Church...Credit Unions...Stepping on Toes
I was having lunch with a group of people when the topic of friendship came up. As everyone was talking about what they liked or disliked about their friends one person said something that really took hold with the group.
I was having lunch with a group of people when the topic of friendship came up. As everyone was talking about what they liked or disliked about their friends one person said something that really took hold with the group.
The person said, “I need friends that when I get lost they tell me and are not afraid to step on my toes. I need to hear what I need to be doing no matter if I am doing it or not. I want that type of moral compass” Everyone at the table nodded in agreement and said that was exactly what they were looking for in their friends.
Keeping one's business moral compass can be difficult as you try to navigate changing regulatory landscapes. Just when you think you have it figured out some new piece of legislation is passed. Added to that is the challenge of all the unspoken rules for financial services that seem to be continuing to shift.
Wanted Dead or Alive - Free Checking
Most recently the latest unspoken rule to change seems to be the new trend of killing free checking. This basic vanilla product is on the most wanted list and clearly becoming a product of the past. Just as Main Street is trying to get their feet underneath them the Big Banks are looking for new ways to cash in.
The good news for credit union members according to Bankrate’s annual Credit Union Checking Study is that free checking accounts are alive at many of the nation's credit unions. The study revealed that of the 50 credit unions surveyed, 38 of them -- or 76 percent -- offer free checking accounts with no strings attached.
So why have The Big Banks suddenly targeted checking accounts? It is all about profit pure and simple. Big Banks are trying to earn more revenues from their existing customer base by requiring Main Street consumers to use more products and services in order to avoid monthly fees. One Big Bank is currently testing a variety of fees based checking programs in target markets. The options being tested fall under four types of checking accounts:
- An “Essentials" type of account is a basic account with a monthly fee (six dollars) and a debit card. Sadly you do get online banking but you do not get bill pay with it. Want bill pay well that is 3 dollars more per month.
- An "eBanking" account has no fees if the customer opts for e-statements and makes deposits and withdrawals online or by ATM. Also includes mobile and bill pay for only nine dollars a month.
- An "Enhanced" account will have a fee (fifteen dollars) if a customer doesn't keep a minimum of $2,000 balance. It includes two checking accounts, savings, debit card, and bill pay.
- A "Premium" account requires a minimum of $20,000 balance and provides a tiered checking account with debit card, online banking, bill pay, free money orders and check printing. If you fall below the balance minimum then you are paying twenty five dollars a month.
No matter the option being tested the fact remains that for large banks free checking is becoming a product of the past. This rush to fee reminds me of someone who has lost their sense of direction as they think about their customer base.
If you check out the advertising in the target markets (Arizona is the one I checked) you see a picture of a smiling woman pondering which of her checking account options she will choose. The tag line for the ad is “Checking that fits: Get a solution that fits your needs.” How can Big Banks roll this out in Arizona and not take into account the impact on the average person trying to make ends meet?
The last numbers I saw for Arizona indicated that the state had unemployment rates around 10 percent. This is an economy that lost about 300,000 jobs during the recession, or around 11 percent of the state's total.
In a recent article talking about the job market of Arizona Ioanna Morfessis, founding chief executive of the Greater Phoenix Economic Council and an economic-development consultant, stated, “The Great Recession has redefined the standard of living for most Americans, and in Arizona it has really compelled people to adapt, change and lower expectations.”
I think it is sad that one of the things the people of Arizona have to lower their expectations on is on being able to avoid extraneous fees from their financial institution. I think there is an opportunity to gain market share from the Big Banks as people grow tired of having new fees for existing services. Remember back in 2009 when there was a flight to safety as people were worried about the Big Banks and credit unions gained new members? Today the banks have given credit unions another shot in the arm as they try to fee customers out of their branches.
Free Moral Compass Moment
Recall my lunch time observation that people sometimes need a moral compass to let them know when they have lost sight of what is important? Well, in the spirit of reaching across the road to our misguided neighbors at the Big Banks here is your wake up call.
“Ahem, to any Big Banks reading the blog…feeing the middle class who are struggling to make ends meet for the same old services just so you can pay for the litigation cost of doing robo signatures on sub prime mortgages…that’s low….even for you guys. Really think of the mentality behind this strategy. Don’t call us…Don’t visit us… just give us your money and nobody gets hurt…that’s a little “Billy the Kid” don’t you think?"
One can only hope that the credit unions and community banks, and those mid-market banks who are thriving, will see customers arriving in droves as the people finally decide that their mega-bank is just too greedy.
ReplyDeleteI agree heartily with the sentiment in this article. Access to a million ATMs is not worth the loss of soul that accompanies doing business with a bank that seeks only to suck every possible dollar out of its customers.
The New Lending movement that began with the GSE implosion will change the landscape. Smart banks and credit unions will lead this charge. I know our company will be part of it, because doing the right thing leads to a foundation of very good business.
I hope all of you will consider downsizing your banking relationships. It's time for us to get a little more "It's a Wonderful Life" with our banking.