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Are Big Banks Really Losing Customers?

Submitted by on November 19, 2011 – 2:28 pmOne Comment

Bank Transfer Day swept social media recently, urging consumers to transfer their funds from major banks to smaller local institutions and credit unions. Reports show that hundreds of thousands of customers, representing millions of dollars, are choosing smaller banks; and while these numbers are low compared to the billions at stake in finance, they might be enough to make the big banks start to worry.

Saturday, Nov. 5 marked Bank Transfer Day as popularized on Facebook, an event that saw 40,000 new members and $80 million join credit unions. According to the Huffington Post, 650,000 people have joined credit unions since Sept. 29, when Bank of America announced their plan to initiate debit fees, “more than joined… in all of 2010.”

Credit unions are like banks that are owned and operated by their members (anyone with an account). Credit unions are often seen as a safer, friendlier alternative to other banks.

Individual customers aren’t the only ones making the switch: NPR reports that an entire town withdrew its accounts from one of the “Big Three.” In April, the village of Hempstead, NY, “a working-class town of about 54,000 people,” withdrew their $12.5 million in municipal savings from accounts at Chase. Mayor Wayne Hall cited frustrations over their high percentage of residents with failing mortgages; many locals were refused refinancing by the banks.

But the article also quotes a banking consultant, who doubts that “municipalities moving their deposits around is going to have any measurable influence on how home mortgages are serviced.”

Still, popular protest has already arguably had some affect on banks. Bank of America cancelled their immensely unpopular debit fee after many protests, including an online petition with more than 300,000 signatures started by a 22-year-old nanny.

What do you think? Should consumers be moving to credit unions and smaller banks? Will it make a difference?

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