Saturday, November 5, 2011

Bank Transfer Day

Bank Transfer Day, today, was apparently not the anticlimax that most observers had expected. Probably 2 or 3 million consumers and a significant number of small businesses had already moved their accounts, including about $30 billion in deposits, from Wall Street banks to local community banks and credit unions before Friday, so how many could be left to make the move on the actual day?

There nevertheless was a lot happening today. At least three of the top 19 banks shut down large parts of their online banking systems for the weekend. The banks were pleading “scheduled maintenance,” and I am sure they did take advantage of the shutdown to do maintenance, but when a routine four-hour maintenance window gets expanded to more than 40 hours, you can be sure that more than maintenance is going on.

Banks are restricting their online access to try to force leaving customers to go to branch offices, where they hope to talk them out of closing their accounts. There is little the large banks can say to their departing customers, though. For the average banking customer, any bank will do — the most expensive banks don’t really offer any advantages over the least expensive ones. Consumer advocates promoting bank transfer day anticipated this kind of friction from the banks, and had this simple advice: wait a few days if that makes it easier. The objective of the day is not to suffer or be inconvenienced, but just to move your money.

The media seemed to focus mostly on the Occupy protesters, particularly major marches in Los Angeles and Portland, Oregon. There were coordinated “marches” to bank branches in dozens of cities, leading to at least five arrests. Police in Dallas use force and pepper spray to clear protesters and others from a sidewalk in front of a bank branch, but that was apparently the only mass violence.

There was some spillover into the United Kingdom and Canada. Wall Street banks obviously don’t own half the bank branches in those countries, but still, some banks are more local than others, and some people were moving their accounts or out on the street protesting.

Protests might make the news, but the most important actions were done by the smallest groups of two or three people going to the bank together for moral and logistical support. Early estimates suggested that between 50,000 and 100,000 people would move their checking accounts today, but reports on social media suggest a number larger than that, along with a surprising number of credit card cancellations, perhaps as many as a million. The credit cards are mostly symbolic — Americans hold far more credit cards than they actually use — but even symbolic actions can help people form new habits of action.

The giant banks may not financially miss the deposits they are losing today, but they are showing that they are worried about losing customers. They take for granted the chance to advertise potentially expensive services to their customers, and that is a window of opportunity that is shrinking today.