Kaiser Federal Bank was looking to rebrand itself last year, and the Covina, Calif., institution wanted a name that would appeal to a broad segment of consumers in southern California.
The name the bank settled on was Simplicity Bank. Its new tag line: "Bank Simply."
"We are here to make life easier for our customers," explains chief executive officer Dustin Luton. "That was essentially our brand."
The name was changed in November and $890 million-asset company is focused today on living up to its new moniker, Luton says. He points to Simplicity Bank's efforts to ensure that whoever answers a customer's phone call is able to resolve the issue without transferring the caller to another department.
"I just think the world today is so complex," says Luton. "You get to a point where people just want things to be made simple for them."
It's a message more and more banks are trying to convey to customers.
TD Bank and Regions Financial (RF) are among the institutions that offer accounts they tout as "Simple Checking." U.S. Bancorp (USB) provides what it calls a "Simple Snapshot," a one-page summary of its checking accounts' key terms. Citigroup (NYSE: C) is marketing its Simplicity Card, a credit card with no annual fee and no late fees. All of these products have been introduced since 2011.
The marketing push behind simplicity comes as banks contend with new pressure from regulators to make their products easier to understand. The landscape remains somewhat murky, but regulators appear more favorably inclined toward products that are simpler, says Jo Ann Barefoot, an industry consultant at Treliant Risk Advisors.
The big unanswered question is: how deep will the industry's changes go? Simplicity is a broad concept that is open to multiple interpretations. So are banks merely putting a new marketing gloss on hard-to-understand products? Or will this be the dawn of a new era?
"I do think that banks are grappling with it, and that simple is much easier said than done," Barefoot says.
The Obama Administration's original proposal for what would become the Consumer Financial Protection Bureau gave the agency the authority to require simple products with straightforward pricing.
That so-called plain-vanilla option was later torpedoed in Congress. Still, a regulatory preference for greater simplicity in consumer banking products appears to be one legacy of the financial meltdown.
While the CFPB does not have the authority to require banks to offer simple products, it can use carrots and sticks to move them in that direction.
So far, crackdowns by the Consumer Financial Protection Bureau have focused on complex, hard-to-understand products, such as credit card payment protection plans. It has not zeroed in on checking accounts but it is encouraging easier-to-understand disclosures. "Ideally, consumers would have a simple way to evaluate checking account costs," the CFPB said in a 2011 statement.
Banks are responding to the regulatory encouragement by simplifying their product presentation, says Steven Reider, president of Bancography, a consulting firm in Birmingham, Ala.
"Historically, banks had just an absurd array of six, seven, eight checking accounts," he says. "It was not only confusing to the consumer; it was confusing to the sales representative."
Credit cards were also long plagued by hard-to-understand disclosures, but a 2009 reform law required simpler explanations. "I'm not sure the industry would have ever moved toward that if it had not been mandated," Reider says.
