The evolution of banking has been exciting and dynamic in growth. As this evolution has occurred, this growth has impacted many areas - deposits, lending, advertising and much more. Through the creation of the internet, our industry has seen development never thought possible within the last decade.
With growth comes the challenge of regulating and reviewing these powerful new tools used on a daily basis. This article will review the top five regulatory concerns found within a financial institution's website and how that website can be impacted by the regulations.
The first, and probably the most overlooked, concern is the presentation of the website. What many industry specialists do not understand is that this website is not only an informational tool to the consumer but also an advertisement subject to Regulation DD and Regulation Z advertising guidelines, respectively. Yes, we just entered the world of scary, regulatory language. Hold out hope because we are going to be okay.
Simply put, we have to look at these sites as though they are selling something to the consumer. We cannot simply state Premier Certificate of Deposit - 2.50%. With this statement, we have to include all of the proper disclosures, such as the minimum balance to open, the fact that fees may reduce earnings, the term of the account, express the rate as an APY, and all applicable regulatory guidance provided in Regulation DD, 1030.8 or Part 707.8. Don't want that language on your site? That's understandable. Another option would be to include a link on your site to the terms of the account set forth by the same regulation, just be sure it clearly states this information is one click away.
Another common issue is understanding when to use "Member FDIC" and "Federally Insured by NCUA." Frequently, we find these logos included on every page of the institution's website. It is great to inform the consumer of this feature on the accounts, but be sure it is applicable to that portion of the site. If the institution offers products outside of FDIC or NCUA coverage, do not include these logos on this portion of the site. Ask yourself, "Does the FDIC or NCUA cover a stock account? Does it cover insurance?" If the answer is no, do not mislead the consumer and allow them to think your institution will insure this type of investment through the FDIC or NCUA. These logos will then be replaced by the applicable NDIP disclosures, often referred to as the "not-not disclosures."
On the topic of misleading the consumer, what about the options and opportunity available to the consumer on your site? Quite often, an institution includes language and a one-click option to "Apply Now" for that next great loan, or "Open Now" that awesome new account. However, much to their disappointment, the consumer is not afforded this opportunity and is simply directed to leave their contact information so the institution can contact them at a later date. You need to keep in mind that if we are offering this opportunity online, the consumer must be allowed to take full advantage. Rather than "Apply Now," we can use "Request Information." Instead of "Open Now," we can state "Contact Us." Using these tactics, you are able to provide the same quality experience for customers or members and stay within regulatory guidelines without misleading them.
How about informing the consumer? Are you providing current information? Is your institution reviewing this information on a regular basis? Keeping information current is often overlooked, leaving the financial institution in a position of non-compliance. Oddly, rate sheets can be your best example. What happens if, on January 5, rates are uploaded to your institution's site offering a wonderful New Year's promotion? Let's say 2.75% APY for a 3-month CD. Now tax time has come and gone, flooding the site with people looking to invest their tax refund, but there is a problem. That rate is no longer available, the product is long gone and the consumer is left with an APY of 1.25% for the exact same term. Simply having a procedure in place to ensure a review of the website is completed on a regular basis - monthly, for example - will help avoid situations where the institution may be negatively impacted and the consumer will be given current, accurate information.
Lastly, we want to look at web linking. Can you simply redirect the consumer from your site to another site, owned and operated by a third-party vendor? You sure can. If you do this, the consumer must be informed of additional information. This includes the following facts: they are leaving your institution's site, your institution does not imply endorsement of the site or guarantee products and information and their policies may differ from yours. Keep in mind, this applies to social media accounts as well. Yes, your institution's name is on your Facebook page; however, this is still considered a third-party site.
Although we have covered many topics in this article, remember that these five topics are not all encompassing. Creating a dynamic, informative and regulatorily-sound website is critical to the success of your financial institution in our new, technology-driven world. However, utilizing these five directives as your starting point, your website will become that dynamic, informative site your financial institution deserves.