the Future of Change

Yesterday I had the pleasure of working with the City of New Haven to launch its new Community Impact Report Card (CIRC).  CIRC is an index that grades banks based on the array of products and services they offer and generates an overall score for each bank on a scale of 1-100 points.  The products and services CIRC measures are the types of things consumers tend to care about: the fees banks charge to maintain accounts, the hours their branches are open, minimum balance requirements, etc.  A complete overview of CIRC is available here.  The system grades the 11 banks that serve residents of New Haven, and gives consumers easy-to-understand metrics and data for making determinations about where to bring their banking business.

The idea behind the project, launched by the City of New Haven in conjunction with Yale Law School’s Community & Economic Development Clinic, is that consumers will want to bring their banking business to the bank that offers them the best array of products and services, on the best terms, and in an accessible way.  Unfortunately, wading through the fine print of web-sites and brochures can be complex, and it is difficult to engage in comparison shopping between banks because much of this information can be difficult to understand and harder to access.  CIRC does that work for the consumer.  Law students reviewed banks web-sites, conducted site visits to local branches, and spoke to bank personnel to fill out the information grid that generated the final score for each bank.  Consumers can consult the way banks scored in individual categories, and can use the overall score as a simple way to capture the best overall bank along the information gathered, measured and compared.

Two years after passage of the landmark Dodd-Frank financial reform legislation, trust in the nation’s financial institutions is at a thirty-year low, as this tracking of data gathered by Gallup reveals.

Much of this lack of trust in financial institutions can be traced to the treatment customers receive from banks — the fees charged, the impersonal nature of many interactions with the typical bank.  The rise of movements like the Move Your Money Project and Bank Transfer Day is no surprise in light of this loss of trust.

CIRC attempts to give consumers information about the products and services offered by local banks so that they can have confidence that they are supporting banks that meet their needs.  The hope is that consumers will use the CIRC system to choose where to bank.  This movement of customers to banks that score well through the CIRC system will, hopefully, encourage banks to improve their products and services and score better when New Haven scores banks in the future (the plan is to generate new scores every year).

The system was designed to be easily adapted to other communities, and such other communities are invited to adapt and tailor the CIRC system to meet their needs.

A quick overview of this project can be read here, in a post I co-authored with Mayor John DeStefano of the City of New Haven for the Huffington Post.

A lengthier, more academic treatment of the project can be found here: a piece I co-authored with Yale Law student Sonia Steinway, for the Fordham Journal of Corporate and Financial Law.