Putting Consumer Protection in the Hands of the Consumer:
New York’s New Bank Ratings Index
As a new administration takes over in Washington, many fear that federal oversight of broad sectors of the economy will slacken, whether it is the coal industry, automobile manufacturing, or pharmaceuticals. One sector where many anticipate attempts to roll back recent regulatory reforms is the financial sector, where banks may feel emboldened to pursue changes in such laws as Dodd-Frank, the law that instituted critical consumer protections and bank regulations in an effort to avoid a repeat of the Financial Crisis of 2008 and the fallout that followed. While some intrepid state law enforcement officials, like New York’s Attorney General Eric Schneiderman, can try to fill some of the regulatory gaps, one critical voice, that of the consumer, is often left out of such discussions. Until now that is.
Today, in one of the financial capitals of the world, New York, consumers now have a tool at their disposal, the New York Bank Ratings Index, that will help them “vote with their wallets” and choose the bank that is right for them. The hope is that when consumers use this tool, and this power, banks will pursue a “race to the top” and strive to deliver the best array of products and services in an effort to attract customers.
The Bank Ratings Index scores the nineteen largest banks by bank assets operating in New York State along 20 consumer-focused categories. Such categories include such items important to consumers, like overdraft fees, interest on credit cards, bank lending behavior, and branch locations and numbers. The index then ranks the banks according to how well they perform under all of the categories combined, with a potential score of 100. More importantly, with a website that accompanies this index, consumers can customize the findings and create their own ranking, assigning different weights to the categories and focusing in on only those categories that matter the most to them.
Here is the ranking of these nineteen banks according to our assessment:
The information that formed the basis of this study was compiled in 2016, when Key Bank was still finalizing the purchase of First Niagara, so we left both banks in this ranking.
While creating an index such as this is somewhat in vogue, to my knowledge, very few such ranking projects allow for end-user customization, which is now available through the accompanying website. Please check out the site and give the ranking a whirl to find the right bank for you.
If you do not live in New York State, you can still create your own ranking system based on what we have done in New York. The accompanying report provides all of the background on the study and shows how different states and localities can create their own index and rankings. Download the report here.
This ratings project was completed by Ralph Scunziano, a recent graduate of Albany Law School, and myself, in collaboration with the Empire Justice Center, a state-wide provider of free legal services to low-income New Yorkers, and the Association for Neighborhood & Housing Development (ANHD), which works to build the community development movement in New York City. The website was constructed by Christopher Velez, who made initial iterations of the site as part of a class he teaches at the University at Albany, part of the State University of New York system.
The New York Bank Ratings Index puts the power to shape bank behavior in the hands of consumers. As more consumers utilize the index, and its use spreads to other states and cities, consumers can help ensure bank behavior is consistent with consumer interests, regardless of the strength, weaknesses, ineffectiveness, presence or absence of government regulators.