Delays of even a day in taking a required action can prove to be costly regulatory violations. Thus, one implication of the growing importance of non-interest revenue to banks is the need to match that new business with increased attention to the often detailed and technical compliance responsibilities that accompany the businesses that produce that income. Second, many of the non-interest revenue generating lines of business involve contacts with individual customers, often on an ongoing basis, although not necessarily in person. Thus, good customer relations are important for banks to keep this type, of business. Individual consumers may not know exactly if their bank has complied with all the applicable compliance rules, but they immediately know, and have no problem reacting, when they feel they haven't been treated right by their bank.
Customers can and do react by switching their business elsewhere.
And if many customers of a particular institution have the same type of problem with their bank, the reputational damage from bad publicity and the loss of business can be highly detrimental. Today's consumers are increasingly sensitive, vocal and mobile in how they react to treatment by their financial institution. A technical compliance issue can easily turn into a public relations nightmare, particularly where, as is the case with many retail products, the same mistake can affect hundreds or thousands of customers. Also, whether a bank has complied with particular legal requirements may not be all that determines whether customers want to do business with the bank. or not. A bank may be complying with what the law requires but doing something that has a significant customer relations impact.