The Risks of Bank Transfer Day

Bank Transfer Day is the consumer-activist inspired initiative that called for America’s banking customers to switch from commercial banks to credit unions on November 5, 2011. The day has come and gone and we do see that many credit unions reaped the benefits of consumer dissatisfaction with banks. This is certainly good news, as credit unions offer a competitive alternative to traditional banks that consumers should be taking advantage of in far greater numbers than they are today. However, this growth should cause some concern for credit union leaders.

To understand the concern, we have to understand the reason for the growth. Consider this direct quote from the Bank Transfer Day Facebook page:

In response, these corporate-level banks have decided that beginning early 2012, any consumer with less than $20,000 in combined accounts will be charged a monthly $3-$5 fee if they use their debit card at any point during the month. This new fee clearly targets the impoverished & working class. After endless research, the organizer concluded that her money would be put to better use on the local level through not-for-profit credit unions.

Now to the concern. If your credit union had the good fortune to sign up new members on November 5, why did those people open their accounts with your credit union? Was it because of the brand promise you made them, or the brand promise made by the organizer of Bank Transfer Day?

You may say, “What difference does it make?” One one hand I agree – it doesn’t make a difference. A member is a member. On the other hand, it makes a big difference, especially of you read the quote above a little more carefully, and this one as well:

The organizer, Kristen Christian has said, “I started this because I felt like many of you do. I was tired–tired of the fee increases, tired of not being able to access my money when I need to, tired of them using what little money I have to oppress my brothers & sisters.

Here is why the rationale for bank transfer members choosing any given credit union makes a difference. The quoted material suggests a $3-$5 bank fee for accessing an account via a debit card is a fee targeting the impoverished and working class. Credit unions of all sizes charge fees. I know of more than a few credit unions that have monthly maintenance fees for their checking accounts, and some even charge for in-branch visits. If a fee is $5, does that mean the credit union is taking advantage of the impoverished and working class? How about $3? Is that any better?

The implied brand promise made by the Bank Transfer Day group is that credit unions are a fee-free solution. What will these newly-minted members, refugees from financial institutions that fee them for basic account services, think when they see a fee pop up on their account? Will they think you lied to them? Will they think you are no better than the banks they left behind?

The point is that credit unions benefited because of a broad, generic brand promise made by others, and not every credit union matches up with this promise. Not every credit union can afford to eschew fees. Some need fee income so they can afford to offer a higher level of personalized service, which is a unique brand promise nothing like the fee-free promise floating in the marketplace today.

Yes, credit unions are good value, but not all in the same way. Some credit unions charge no fees whatsoever and have market-beating rates. The brand promise and value is purely financial. Some credit unions have higher rates and charge fees, but use the extra income to maintain staff trained in helping individual members work through the complexities of our financial system. The value and promise is individualized service.

In the case of credit unions, one message does not fit all.

Consider this anecdotal story. A few years ago I dropped my iPhone. The phone worked, but had a crack in it that annoyed me. I took it to an Apple Store, explained the situation, and walked out with a replacement phone – at no cost. Soon after I was facilitating a credit union planning session, and on a break mentioned my awesome Apple Store experience. One of the management team members relayed that her son’s iPod had recently broken. I told her that he should take it in, and that they would probably swap it out like they did my iPhone. Her expectation was based on my experience.

When I caught up with her months later, on credit union business, she made sure to let me know that she and her son had made the trek to an Apple Store and that it was quite the disappointing experience. Needless to say, Apple did not replace his broken iPod for free.

You may say that she should not have expected, based on my personal reference and intimation, a free iPod replacement. Perhaps you’re right, but similarly, is that the message you will give the member sitting in your office, the one with the Guy Fawkes tattoo, questioning why, after all he or she had to go through to move their account to your credit union, you charged a fee on their account?

If your credit union offers a brand promise that is not “fee-free,” then you will be wise to clearly communicate what you do offer of value to your new Bank Transfer members so that they know exactly what to expect from you, and how to truly receive the real value of their new relationship.

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