New technology making it feasible for financial institutions to enable consumers to exert “much greater control” over their credit cards, debit cards, and other payment methods should be considered for speedy adoption by financial institutions so their customers can take advantage of them, the outgoing director of the Consumer Financial Protection Bureau (CFPB) wrote last week to the CEOs of several banks, credit unions, and financial companies.
In the letter, CFPB Director Richard Cordray (who announced last week he would step down from the agency by the end of November) said he believes bank and financial company customers and credit union members will want and demand the capability, “and it is worth considering how you can prioritize the steps necessary to speed its availability to them.”
Cordray said that digital servicing, which can enable consumers to exercise very detailed control over their accounts, is an example of service worth considering. “With digital servicing, financial institutions may be able to offer consumers the ability to set spending limits on a card-by-card basis for particular merchants, channels of transactions (online versus phone versus in-person versus recurring transactions, for example), or categories of spending,” Cordray wrote. “Digital servicing may also allow customers to receive an alert or warning if a transaction is attempted that falls outside the consumer’s personal preset parameters (or parameters for an authorized user such as those set by parents for their children).”
The consumer bureau director added that financial institutions could likewise embed other money management tools within their online and mobile platforms.
“On the eve of my leaving the Bureau, I urge you to think creatively about how you can put more control directly in the hands of your customers, Cordray wrote, adding doing so help consumers as they worry about data breaches, and could help banks, credit unions and financial companies minimize the incidents of fraudulent use of credit cards and debit cards and other payment methods.
“This will help people also to assert greater control of their financial lives. In short, you have the power, right now, to help consumers help themselves in ways that will materially improve their lives and that could reduce your costs. And if you manage to do so, we believe you will enhance the loyalty and engagement of your customers with positive results.”