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Not Your Grandmother's Deposit Offerings

Rachelle Dekker, Senior Compliance Advisor, outlines five key considerations for your financial institution to maintain compliant while updating to more modern and convenient products and services.

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Rachelle Dekker – Senior Compliance Advisor

Fewer account holders are conducting traditional banking in-person at brick and mortar locations. And as millennials become a larger portion of their customer or member base, financial institutions are offering competitive products and services with convenience at the forefront. These offerings appeal to consumers who want to access their accounts anytime and conduct transactions in the most convenient method possible. This includes accounts with features such as free mobile banking and online banking, person-to-person transfers, e-statements and more.

Financial institutions are encompassing convenience in the delivery of these products and services, including the ease of opening an account online or through a mobile app. They are also providing services that allow transactions to be conducted from anywhere, including a consumer’s mobile device, online or through a large network of ATMs. The methods used to reach these types of consumers, such as advertising on social media, has also progressed.

Even though the industry is evolving with more convenient products and services, financial institutions must continue to meet regulatory requirements, regardless if the regulations have been updated to align with this modern age. Depending on your institution’s current offerings, or your plans to update, this list of considerations could help when it comes to modernizing your products and services and maintaining compliance:

  1. The shift to paperless. If you want to switch customers from paper statements to e-statements, consider the requirements for a change in terms notice. If you plan to assess a service fee if the customer doesn’t enroll in e-statements, be sure to provide advance notification of the change in terms. If you require customers to enroll in e-statements or be switched to a different type of account, then advance notification is also required to allow customers time to take action. Consider any potential Unfair, Deceptive or Abusive Acts or Practices (UDAAP) violations that may arise if you switch the individual’s account.
  2. Mobile banking and remote deposit. Does your institution allow account holders to conduct mobile deposits? If so, consider the new indemnity in Regulation CC. Effective July 1, 2018, section 229.34 of Regulation CC was updated with a new indemnity indicating that a depository bank requiring a restrictive endorsement such as, “for mobile deposit only,” on remote or mobile deposits would not be liable when an item is presented twice for payment. To reduce the risk of allowing a consumer to present the same item twice for payment, a financial institution allowing mobile or remote deposits can require the item to include a restrictive endorsement to alleviate the risk of a potential loss.
  3. Digital Advertising. Many institutions advertise on social media, but compliance requirements must be considered if disclosures are one click away. A newer method of advertising is through digital signs. If your institution advertises with digital signs within a branch, keep in mind that certain disclosures may be exempt.
  4. Digital Signage. Does your branch lobby have a display that rotates signage? If so, ensure a consumer can view the applicable signs when required. For example, if an individual came in to make a deposit, would they see the funds availability sign? Will they see the Patriot Act sign if they open an account? If utilizing a digital sign, be sure consumers can view all required signage.
  5. Online or mobile account opening. If your institution offers account opening online or through a mobile app, consider the new requirement under section 213 of the Economic Growth Regulatory Relief and Consumer Protection Act. This section of the Act addresses the restriction of retaining an ID online for purposes of minimizing identity theft. This doesn’t mean you can’t retain the provided ID on your institution’s internal system, but consider where it is retained to avoid potential fair lending concerns. For example, by restricting lenders and underwriters from accessing an applicant’s photo ID, your institution can avoid potential concerns that the photo ID influenced a credit decision. 

Regardless of the products and services your institution wants to update, anytime you change your current offerings or roll out a completely new product or service, compliance with regulations should be considered every step of the way.