Bank Transfer Day Should Be A BAD Day

Many people involved in the financial services industry know that this coming Saturday, November 5, is being called Bank Transfer Day. (You can Google the term to find more information about it, how it got started, etc.). 

And many in the credit union industry seem to be licking their chops, awaiting a slew of new members, as (they hope) millions of disaffected big bank customers observe this newly-ordained “holiday.”

I challenge credit unions to make Saturday, November 5, a BAD day. 

What does BAD stand for? I thought you’d never ask. Bank ACCOUNT AVOIDANCE Day.

What I DON’T mean by “avoidance” is simply moving one’s checking account from a bank to a credit union. 

What I DO mean is getting rid of the checking account altogether.

Aite Group surveyed consumers who use “alternative” financial services products (e.g., prepaid cards, check cashing services, etc.) to manage their finances, and identified a set of consumers who don’t have a checking account (not all users of alternative financial products are un- or under-banked, FYI), and rely instead on prepaid cards. 

The most prevalent reason why prepaid card holders who don’t have a checking account don’t have one? They don’t want to pay fees. Not just fees for using a debit card. But fees for insufficient funds, fees for reordering checks, or even basic monthly fees. 

This is an interesting perspective when you consider that many of the prepaid cards that these folks are using to manage their financial lives do have a monthly fee (and other fees) associated with them. 

Are credit unions prepared to identify consumers who shouldn’t have, or could do without having, a checking account? Will they recommend to these consumers that they NOT open a checking account, and use prepaid cards instead? And do they even offer prepaid cards in the first place?

We’ll see what happens on Saturday.

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4 thoughts on “Bank Transfer Day Should Be A BAD Day

    • Sarah: I don’t understand the question. How can any product be “sticky” or “not sticky”? Are you implying that checking accounts are sticky and prepaid cards aren’t as sticky? If checking accounts are so sticky, banks wouldn’t see double digit attrition rates. If prepaid cards aren’t sticky, I’d argue that it’s due more to prepaid card providers’ inability to effectively manage the relationship, than it is the inherent nature of the product to be “not sticky.”

      Few financial institutions today (banks or credit unions) have figured out how to effectively integrate prepaid cards into product portfolios. This is why I think Movenbank has a real shot. First “bank” I’ve talked to with a vision for how to incorporate prepaid cards into the mix, and how to “grow” the relationship from prepaid cards to more traditional products.

      • I wasn’t implying; I was honestly asking if people who bank with prepaid cards tend to use other products from the same provider. Many financial institutions use the checking account as inroads for other relationships. I’m sure the relationship could be managed but, as you said, it’s not by most institutions.

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