COMMENTARY | In the four weeks prior to Nov. 5, the day designated as Transfer Bank Day, a day set aside for individuals to transfer their money from the big banks to credit unions, the Christian Science Monitor reported that the number of people fed up with higher banking fees and charges with the larger banks and transferring their accounts had already topped 650,000.
With a number of the larger institutions — or at least their smaller branches — being closed that day (a Saturday), many of those protesting against their banks were forced to postpone their day of transfer. But as the Monitor subsequently reported, the true impact of Bank Transfer Day may not be known for some time, as those who intended to close their big bank accounts but were unable do so in the following weeks.
It is estimated that the number of transferred accounts could top the one-million mark after Bank Transfer Day.
On the day itself, Mashable’s Charles White reported that the Bank Transfer Day Facebook page, complete with the logo of a Guy Fawkes mask, displayed 81,900 RSVPs from individuals planning to make good their transfers on Nov. 5. As some soon discovered, that was not possible, but comments on the Facebook site indicate that the determination to strike a blow against the massive banks was only delayed until the participant could find time in the coming week to actualize the closing and the transfer to a credit union.
The Bank Transfer Day movement seems to have grown out of the frustration of watching financial institutions “too big to fail” continue to make record profits, pay exorbitant bonuses to their employees, and raise banking fees. White pointed out that the idea most likely gained momentum from Huffington Post founder Arianna Huffington’s call in July for a “Move Your Money” movement to get individuals to transfer their accounts from institutions that were involved in the mortgage crisis and the Wall Street bailout to smaller banks and credit unions. It was likely exacerbated by Bank of America’s announcement on Sept. 29 to impose a debit card fee of $5 on its customers.
Surprisingly, Bank Transfer Day was not affiliated with Occupy Wall Street, which began as a protest against corporate influence and the income inequality.
Kristin Christian started the Facebook page on Nov. 1 and wrote that she was shocked at how many people responded.
Christian could be in for another shock. The initial report from the CUNA (Credit Union National Association) revealed Wednesday that thousands of new accounts had been opened nationwide on Bank Transfer Day. BECU, Seattle, reported that they had a single branch open 659 accounts on Saturday. The Washington credit union has 45 branches.
But some are saying that the overall impact on the larger banks will be minimal, maybe even beneficial. According to The Motley Fool analyst Morgan Housel, it just might be a win-win for both the customers and the banking institutions (both the large banks and the credit unions).
“People are going to be moving to credit unions,” Housel explained to DCDecoder , “and that’s good for them because they’re going to have lower fees, they’re going to have better service, they’re going to have the feeling that they are investing in their community. And then the banks are going to be better off because they are getting rid of their least-profitable or not profitable clients. It helps them stem this tsunami of cash [from panicked small account holders, small investors, and increased surcharges associated with overdrafts and fees on an increasing number of accounts] that’s been flowing in that they don’t know what to do with.”
But when does the outflow of customers, something that might not slow for some time, stop as an alleviation of “pressure on the margins because banks have to pay [Federal Deposit Insurance Corp.] premiums and overhead costs” and start becoming a drain on big banks’ assets? Or was Housel’s analysis simply a way to minimize and possibly curtail (through reverse psychology and the positing of irony) what could possibly become a very detrimental movement for the larger banking institutions as one million transfers become two and so on?