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!

Community Service

It’s rightly said that the SMB market, which employs a majority of the American workforce, is often overlooked in the national business discourse. Similarly, community banks and credit unions are too often neglected in the mainstream dialog over the financial services industry. This is a glaring oversight: these sectors not only play a critical role in the daily lives of many Americans, but also offer a fresh and distinct picture of the economy at large. Some recent stories, still more the exception than the rule, prove the point.

First, SNL Financial is out with its annual list of the nation’s best-performing community banks, and true to form, there are some very interesting angles. For example, Atlanta-based State Bank Financial Corp. (the holding company behind State Bank & Trust) ranks No. 1 among banks on the larger end of the spectrum, between $500 million and $5 billion in assets for 2011. This would seem to be an unlikely location for a success story of this caliber—Georgia has suffered through nearly 80 bank failures since the market tanked in 2008. However, SBFC has since acquired a dozen of those fallen competitors and assiduously built up a strong, and now market-leading, portfolio.

Coming in second is American First National Holdings of Houston, which has a very different story to tell. Founded by six entrepreneurs barely 15 years ago, it is focused on the Asian American market. And then there’s Citizens National Bank of Bossier City, La., launched in 1985 by a small group of local businesspeople who saw the need for a locally owned and managed bank that could provide modern banking services “without the cold and impersonal delivery. . .so prevalent in today’s financial institutions.”

The entire list exhibits this kind of national diversity. Texas has the highest number of ranked banks, with 12 entries in the top 100. California comes in second with nine, followed by Virginia and Pennsylvania with eight each.

SNL casts a separate look at banks with assets of less than $500 million, and here too there are pleasant surprises. Topping the list of community banks in this category is Amerasia Bank, located in Flushing, N.Y. That’s literally a stone’s throw away from Wall Street and its conglomerates. Launched less than 25 years ago, the bank has earned recognition from financial rating companies.

Meanwhile, The Street offers a different perspective on this very issue by pointing out that long-term growth investors would do well to “look beyond the largest bank holding companies and consider profitable, growing community banks.” The simple, underlying reason: While the multinationals get all the attention, it’s their smaller counterparts, working at the community level, that have more room to grow.

For the record, most of the largest banks are healthier now than they were even a few years ago: All but four of 19 major institutions got a boost last week after the Federal Reserve, reporting on rigorous stress tests conducted over the past few months, determined them strong enough to survive another harsh downturn. J.P. Morgan Chase and Wells Fargo, among others, got the thumbs-up; Citicorp did not, and the market seems to reacting accordingly.

The reality is that community banks play a critical role important in the daily economy, just like their much larger counterparts. However they get much less attention in the process, unless there’s a scandal, or something of political significance, such as last year’s much-heralded Bank Transfer Day.

But for the most part, community banks do what they do quietly—serve with dedication and innovation, effectively using the technologies and tools most needed to survive and thrive. For that, they deserve far greater recognition than they typically get.

The Bank of America Discount

Not so long ago—just last fall, in fact—Bank of America was in the news for all the wrong reasons. The company had instituted a $5 debit card fee, and faced a strong consumer backlash as a result. The incident was at least partly responsible for giving rise to the movement dubbed Bank Transfer Day.

It was likely in the works earlier, of course, but the country’s second largest back is back in the spotlight with a very different initiative. This one, however, is designed to help customers save money. In a pilot program being rolled out this week (to employees only, for now), the bank’s online customers will receive discounts from selected retail partners based on their previous spending patterns. Customers don’t even need to sign up for the service or go to a separate site, a la Groupon, discounts will be awarded in the form of cash payments once a month.

The savings won’t be immediate. Online customers will see discount offers embedded in their bank statements, or potentially in a separate tab, and buy what they choose, paying full price, then receive cash back in their accounts.

Perhaps most interestingly, the bank itself will receive no compensation from the retailers and merchants involved. It will instead use the discounts to extend relationships with existing customers—who will use their bank accounts and credit cards in the process—and of course draw new ones. For the record, BofA says it won’t share incoming customer spending data with the retail partners or anyone else, through presumably it will use the information internally.

While other banks have launched similar efforts, BofA is likely the largest financial services institution to enter this nascent field. This also means that there will be a flood of other financial institutions plunging into the business. As consumer spending patterns and habits evolve in the age of online shopping driven by social media tools and techniques, this is exactly the kind of forward-thinking initiative the industry needs to build on.

