Measuring the Impact of Bank Transfer Day

The Word on the Street

Commenters on Facebook and blogs shared a variety of experiences about Bank Transfer Day:

Writing on the New York Times Bucks blog, Allison from San Diego California said, “I opened a new credit union account a few weeks ago so that I could drop my Wells Fargo account last Saturday, Bank Transfer Day. The woman that I spoke with at Wells Fargo was clearly aware of the occasion.”

On the Bank Transfer Day page on Facebook, James Carvalho wrote, “I’m out of town now but when I get back home I’m going to open an acct. with a local bank and close my BOA acct.”

Melanie Duvall posted, “My son just enlisted in the Marine Corps, so I’m switching from SunTrust to Navy Federal Credit Union.”

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Wolff says that CUNA is hearing from credit unions about new members that came in on Saturday:

BECU in Seattle had about 660 new people open accounts Saturday at just one of its 45 branches—a record for Saturday traffic at that branch.

Redwood Credit Union outside of San Francisco had 75 new people join on Saturday, and said its parking lot was “jammed” with cars. Redwood said it has experienced an 83% increase in new members compared to this time last year.

Pennsylvania State Employees Credit Union said it opened 153 new accounts on Saturday, which is 50% above its normal average.

Schwanhausser wonders how many people said they would switch, but then either failed to follow through, or gave up when they tried to open an account online. Javelin research shows that 60% of consumers abandon the process when trying to open new accounts online. And if credit unions or community banks aren’t offering a full range of online and mobile services, the most loyal customers—the “money hawks” as he calls them—may not even bother to move.

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Will it Make a Difference?

According to the American Banker’s Association, checking accounts at FDIC-insured banks held $1.172 trillion (at the end of the second quarter of 2011), and $5.188 trillion was sitting in savings accounts. But the average consumer bank non-interest checking account balance, according to Pitney Bowes Business Insight, is just $2,947, and the average consumer savings account is $5,753. Will the big banks even feel the loss of these small accounts?

If consumers do in fact switch, then “yes,” says Schwanhausser, who notes a recent Javelin study that found that banks are typically willing to pay $150 to acquire a new customer. Additionally, he says, banks also benefit from the long-term relationship with customers and potential profits from cross-selling them on other products.

Losing smaller accounts will impact large banks, says Santiago, because these smaller balance customers tend to be loyal, and their deposits are considered “stable” money. “I think what’s happened is that while the total dollars moving is small, the sophistication of the customer is rising. If you have smarter customers you’re going to be a smarter bank.” The Bank Transfer Day movement could provide additional pressure on large banks to become more competitive, he says.

And he may be right.

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American Banker reported that SunTrust Bank dropped a $5 monthly debit card fee it had instituted earlier this year. Some have suggested that the reversal wasn’t primarily the result of Sun Trust customers’ complaints, rather the backlash against the Bank of America fee is what drove the bank’s decision.

Consumers “are voting right now,” Schwaunhauser says. “We’re just waiting for the ballots to be counted.”

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