Bank Transfer Day reflected growing consumer frustration with large financial institutions and the fees associated with traditional banking relationships. Organized largely through social media, the November 5 protest encouraged consumers to move their deposits from major banks to community banks and credit unions.
The immediate financial impact on the nation’s largest banks may be difficult to measure, but the movement highlighted a broader challenge for the banking industry: dissatisfied customers increasingly have alternatives and new ways to organize around their concerns. For smaller financial institutions, Bank Transfer Day also created an opportunity to attract consumers looking for a different banking relationship.
For those interested in data points around Bank Transfer Day (which was the movement started by an individual consumer to encourage people to move their DDA accounts from big banks to credit unions), this article offers a detailed list of comings and goings. However, the main point might be that hundreds of credit unions have seen a spike in accounts and have had the rare opportunity to collectively (and loudly) toot their horns.
Either way you look at it, October 2011 can be regarded as “Black October.” For big banks, it was a hugely negative event like Black Monday in 1987, only for a whole month. For community-based financial institutions — especially credit unions — it was a major boon to business, like 30 straight days of Black Friday.
What we don’t know yet, is which accountholders switched and whether or not they offer a sustainable net new account base for credit unions. As banks quickly retreat from the per-debit card fee strategy and the initial hysteria dies down, will the movement lose its momentum? Accountholders facing the cumbersome and time-consuming task of changing primary checking accounts may demur in favor of good intentions and leave their primary account at the big bank, while maintaining a secondary account at a local credit union. Time will tell, but in the meantime credit unions are getting some well-deserved attention.
The significance of Bank Transfer Day may ultimately extend beyond the number of accounts opened or deposits transferred on a single Saturday. The movement demonstrated how quickly consumer dissatisfaction with banking fees and practices can become a highly visible public campaign.
Community banks and credit unions have an opportunity to benefit from that dissatisfaction, but attracting new customers is only the first step. Institutions must demonstrate that they can provide competitive products, convenient access, responsive service, and a compelling reason for consumers to maintain their new relationships after the attention surrounding the protest subsides.
Large banks also have reason to pay attention. Even if the deposits moved during Bank Transfer Day represent only a small portion of their overall assets, customer frustration can affect loyalty and create opportunities for competitors. The ability of consumers to share experiences and organize through social media makes reputation and customer satisfaction increasingly important considerations.
Bank Transfer Day therefore provides a reminder that consumers have choices about where they keep their money. Financial institutions that understand what motivates customers to switch—and address those concerns before dissatisfaction reaches that point—may be better positioned to build lasting relationships.