Many financial services firms still have the mentality that, in a sense, they need to remain above the fray. They finance these initiatives but they’re not directly involved, since it’s not a core competency. That may be true, but the reality is that they have the resources, they have the technology, they have the information, and most of all they have the customers. For banks to stay completely out of the transaction means denying themselves potentially significant revenue streams.

As other financial institutions enter the fray, we will likely see the process becoming simpler and more commoditized—the savings will be immediate, retailers will share the revenue, and so on. If that’s the case, then this initiative could be seen as a major turning point. Let us know your thoughts by posting below, or Tweet @bankingdotcom.

Bank Transfer Days, And Beyond

In a sense, the much-heralded “Bank Transfer Day,” designated as such for November 5, 2011, fit nicely into the overall narrative for the year just passed. We had monumental, activist-oriented, from-the-ground-up, socially networked movements around the world, from Arab Spring demonstrations toppling near-permanent fiefdoms in the Middle East to the multi-branched ‘Occupy’ rallies here at home. In that vein, moving accounts from large corporations to down-home non-profits seemed like an idea whose time has come.

As with those other movements, Bank Transfer Day was a consumer-driven initiative calling for systemic change—in this case, a voluntary switch from commercial banking conglomerates to non-profit credit unions. Prompted by one consumer’s decision to protest one bank’s customer service and debit card fees, the action was quickly propelled to a massive audience through spontaneous yet skillful use of social media. Even the date selected had a symbolic origin: November 5, commemorating Guy Fawkes, who was charged with attempting to blow up the British House of Lords in 1605. (That event has also permeated pop culture via films such as V for Vendetta and the eponymous masks worn by some Occupy protesters.)

It’s unlikely anything could live up to the hype, and in many ways Bank Transfer Day didn’t. Financial institutions across the board saw a flurry of activity for a short time, the larger banks still won’t tell how many accounts they lost, and a few credit unions are using the term in their marketing collateral. Otherwise, the movement seems to have faded from the public consciousness. Still, financial services professionals who dismiss the root causes do so at their own peril.

This is not your father’s banking industry. More than a singular protest, the factors roiling the market now are both more prosaic, and more revolutionary, than Guy Fawkes could ever be.

Consumers today have far more tools to conduct transactions with, far more options to choose from, and far greater expectations of each provider than even a few years ago. At the same time, new entrants to the market are building on innovative services to lure business away from big business. And of course, regulatory mandates, not to mention the pending potential of the Consumer Financial Protection Bureau, will add more pressure to the industry, and those institutions that don’t keep pace with are set to lose, even lose big.

Consumers now demand, and expect, high levels of transparency, flexibility, convenience and access. Banking used to be shaped by the act of walking into a branch or getting on the phone; today, it’s one of the most common online activities, and institutions are virtually required to develop personalized and otherwise customizable applications that meet a broad range of user needs.

Some have done this, but many others haven’t. There’s also a significant lag between user behavior and corporate accommodation, at least in some markets—while some larger institutions are still struggling to develop brand-specific mobile applications, many smaller providers have already embraced newer alternatives such as Remote Deposit Capture (RDC).

As the innovations keep coming, we’ll track them on this blog, warts and all. But the inescapable, irrevocable conclusion is that, far from the clamor of protests and rallies, consumers today have a quiet but powerful toolset to draw from, and they’re not shy about drawing from it to make a point, or even a transfer. That’s what change is all about.

Will Bank Transfer Day Prevail?

As news rolls in regarding rising debit fees, numerous consumers across the country are voicing their opinions and putting their money where their mouth is. Encouraged by movements such as Occupy Wall Street and Bank Transfer Day on November 5th, bank customers are re-evaluating how and where they manage their money. So how are consumers really reacting? Intuit Financial Services’ 4th Annual Financial Management Survey polled 1,000 consumers in October to get a pulse on consumer’s attitudes. Below is a graphic outlining the findings:

Are you a loyal FI member, or do you plan to switch due to new fees? If you work at an FI, what are you doing to deepen relationships? Are you planning to charge new service fees?  Let us know by Tweeting @bankingdotcom or leaving a comment below.