Fed-up clients ditch banks for 'Transfer Day'
The social media-organized protest against big banks crescendoed Saturday, with hundreds of thousands of fed-up customers yanking their money from large corporate institutions to dump it into credit unions.
Smaller community banks across the United States were recording an uptick in business as a result of the anti-corporate sentiment, which came to a head on so-called international "Bank Transfer Day" on Saturday.
At least 650,000 customers have opened accounts at not-for-profit credit unions in the U.S. since Sept. 1, taking away an estimated $4.5 billion over the past four weeks from big banks.
The pushback, which is not officially affiliated with the global Occupy movement, shares that movement's anti-corporate sentiments.
Saturday's day of action swelled from a grassroots Facebook campaign, which was intended as a statement objecting to Bank of America's recent proposal to charge a $5 monthly debit-card usage fee. As of Saturday, the Facebook page had nearly 82,000 supporters, and included links to help visitors locate credit unions in Canada as well as in Britain.
Credit unions hope to cash in
Canadian credit unions were hoping to cash in on the occasion to promote their financial institutions as a better option for consumers. Meridian, Ontario's largest credit union, was promoting the advantages of credit unions over traditional banks in the lead-up to Bank Transfer Day.
"With Bank Transfer Day quickly approaching, I urge Ontarians to take this opportunity to experience first-hand the benefits of credit union membership," Meridian CEO Sean Jackson said in a news release.
Although Bank of America quickly backpedalled on its initial fees proposal after mass outrage, the damage had been done.
Noah Wilcox, president of Grand Rapids State Bank in Minnesota, told The Associated Press that anger over the debit fees "was definitely a driver" that brought Grand Rapids more account openings.
Clients told The Associated Press the debit-fees issue drew them over the brink after growing perception that they were being trampled on by big banks.
Lift in credit-union account openings
"Consumers are waking up and seeing that they have options," said Kristen Christian, the 27-year-old L.A. small business owner who started the Bank Transfer Day campaign on Facebook.
The largest credit union in the U.S., Navy Federal Credit Union, said there was a 38 per cent lift in new account openings in September and October compared to the previous year. The U.S. Consumers Union, the advocacy arm of the publication Consumer Reports, was backing Bank Transfer Day.
Canadian credit unions outside Quebec — where the vast majority of residents bank at the Desjardins co-op, making it the province's largest financial institution — had $145 billion in assets as of July 1, an increase of five per cent from Jan. 1, according to Credit Union Central of Canada. More recent figures are not available to determine whether Bank Transfer Day has had an effect on their business. Because some Canadian banks already offer fee-free banking, like ING Direct or the President's Choice Financial accounts offered through CIBC, it's not clear that it will.
But if the disaffection among American banking clients spreads north, credit unions could see a heap of new customers. An online survey by Intuit Financial Services in October of 1,000 American adults found 36 per cent of respondents had switched or were planning on switching banks due to service charges. And in a Harris Interactive online poll of 2,463 American adults in mid-October, 73 per cent of credit union customers said they were extremely or very satisfied with their institution, compared with only 44 per cent of bank clients.
The trouble for big banks could not have come at a worse time, with record unemployment, a lurching economy, and distrust of large corporations already at a fever pitch amid international rallies inspired by Occupy Wall Street's protests against big money.
With files from The Associated Press