An interim Federal Reserve rule allowing electronic account statements could bolster profits and lead to cheap paperless accounts for home banking customers.
"It's a potential win for the bank and a potential win for the customer," said Robert P. Shay Jr., executive director of global electronic banking at Bank of Boston. The business model for this is "really quite striking," he said.
Bank of Boston expects to offer paperless service to its 250,000 "HomeLink" customers next year, he said. Customers would have the ability to view, print, or download images of their monthly account statements and their canceled checks. The bank would gain a marginal cost savings of 62 cents on every monthly statement sent electronically, he said.
The rule lets bank customers who agree to go paperless receive monthly statements, change-in-terms and error-resolution notices, initial disclosures, and other documents electronically. Paper copies would not be mailed. Public comments on the interim rule are due at the Fed by May 15.
The American Bankers Association had been prodding the Fed to issue the interim rule. An initial, proposed version was released nearly two years ago.
"I was glad to see them do it," said William H. Phillips, director of policy development at the ABA. "The Fed is clearly positioning themselves to be able to have a regulatory handle on electronic transactions."
The Fed left open whether banks may charge customers who request paper documents. "That depends on the underlying fee arrangements that exist between the bank and the customer," said Mr. Phillips. But Mr. Shay suggested that if customers get a discount for electronic-only accounts, they should probably expect to be charged for paper documents.
Telephone banking is not a candidate for the Fed's paper exclusion because the technology does not permit downloading or printouts. But a customer using ATMs could theoretically qualify, provided the ATM can print document copies.
The savings from electronic delivery may lead to lower customer fees. At Bank of Boston, Mr. Shay said, he envisions possibilities such as lopping 50 cents or a dollar off the $5 basic monthly checking fee. The bank may pocket the $7 per customer it expects to save.
"The marketing trick is to find out which way will maximize the bank's income," he said, "and we haven't done that exercise."
