Why There Isn’t a Bank Transfer Day in 2012

*This post originally appeared on MyBankTracker

From June 2011 to June 2012, credit unions reported a year-to-year increase of more than 2.16 million memberships — the largest influx of members in the past decade, according to data by the Credit Union National Association.

In the prior year, there was only a 552,890-membership increase at credit unions.

The four-fold jump in new memberships is easily attributed to last year’s Bank Transfer Day (held Nov. 5), the consumer movement that rallied fed-up bank customers to close their fee-riddled accounts and move their money to credit unions.

The exact number of consumers who made the switch because of Bank Transfer Day is difficult to determine, but the movement did push credit unions into the spotlight.

This year, however, there will be no official Bank Transfer Day to give banks a run for their customers and deposits, said Kristen Christian, the creator of Bank Transfer Day.

Christian, a former art-gallery owner, now spends most of her time attached to her notebook PC while she journeys throughout the country, and other parts of the world, as a speaker/consultant for credit unions.

For instance, earlier this month, Christian attended a credit-union conference in Pennsylvania and spoke on ways that credit unions can market to younger generations through social media.

“It’s been such an incredible opportunity to promote consumer empowerment and economic sustainability while helping cooperatives [financial institutions owned and operated by its members] reach the next generation of members,” Christian said.

But, her new role isn’t the main reason that there won’t be another Bank Transfer Day this year. Rather, given that 2012 is an election year, Christian does not want to distract consumers from exercising their right to vote.

“While we’ve seen significant media attention dedicated to the Presidential race, I’ve yet to see significant steam for Senate elections,” said Christian, who aims to draw support forSenate bill S. 2231. The bill is an amendment to the Federal Credit Union Act that would more than double the lending cap for credit unions from 12.25 percent of assets to 27.5 percent. Christian says this would enable credit unions to promote the growth of local small businesses through low-interest rate loans. “This piece of legislation has a potential to create 140,000 jobs at no cost, yet lacks the support in Senate many voters feel it deserves.”

Non-violence

Additionally, Christian does not want any violence to break out during the promotion of another Bank Transfer Day.

Last year, Bank Transfer Day happened to coincide with Occupy Wall Street, another non-affiliated consumer movement. OWS protesters organized a “March on the Banks” event that gathered bank customers to close their accounts, which occurred in a less-than-civil fashion at some banks. At one Citibank branch in New York City, protesters were locked in the branch — until police arrived — because they were holding a protest in the middle of the bank.

“Being a pacifist by nature, I was disgusted by the disruption caused last year in the name of Bank Transfer Day,” Christian added. She encourages consumers to close their bank accounts independently and respectfully. “These front line employees have absolutely no control over bank policies and certainly didn’t deserve the abuse heaped upon them.”

Occupy Wall Street has been unable to rebuild momentum this year and its impact has diminished significantly. If the movement fails to return in the future, would Christian promote Bank Transfer Day again? Probably not.

“As people constantly evolve, I think social movements should as well,” said Christian, who’ll commemorate Bank Transfer Day for many years to come. “In many ways, it’s a celebration of the principles that bore the American revolution: rallying together to inform one another and defend the communities we’ve worked so hard to build.”

This Nov. 5, Christian will be in Baton Rouge, La. to raise awareness for Senate bill S. 2331.

Consumers don’t need an official day to move their money from banks that are treating them unfairly. As Christian and credit unions would say, “Every day is Bank Transfer Day.”

To anyone or any organization that seeks to effect a similar consumer-advocacy campaign, Christian preaches: “The best advice I can give to anyone who seeks to implement significant change is to approach their efforts with patience, reason, love and a sense of humor. I’ve found love to be far more effective than hatred.”

How has your organization seen the effects of Bank Transfer Day in the last year? Let us know in the comments below!

New Technologies Are Coming for Unbanked, Underbanked

*This post originally appeared on MyBankTracker

In the past year, countless prepaid cards have flooded the nation to target the large portion of the American population that is either unbanked or underbanked. Acknowledging that the market for these alternative financial products is rapidly growing, more tech companies are catering to this group of consumers.

According to a recent survey by the FDIC, in 2011, 8.2 percent of U.S. households do not have bank accounts, up from 7.6 percent in 2009. And 20.1 percent of U.S. households have bank accounts, but rely on alternative channels for financial services (e.g., check-cashing, payday loans and money orders), up from 18.2 percent in 2009.

Even traditional banks have jumped on the bandwagon to compete against non-bank prepaid-card companies and get a piece of the prepaid-card market.

Last fall, Regions Bank started rolling out asuite of products and services that included a prepaid card and check-cashing and Western Union services. In July, Chase, the largest bank in the country, launched the Liquid prepaid card that does almost everything that a regular Chase checking account can do.

“As banks have steadily inflated the cost of banking, more and more depositors are seeking substitutes for bank accounts with escalating costs, high minimum balances and surprise fees,” said Jim Wells, president of Wellspring Consulting, a firm that specializes in solutions for the unbanked and underbanked.

But, with the proliferation of financial technology, the focus is shifting to serving the unbanked and underbanked through mobile devices.

Last week, at a Finovate conference, two companies demonstrated their versions of a mobile wallet for the unbanked or underbanked consumer.

The CAT (Cash and Transact) mobile wallet, by Emida, is an app that is based solely on the consumer’s smartphone. Through participating retailers, users can refill their CAT accounts with cash (for a convenience fee of $1.50). Then, they can use the funds to pay for purchases through the app.

The Flip mobile wallet, from PreCash, is an app that allows users to perform instant mobile check deposit and make expedited bill payments — two services that were never before available on a prepaid card account.

“Although these mobile-enabled, prepaid card-based accounts are attractive to far more than just low-income consumers, one key to success will be in making the services available via even the simplest of mobile devices,” said Wells.

In countries where financial institutions are hard to come by, mobile devices are the preferred channel for financial transactions. For example, more than 17 million mobile subscribers in Kenya use a mobile-phone-based money transfer service called M-Pesa, which enables users to deposit and withdraw money, pay bills, buy phone minutes and send money to bank accounts or other users.

In the U.S., the decreasing cost of smartphones may make it seem like everyone has a smartphone — but non-smartphones are still the most common mobile devices among the low-income population.

According to the Federal Reserve, 64 percent of the unbanked have access to a mobile phone (18 percent have a smartphone) while 91 percent of the underbanked have access to a mobile phone (57 percent have a smartphone).

Regardless of the types of mobile devices, the demand for alternative financial products and services is there.

And, history tells us that unbanked and underbanked consumers could be the users of the next wave of financial innovation.

In last year’s fall Finovate conference, card-linked offers made regular appearances on stage. Since then, card-linked offers became more available to bank customers. Bank of America, Capital One, American Express and many other financial institutions began providing card-linked deals.

Considering that the conference offers a good idea of what products and services we’ll see in the near future, it wouldn’t be a surprise to find that, by this time next year, there are more prepaid card accounts and other financial services that live on mobile devices.

 What are you offering your customers? Let us know in the comments below!