I’m a little late posting this, but you may have read the headlines last month about Bank of America back-pedaling on its proposed $5 debit card fees because people were unhappy about it. People, who could have been loyal customers to the end, were doing the unthinkable – taking their business elsewhere *gasp*.
The Credit Union National Association (CUNA) is reporting that 650,000 Americans joined credit unions in October – Bank of America announced their $5 debit fee charge on September 29th. It’s not yet known (and possibly we never will know) how many customers Bank of America lost, or whether people started running at the prospect that their bank could follow BofA’s suit.
Big Bank Loyalty Has Been Declining
Banks have long been the bad guy in many people’s minds with the poor economical state, the bailouts, the layoffs, and their large profits. Increasing fees, convenience charges, and what some view as shady practices, have put a sour taste in consumer’s mouths when it comes to financial institutions.
A J.D. Power and Associates 2010 U.S. Retail Banking Satisfaction Study showed last year that bank customer’s satisfaction with banks had dropped as well as the brand image of banks among customers. Customers perceived banks as being more profit-driven than customer-driven, and only 34% said they would definitely not switch banks. 29% reported switching banks due to high fees. There was also a large gap between people who were customers at small banks saying they wouldn’t switch versus people at large banks who said they wouldn’t switch (41% to 32%).
Surveys conducted yearly have shown a declining pattern in satisfaction with banks, but fees may not be the only culprit. According to the J.D. Power and Associates 2010 U.S. Retail Banking Satisfaction Study :
The study also finds that customers may be highly satisfied even when they are charged bank fees, provided that they perceive they are receiving sufficient value in exchange. When satisfaction with fees is above average, customer’s ratings for branch access and appearance, promptness of being served, and the bank’s website navigation and range of services are also higher than average.
What Could Bank of America Done Differently?
- Show Me the Value– What’s the value of being a BofA customer? In 2009 BofA was being applauded for their mobile-banking, but mobile-banking is not something unique to them anymore. If there was an added value for the fee, consumer response could have been less negative.
- Loyalty Goes Both Ways – Customers can be fickle, so loyalty has to go both ways. The study stated that customers were unhappy that new customers were being treated better than loyal customers; perhaps BofA could have implemented an expensive customer loyalty program. People also state they feel their local banks are more friendly and have the perception that they care more about their customers.
- Do Your Homework– Signs were EVERYWHERE that consumers would NOT be happy with yet another fee. If BofA had done their homework and properly judged the emotional atmosphere, there may been steps to take to soften the blow of the fee announcement or time to scrap the plan all together like they’re doing now.
- Lay Low – Many other banks were probably considering additional fees, but many were smart and kept quiet and watched. People aren’t necessarily open to change because it’s a time-consuming hassle. They have to research and find another bank, go through all the transfers, make sure all of their automatic payments and direct deposits are changed, and then close an account.
Bank of America has said that the revenue from the fees were not greater than the damage to their reputation. If they had come to this conclusion before they announced it, they might have a few more customers. Instead, they sacrificed (what was left) of their brand image to make some more money.
Did you or anybody you know close their “big bank” account? How loyal do you feel to your banking institution? Let us know with a comment!
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