For several years now, I’ve been preaching about how banks and credit unions need to get their customers to use online bill pay and direct deposit. The reason is simple: the more bills a person or business pays online, the less likely they are to switch to another financial institution.
Once a person inputs all of their vendors and monthly bills, they won’t want to go through the trouble of doing it again with another financial institution.
But over the last couple of weeks, we have all seen that you can get people to switch banks. Just ask Bank of America, Wells Fargo and Chase. After raising their fees for debit card usage, millions of people complained – including President Obama! And many didn’t just complain, they switched to a community bank or credit union.
Kristen Christian, an art gallery owner in California, said she was dissatisfied with Bank of America’s “ridiculous fees and poor customer service,” so she created an event on Facebook called “Bank Transfer Day.” Within days, almost 80,000 people signed up.
Since then, the Credit Union National Association stated that 650,000 consumers nationwide have joined credit unions, contributing to $4.5 billion in new savings accounts.
There are many lessons here, but the biggest ones include the value of social media and the ability to adapt to changes in the marketplace. All it took was one person with a passion to start something that got 650,000 consumers to switch, moving $4.5 billion!
Deluxe Corporation recently announced the launch of SwitchAgent, a new solution for banks and credit unions that allows consumers to easily switch from one financial institution to another.
According to a study by J.D. Power & Associates, 66% of account holders would consider switching primary financial institutions, but many accounts go dormant due to the laborious transition process. SwitchAgent assists in shifting multiple billing vendors – such as mortgage payments, Social Security payments and utility bills – to new accounts, easing the transition process for both the financial institution and the consumer.
Another company, BankMarketingCenter.com, recently introduced an ad campaign for hundreds of community banks and credit unions called “Scan and Switch.” The ad features a QR Code that, when scanned with a smart phone, will automatically take potential customers to the financial institutions’ web-based switch kit.
Even Congress is getting involved. A bill recently introduced by North Carolina Congressman Brad Miller would eliminate this headache for consumers, making it easier to open and close bank accounts.
Miller is calling his bill, “The Freedom and Mobility in Consumer Banking Act.”
“As megabanks flirt with menus of new fees, an increasing number of Americans will want to switch banks,” Rep. Miller said. “That is the way things work in a competitive, free market as unrepentant banks are still trying to rake in vulgar profits from their customers.”
Miller’s bill would require banks to make it as easy as technologically possible to switch accounts and would forbid practices aimed at keeping consumers locked in.
Now has never been a better time for community banks and credit unions to market their products, services and lower fees. But with the new technology and laws that make it easier for customers to switch, they’ll also have to start offering more products and better customer service!
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Neal Reynolds has worked with hundreds of banks and credit unions around the country helping them to grow core deposits and market share without growing their marketing budgets. Contact him at [email protected].
