a balance when making only minimum payments and highlighting how much more the consumer would pay in fees and interest when doing so, sources said. Currently, the Maloney bill requires issuers to provide a toll-free number and a website so that consumers can find out how to pay off their balance……The administration wants to require any low-interest teaser rates to be offered for at least six months and standardize bill due dates so they are the same every month.

Instead of pushing back on these requirements, perhaps banks can see – and reap? – long term benefits of these types of regulatory changes. For example, consumers who get direct, easy to understand communication from their banks about fees and charges may be able to takes steps to avoid them and, in turn, save more money. Customers who know when fees will be charge and payments required will be better able to budget and manage their money. In both cases, customers may develop more trust and satisfaction with their banks. These customer may then need ways to invest the money they are able to save – in new savings and other products. Consumers who go from managing paycheck-to-paycheck may have experience only with the  bank’s lowest cost products. They may not know about other, higher interest-bearing products and services. They may acquire enough to become wealth management customers. They may use their savings to start small businesses. But will they start them with your bank?