Personal Finance: Bank Transfer Day saw 600,000 switch
NEW YORK (Reuters) - More than 600,000 U.S. consumers have moved their money from big banks to community banks or credit unions, thanks to the much-publicized Bank Transfer Day last fall, according to an analysis released by Javelin Strategy & Research.
The grassroots campaign to get people to shift out of big banks capitalized on the nationwide Occupy Wall Street movement, and picked up further momentum from a Bank of America plan in September to charge customers a $5 per month debit card fee. After the bank dropped this plan ahead of Bank Transfer Day on November 5, an exit from big banks continued, sparked by Bank Transfer Day's Facebook campaign. (More than 60,000 have "liked" the page.)
"It was a meaningful movement of people from big banks into small community banks and credit unions, but it wasn't a huge number by any stretch," said Jim Van Dyke, founder of Javelin, a research and consulting company which on Thursday released a data-based analysis of the impact of the movement.
Nevertheless, he said, "It was quite a feat. I don't think we'll see it repeated any time soon."
Historically, people don't switch banks easily, even if they are unhappy, Van Dyke says. Consumers have strong ties to their banks because of direct deposit, automated bill payments and habit -- making change more complex than simply going someplace else.
"Individuals are really resistant to moving their money out of banks," Van Dyke says, noting that Javelin has tracked customer behavior at banks through a large sample survey since 2003. "The difference between what they say and what they do is really different."
American Bankers Association spokeswoman Carol Kaplan says the numbers of those fleeing big banks should be kept in perspective.
"While these 600,000 adults represent an exceedingly tiny fragment of the hundreds of millions of Americans with bank accounts, the industry takes consumer sentiment seriously... Consumers have a wealth of choice and banks have always been in favor of competition, regardless of where it comes from," she says.
An additional 200,000 people claimed they had moved their accounts due to the campaign against big banks, but did not take their money out of one of the top 10 institutions, Van Dyke says.
Bank of America did not bear the brunt of the account closings, Van Dyke says -- its losses attributed to the Bank Transfer campaign were statistically similar to losses at the other large banks.
"We didn't see any individual bank punished out of this more than the rest," he says.
Bank of America spokeswoman Betty Riess wouldn't comment on Javelin's findings or the impact of Bank Transfer Day. However, CEO Brian T. Moynihan had said in a recent conference call with analysts that the bank did take a hit.
Moynihan said on the call that the bank had a 20 percent increase in account closings in the fourth quarter of 2011 compared to the same quarter in 2010. "So I'd say that yes, we had some impact from the $5 debit fee. That's why we made a decision to reverse it," he said, according to transcripts of the conference call published on the internet.
That statement shows that the bank understands that consumers' voices count, says Ed Mierzwinski, consumer program director for U.S. PIRG, which advocates for consumers on a variety of issues including banking.
"Bank of America got the message and did take a hit," he says, noting Moynihan's comments. "Bank of America and other big banks now know that unfair practices will and do result in consumers voting with their feet."
Overall, about 5.6 million people moved their bank accounts in the last quarter of 2011, Javelin says. Account changes attributed to Bank Transfer Day represented about 11 percent of total moves. About a quarter of the overall group that moved accounts cited fees that banks charge. Fees, including Bank of America's proposed monthly debit card fee, were at the core of the push to move consumers' cash to nonprofit credit unions, which tend to have lower and fewer charges for routine banking.
The trade group Credit Union National Association estimates that between the time Bank of America announced the plan to charge a debit-use fee and the week following Bank Transfer Day, some 700,000 people moved their accounts to credit unions.
Technology plays a big role when consumers switch banks, Van Dyke says. Younger adults place greater value on having robust online banking tools -- something not as commonly available at smaller banks and credit unions.
"It turned out that technology and individuals' inertia really won the day in favor of the large banks," Van Dyke says. "If this continues, these small institutions will go the way of the Oldsmobile." (The author is a Reuters contributor. The opinions expressed are his own.)
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