Credit Union Times recently reported that Bank Transfer Day (BTD) creator Kristen Christian “came in for sharp criticism from a Vermont Occupy contingent which made headlines this week by electing one of its own to the board of the $346 million Vermont Federal Credit Union of Burlington.” According to the article:
“Christian has taken undue credit away from the broader Occupy movement in starting BTD as well as ignoring the phenomenon’s umbrella mission of hitting hard on bank practices. [Occupy Burlington activist Matt] Cropp accused Christian of promoting “a misleading and self-serving narrative of why BTD unfolded as it did, attributing its success to her marketing skills and understanding of Gen Y.”
Personally, I have no clue whether Cropp’s claims are accurate or not, nor do I care. The two questions that I’m more concerned with are: 1) Was Bank Transfer Day 2011 successful? and 2) Should CUs create a Bank Transfer Day 2012?
If it was a success, then regardless of who gets (or takes) credit for it, credit unions should figure out how to recreate the efforts again this year. If it wasn’t successful, then credit unions shouldn’t care less who gets the “credit” for what happened last year.
So, was BTD 2012 a success?
My take: The results are inconclusive.
Aite Group research found that 10% of banked consumers switched primary FIs in 2011. When asked what factors influenced their decision to switch, 8% cited BTD transfer day.
Taken by itself, that statistic isn’t very impressive.
But of those that switched primary providers, about half were Gen Yers. And of switching Gen Yers, 12% said that they were influenced by BTD (if you want to quantipulate, you could say that 12% is 50% higher than 8%).
Before dismissing BTD as…well, not as a failure, but as a “less-than-rousing success”….we should keep in mind that, for the most part, credit unions themselves did diddly-squat to create or promote BTD. Which means that their ROI on BTD with a 8% influence rate was huge. (It’s always a great marketing tactic when you can get someone else to do all the work while you reap the benefits).
If 10% of households switch primary FIs again this year, and if BTD 2012 influences 8% of them to switch to a credit union, is it worth CUs’ investment? We are talking about 1 million credit union members here.
But it seems highly unlikely that someone else is going to pick up the ball and tab for a BTD 2012. Credit unions will need to make a concerted, well-planned effort to pull off a BTD 2012.
Could CUs Pull Off a BTD 2012?
The credit union blogosphere has forever debated the merits of a national branding campaign for CUs, without coming to many conclusions, little agreement, and no action (I think). So how will they pull off a BTD 2012?
And is consumer sentiment the same in 2012 as it was in 2011? I don’t think so. That’s the problem with these “movements”: Short shelf-life.
We Americans like to have our villains to blame all the evils of society on, but those villains come and go. Are banks still the Satan-incarnate?
Maybe, but the hatred is winding down (as it always does. Anybody remember BP?) BTD 2011 needed a trigger, which it got in the form of new fees introduced by the big banks. This year hasn’t produced that trigger.
Bottom line: The parties involved can argue all they want over who gets credit for BTD 2011′s success. Credit union executives would be wise to focus on the future, and determine if a BTD 2012 is in their best interest.
As far as I’m concerned, BTD 2011 was a passing phenomenon. A one-time shot. The pieces came together at a moment in time in 2011, and those pieces aren’t there for 2012.
Let’s grant the premise that BTD 2011 caused more consumers to move their accounts to Credit Unions. There are several other key factors that need to addressed before ascribing success to the effort, including
1. Did consumers (who opened new accounts at a Credit Union) actually follow through in transferring their banking relationship from a Bank to the Credit Unions?
2. Was the Credit Union able to cross-sell additional products / service to leverage the value of goodwill and create a deeper relationship?
3. Is the transferred relationship profitable (on a fully costed basis)?
4. Is the relationship still active? Is the consumer still banking with the Credit Union?
My guess is that most Credit Unions who assess the results of BTD 2011 will be bitterly disappointed with their results.
Considering that the momentum has continued to build (to the tune of 2.5 million consumers), and that response I’m receiving from supporters is that they’ve investigated or begun to move credit cards, car loans, student loans and mortgages… I would have to say your “guess” has proved inaccurate.
That said, I’ve continued to state that we will not see a BTD in 2012 to the tune of last year’s event. The motto I originated for 2012 is “Every day is Bank Transfer Day!”
What is Bank Transfer Day besides a one time, well timed, public relations opportunity. It is not that the anxiety with all financial institutions has subsided significantly, but as I travel the country, it is my observation that EVERY day is BTD for all of my clients.
The focus on ‘stealing business’ is ongoing and never-ending, as is the focus on presenting their individual brand in the most consumer-centric light possible.
With most banks’ new fee structures and account portfolios realigned, with added emphasis on the potential to serve the underbanked (at least by the larger players), and with a new mission to provide enhanced online, mobile and reward integration, the ability to position credit unions as a better alternative may have become much more difficult.
Agree. Also, BTD was a big deal largely because it was true grass roots. You can’t ‘make’ a Bank Transfer Day–it needs to be earned.
Please be advised that this article is inaccurate in that Matt Cropp is not a newly elected board member to Vermont Federal Credit Union.
Lori: Thanks for the correction. I will fix the post.
Hi Ron. It still says Matt is a VFCU board member. He did not win a seat on the board and has never been a member of our board. Thanks.
