Warning: coming regulatory changes to the checking account.

• Author: Motley, L. Biff
• Position: Customer Satisfaction

Required changes to Regulation DD, which necessitate informing clients on their monthly statements of specifics regarding overdraft fees, plus proposed changes to Regulation E, which will likely require banks to offer clients an "Opt-In" to fee-based overdrafts triggered by ATM or debit card transactions (and perhaps other transactions as well), have bankers scrambling to reconfigure their checking account offerings.

While the implications of these regulations are mind numbing from both an operational and financial-impact point of view, it is vitally important that marketers step into the fray to ensure that the "sausage" that comes out at the end of this regulatory process appeals to customers and is easily explainable by bankers.

As we all well know, many of the current free checking offerings have captured the attention of legislators, and regulators due to the "lightning rod" effect of shifting direct revenue on such accounts from monthly service charges to conditional overdraft fees, which not surprisingly, fall disproportionately on lower-balance, lower-income clients. This effect, coupled with the rise in overdraft fees during recent years has produced the bell-ringing effect of people being charged $30 for overdrawing their account to buy a $2 coffee at Starbucks with their debit card.

While this situation is admittedly the unintended consequence of multiple trends, including the growing popularity of debit cards' use for small point-of-sale transactions and the growing dependency of some banks on overdraft fee income, we have now arrived at the place where the entire value proposition of our checking offering has to be rebaselined to take into account not only the new regulations, but what is fair and right from both a client and bank's point of view.

The common ground of what is fair and right might include the following: (1) The account should be clear and easy to understand and manage by the client; (2) It should not be deceptive or...