Today is Bank Transfer Day for Angry Customers
Published: Friday, November 4, 2011 at 9:30 p.m.
Last Modified: Friday, November 4, 2011 at 9:30 p.m.
How it came about -- and why its impact may be somewhat lessened by the Bank of America and similar institutions backing down this week (and how that quick company turn-around came about) is an interesting thread to follow.
On Oct. 15, Occupy Lakeland protestors met on Lake Morton to set ground rules for their protest. "If you really want to hurt (Bank of America), and you have money there, move it," one woman told the group. That remark was aimed at a BofA announcement on Sept. 29 that it would begin charging debit card users a $5 monthly fee.
Ah, if changing banks were only as simple as switching television channels -- which it was back in the days before computers.
Computers and the Internet brought with them online bill paying. Most banks offer the service for free. But as some customers have found, it depends on what one's definition of "free" is.
Coincidently, on the same day those protestors gathers, The New York Times published an article on its website headlined: "Online Banking Keeps Customers on Hook for Fees."
With it was a picture of a man standing in front of a Bank of America office. The caption read: "Tedd Speck of Kent, Conn., was furious about Bank of America's new fee for debit card use, but he is overwhelmed by the inconvenience of switching banks."
The 49-year-old marketing researcher wanted to end his association with the bank because it had announced a $5 monthly fee for debit-card users. (On Tuesday, amid overwhelming public protest, Bank of America said it was dropping the fee plan.)
Speck told The Times that he relented moving his account because he was overwhelmed by the task of stopping his online bill paying arrangements on this Bank of America account and re-establishing them with another bank.
"I'm really annoyed," he said, "but someone at Bank of America made that calculation and they made it right."
Online bill paying has replaced monthly check writing in many households. In the past 30 days, 44 million households paid at least one bill online -- nearly triple the number from just five years ago.
Those automatic transactions translate into customer stability, according to a 2008 marketing study commissioned by Fiserv, a developer of online bill paying systems. Customers who use online bill paying are 95 percent less likely to change banks; those who didn't use online bill paying were 43 percent more likely to leave.
Emmett Higdon, a consultant who managed Citibank's online bill payment product from 2004 to 2007, told The Times that online bill paying is "a double-edged sword" for customers. They like the convenience, but bankers knew "it would be a powerful retention tool. That's why online bill paying went free in the first place. Inertia is powerful in the banking industry."
Meanwhile, Kristen Christian, a Los Angeles art gallery owner, created a Facebook page called "Bank Transfer Day." She invited 500 Facebook friends to move their money from banks to credit unions on Nov. 5.
The page notes that Christian is "a private citizen and small business owner with no affiliations to Anonymous or Occupy Wall Street. While she's now a proud member of Coast Hills Credit Union (based in Lompoc, Calif.) and the Los Angeles Federal Credit Union, she's not a credit union employee. She's received no public or private donations for her efforts or costs associated with this movement. Every bit of work on Bank Transfer Day is a testament to her love for her community and neighbors. She genuinely believes we can pull ourselves out of this economic mess the big banks caused by investing in local not-for-profit credit unions."
Nearly 40,000 people have clicked on the "like" button for the Facebook page. More than 75,000 responded with an "RSVP" on the event page.
In an interview with Business Week, Christian said, "As far as I'm concerned, the funds of the American public are still better served on the local level with credit unions that focus on members and community instead of stockholders and profit. As I've mentioned before, today is merely the deadline goal of Bank Transfer Day. This announcement from the banks [that debit-card fees would not be assessed] comes too little, too late."
Customers have already voted with their feet: BofA announced its debit-card fee in late September. For the month of October, the Credit Union National Association's survey of 5,000 credit unions found 650,000 new customers had signed up, bringing in $4.5 billion in assets.
And finally into this mix, add Molly Katchpole, a 22-year-old who works two part-time jobs in Washington, D.C. Katchpole was graduated from Roger Williams University in Rhode Island this spring, and decided to post a petition in protest to BofA's announcement.
She posted the petition on Change.org, a nonpartisan website that provides a way for people circulating petitions. An excerpt: "The American people bailed out Bank of America during a financial crisis the banks helped create. ... How can you justify squeezing another $60 a year from your debit card customers? This is despicable."
More than 300,000 people signed the petition.
Other banks, including Wells Fargo and JP Morgan Chase, have also backed away from monthly debit-card fees.
Online bill paying may be a great way to assure customer retention, but bankers have found out that online efforts by disgruntled customers are a powerful tool as well.
[ Lonnie Brown can be reached at LedgerDatabase@aol.com. ]
This story appeared in print on page C9
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