Still just an humble member at your service, ma’am. The member of our group who gained a seat was Eric Davis, who’s a fairly excellent gent
Ron, not to quantipulate here, but how did last year’s bank switchers compare to years before? I can’t speculate to the impact of BTD without knowing if there was a significant increase in switching in 2011 over 2010…or better yet, compared to pre-recession 2007. Switching went way down in 2009 and 2010 and only began to pick up steam again last year. Do you have any insight into this?
Jim, That was my question exactly! Context for the 8% would help if I really cared to determine success or fail. It was a marketing ploy who tracks win or lose on those any way? Also concur with the Sarah it was a one time success if it was one.
Here is some data to put bank switching activity in late 2011 into perspective:
Customers Leave BofA and Wells Fargo, But Half Switch To Another Big Bank
http://thefinancialbrand.com/22522/jd-power-bank-customer-switching-research-study/
So What Was The Final Body Count For BofA’s Debit Card Fee Debacle?
http://thefinancialbrand.com/20399/bofa-debit-card-fee-bank-transfer-day-results/
Study Raises New Questions About Bank Transfer Day Fee-asco
http://thefinancialbrand.com/22214/new-questions-surround-bank-transfer-day-fee-asco/
Bank Transfer Day – Time to Believe the Hype?
http://www.theraddonreport.com/?p=6649
Here’s my take: There was a noticeable increase in switching activity that started in early October 2011, peaked in November and tapered off by the beginning of the new year. This switching increase was significant, but not as significant as many media reports would lead you to believe. BTD was only a symptom, not the root cause of this switching behavior. BofA’s $5 debit fee was the main driver. The media adopted BTD as a hook for their populist, anti-bank coverage around the time (OWS was a major theme, if you recall). Consumers irritated about the $5 fee were going to switch whether or not the media and Kristen Christian decided to give the event a name.
Most people don’t switch banks over broad philosophical issues. Only a small handful will endure the hassle simply to “send a message.” People usually only switch when they get pissed or when they move. If all it took to get people to change banks was a catchphrase, credit unions would have won the war for retail deposits years ago.
Unless some huge bank does something cosmically stupid again this October, there’s no reason to expect a similar increase in switching activity in 2012.
Good stuff, Jeffry. I suspected as much. I was at a credit union during BTD and we did not see a significant increase in new account activity until we got aggressive. The most effective channel for new business? Our members…and we never mentioned BTD. We asked our members who had checking accounts with us to refer friends and family who were banking at a big bank…and we asked members who did not have a checking account with us to consider switching. Tripled our new account volume for November and December. As you noted above, though, once the media attention died down, so did the volume of switching. I believe that the media attention around the fees created an opportunity for BofA competitors to go after BofA customers…and the ones with better acquisition strategies won.
Thanks for the input, JP. I, too, think switching was prevalent, but perhaps as much as the media would have us believe. What’s being overstated, in my opinion, is the switching to CUs. Many people have left large banks for…well, smaller banks. And not necessarily “small” ones. A number of bankers at some pretty decent sized banks told me last fall that they were reaping the benefits of the BofA fallout.
I suspect that there’s belief in the CU community that all of the BTD activity was CU-related. I don’t believe this to be true.
This is the exact reason why I’ve been working on a direct action strategy against the TBTF banks. In my town we have pickets in front of the worst offender bank branch in the center of town, holding signs (our Banner: http://www.facebook.com/photo.php?fbid=411611468880641&set=t.6900568&type=3&theater), passing out pro credit-union literature, singing songs (this was the picket on Woody Guthrie’s birthday: http://youtu.be/41HjN_hk2J0), chanting (http://youtu.be/gtRmOZWL02M) etc.
In short, we shouldn’t just passively wait for the banks to stumble again (which, as parasitic and hopelessly corrupt institutions, they will) in order to grow at their expense. Rather our movement needs to be actively expending resources aimed at spread awareness of the true depth of the banks’ wrongdoing. We need to take the fight to the doorsteps of the banks, literally; more thoughts on the issue can be found here: http://cuhistory.blogspot.com/2011/11/bank-transfer-day-populism-and-strategy.html
I can vouch from intimate personal experience that people who might not change their behavior/patronage for purely ideological reasons after one exposure to a message think differently after encountering protestors in front of their financial institution consistently over the course of a few months. We have several good, one-on-one conversations with bank patrons per picket which really seem to win folks over for the credit union cause; our message and model make sense, if we can get people to hear it. The opportunities that are presented by the prospect of the credit union acting a little more like a social movement, and a little less like an industry, are substantial, should we can break a little bit out of our comfort zones and get down to the transformative work that was envisioned by the founders of our movement: http://cuhistory.blogspot.com/2012/06/edward-filene-speaks-to-radical-purpose.html
Thanks for your comment, Matt. Appreciate you taking the time and effort to do so.
I can only tell you — and I do this respectfully– that I think your tactics are misguided. I’m not saying that your goals and objectives are wrong, I completely respect what you’re trying to ACCOMPLISH, but I think how you’re going about it won’t get you there.
TBTF banks are not the enemy. The vast majority of people in this country either: 1) Have decent to satisfactory interactions w/ TBTF banks, or 2) Just don’t care enough about this.
And there, in #2, Matt, is the real enemy: APATHY. If you can people to care more about managing their money, and who they work with to help them manage their money, then the credit union movement will flourish.
Picketing big banks will have limited impact, although, I grant you, probably more impact in Burlington, VT, than in a lot of other places.
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