Yesterday’s Media Post Marketing Daily featured a story based on research by Mintel, indicating that nearly 1 in 5 consumers would prefer to use pre-paid cards when paying bills, instead of a bank account. The motive was avoiding overdraft and other fees. Click here to read the Marketing Daily story.
Implications: I find it ironic that on the same day this story was posted by Marketing Daily, President Obama signed the most sweeping financial reforms since the Great Depression into law. Among the changes in policy mandated by the legislation: Consent requirements for checking accounts that offer overdraft protection, open access to credit scores if they are used by the bank in the loan approval process, and more. Politics aside—and whatever the intention of the legislation—these new rules will make it easier to be a consumer, and harder to be a bank.
In recent conversations with a couple of folks in the banking field, the consensus seemed to be that some reforms were overdue. But concern remains, in the banking industry, that these stricter rules have arrived at a time when the consumer has more options than ever—options that could be seen as alternatives to traditional banking.
For financial institutions of all kinds, it will be important to make these new rules clear for the consumer. While these new laws are seen as consumer protections, it is rare that new government policy makes anything more simple.