American Consumers Will Continue to Drop Banks for F.E.E.S.

by Thomas Hinton

In an era when consumers are frustrated with Wall Street and big banks, it’s not surprising that more than 675,000 people responded to the social media movement known as Transfer Day to drop their banking relationships in favor of credit unions and small community banks. What is surprising is this. Anyone with a checking account – and that’s about 200 million Americans -- knows that changing financial institutions is not a simple process. It takes time and the process requires a small mountain of forms, paperwork, documentation and signatures in order to complete the process.

But, when you consider how upset and angry consumers are with banks for threatening to raise debit card fees and charging for traditional services that were once free, it’s not surprising that consumers are walking across the street to start new banking relationships with credit unions and smaller community banks.

We refer to this consumer syndrome as “FEES” which stands for “Feeling the Economic Effects.” There’s no question consumers are in financial pain and their response to the insensitivity of big banks has been to pull their accounts in favor of small community banks and credit unions that are renowned for their customer service and friendly banking terms.

While the percentage of new customers that have made the switch from major banks to credit unions and community banks since October 1 is very small – less than one-half percent according to the American Consumer Council -- and their deposits represent less than $5 billion, the switch of that many customers in a six-week period should send a clear distress signal to major banks and their trade associations that consumers have had enough! Banks need to change their policies and customer relations practices if they want to stop the bleeding and start to win back disaffected consumers.

The American Consumer Council forecasts that one percent of consumers, approximately two million people, ultimately will switch their banking relationships to credit unions and community banks in the next 90 days. Such a dramatic shift by consumers will certainly help credit unions and community banks raise their visibility and improve their low-profile image among middle-class consumers who have suffered the most economic pain since 2008. It will also put credit unions on the radar screen with millions of disenfranchised consumers who have yet to make the switch, but are now talking to friends and relatives about their financial frustrations.

What else do the Transfer Day numbers tell us? Well, when you consider that the number of consumers who have already switched to credit unions is nearly double the number predicted by the organizers of the Transfer Day movement, that’s significant. What it tells me – and the American Consumer Council agrees – is that future anti-bank social media campaigns will continue; and, subsequent campaigns will morph into much larger movements that will attract more consumers to credit unions and community banks at the expense of large banks.

It also tells me that there is a major under-current gaining strength in the United States that will embolden consumers to take on bigger fish such as the oil giants, pharmaceutical companies, lobbyists, trade associations and even local, state and national governments that are grossly out-of-touch with millions of consumers who feel as though the American Dream is slipping away from them and their children. The harsh reality is this. It is slipping away, and consumers are not going to lay down and allow that to happen.

About the Author. Thomas Hinton is president and chief executive officer of the American Consumer Council, a non-profit consumer education organization with more than 116,000 members and 44 state consumer council affiliates. For more information: tom@americanconsumercouncil.org

American Consumers Take to the Streets and Banks

by Thomas Hinton

Despite the continued economic hardships facing so my Americans, this has been a fascinating week for redressing the rights of millions of disaffected consumers. Although the Occupy Wall Street movement is losing some momentum, the average middle-class consumer found a new way to organize and vent their frustration with major banks. The negative response among consumers began when major banks threatened to charge a monthly debit card transaction fee. The outcry was fast and loud!

Then, on Friday, November 4, Transfer Day occurred. This event was organized by consumer groups to encourage millions of unhappy bank customers to move their accounts to credit unions and smaller community banks that enjoy a reputation of being member-focused and customer-driven not to mention great customer service!

Organizations like the non-profit consumer education group, the American Consumer Council, reported more than 1,400 new members joined its ranks in order to lend their voice to consumer concerns and affiliate with a credit union associated with ACC’s network. The Credit Union National Association (CUNA) reports that customers moved an estimated $4.8 billion to credit unions in the past five weeks since the debit card fee debacle first aired.

While most large banks have abandoned their plans to levy a monthly debit card fee, the damage has already been done to their credibility and integrity. Consumers were already frustrated and angry at major banks and investment firms dating back to 2008, when the recession started and U.S. taxpayers were required to lend billions of dollars in bailout money to major Wall Street firms and banks. So, Transfer Day was one way for consumers to vent their anger at the very people who got us into this economic mess – the 1%, if you will, who have been the target of the Occupy Wall Street protesters.

Granted, the transfer of nearly $5 billion from major banks to credit unions and community banks is a meager sum, but it’s a start. Hopefully, Transfer Day caught the attention of the major banks who now know that consumers will vote with their feet and no longer hesitate to uproot their financial accounts and move their money to consumer-friendly credit unions and community banks that really do care about people.

About the Author: Thomas Hinton is president of the American Consumer Council, a non-profit consumer education and advocacy organization with over 116,000 members and 46 state affiliate consumer councils. Mr. Hinton is a popular speaker at corporate and association events on consumer issues and trends. Contact: tom@americanconsumercouncil.org