What We’re Reading: Bank Transfer Day, Tech Adaptation and Debit Card Programs
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.
- B of A Debit Fee Was ‘Transparent,’ Poorly Planned: Exec
A senior Bank of America Corp. executive defended the bank’s failed attempt to charge customers for using their debit cards on Thursday, saying that the planned fees were meant to be transparent. “When we rolled out the announcement for debit at the end of September, it was a very intentional effort around transparency,” B of A executive Laurie Readhead said at an industry conference on Thursday. The plan backfired, badly. Readhead spoke two days after waves of public criticism forced her bank to withdraw its plans to charge customers $5 per month to use their debit cards. She said on Thursday that Bank of America ultimately caved to peer pressure, after other top banks also cancelled efforts to test or charge similar debit fees.
- Debit Still Drives Overall Profits, Big-Bank Execs Say
Debit card programs will continue to play a vital role in most large banks’ profit strategies for the foreseeable future, despite new government-mandated price controls that have cut deeply into interchange revenues, executives at several megabanks said. A series of whiplash-like market developments this month reminded the large banks of the crucial role debit plays in courting and keeping customers. “I don’t think the value proposition [for debit] has changed for the client,” Whitney Stewart, senior vice president of SunTrust Banks Inc., said during a roundtable discussion on debit-issuer strategies at the ATM, Debit & Prepaid Forum this week. “We have clients that are fanatical debit users and will continue to be.”
- The Bigger Question: How Many ‘Switched’ Away?
If you’re a credit union with a similar online design for member sign-ups-and you’re not a CEO or you don’t work for one who wishes to provide step-by-step tech support-you’ve got a problem, the core of which is an inside-out view of the site that is too often dictated by the IT department. Prospective members don’t care how many internal meetings you’ve had or how much new coding is needed to redesign the site to make it easier to join; they only know what they see and what they experience (which is your “brand”). Thinking as a consumer rather than a credit union exec, can you think of a website at which you regularly do any browsing or purchasing even though it’s confusing and requires a master’s in computer engineering? And that’s precisely how you must view your own site, from the outside in.
- Bank Transfer Day: Aite Analyst Says Credit Unions Haven’t ‘Earned’ New Business
If credit unions see a temporary surge in deposits after Bank Transfer Day on Saturday, they have two options to calculate the changes to their net worth ratio, the NCUA has reminded its examiners. Credit unions can calculate their net worth by using “point-in-time” assets or using a rolling average of assets. In its memorandum, the agency’s Office of Examination & Insurance noted that for credit unions that choose the averaging method, the agency should “take into consideration the potentially transient nature of some of these deposits.” “However, depending on how ‘sticky’ the deposits are, the credit union may only get temporary relief from the net worth effects of a successful Bank Transfer Day,” the memo said.
- More consumers leaving big banks for credit unions
Credit unions and community banks in the Bay Area are seeing a spike in new members, sparked in part by general anger with big banks and in part by their now-abandoned plans to charge for using debit cards. “We had been talking about it anyway and it just kind of gave us a little nudge to go ahead and do it,” said Miller, who works as a program assistant for the Hayward Unified School District. “I’m kind of hoping everybody still does it, because with all the bailouts with the banks and all the profits they are making, someone has to stick it to them.” Some 36 percent of longtime banking customers surveyed by Intuit (INTU) Financial Services in October said they already have or plan to move their accounts to another financial institution in response to earlier announcements about checking account and debit card fees.
- Amid Wall Street Protests, Smaller Banks Gain Favor
Vince Siciliano – a Birkenstock-wearing, organic food-eating, public transportation-riding sympathizer of Occupy Wall Street who earns $240,000 a year – is far from a banking baron. But as the chief executive of New Resource Bank in San Francisco, Mr. Siciliano has managed to pull off what his bigger rivals have not: turn a profit and stay out of the line of fire. ”Our business has tripled this month,” said Mr. Siciliano, 61, referring to October. ”We have had nonstop, all day long, people moving their money.” New Resource, a small community bank that focuses on sustainable and ”planet-smart” small businesses and nonprofits, is one of the many community-based lenders benefiting from the criticism of Wall Street.
- Study: Youth Lead Tech Adaptation, But Older Adults Post Strong Numbers
The 23 to 32-year-olds responsible for Facebook, Twitter and the whole online social revolution are getting bested by their younger siblings in social network participation, says a new [Forrester] report which looks at generational technology adaptation. Young adults, aged 18 to 22, are more likely to create blogs and upload videos than Generation Y. They also visit social networks such as Facebook more frequently, update their social network status more often and add more comments to someone’s page or profile. Somehow this generation also finds time to Tweet more than any other age group.