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Paper Use caution in wooing angry bank customers
DES MOINES, Iowa (11/2/11)--A new white paper encourages credit unions and community banks to woo bank customers frustrated by fees but also warns them to heed certain cautions when doing so.

The paper, "Use Caution When Wooing Angry Bank Customers," was co-authored by TJ Riha, CEO of debit consulting firm PayFusion, and Andrea Stritzke, vice president of regulatory compliance at PolicyWorks.

The report's release comes as credit unions and small community banks are gearing up for Bank Transfer Day Saturday, a day designated for switching accounts from big banks to the smaller institutions. The Credit Union National Association (CUNA), state leagues, and credit unions nationwide have been urging consumers fed up with big bank fees to switch their accounts any time. CUNA and the leagues have worked extensively the past month with media throughout the nation to drive home the benefits that credit unions offer.

Consumer opposition to the big banks' debit card fees has been so strong--with many consumers announcing they would switch accounts because of the fees--that last week several big banks began  "rethinking" their plans to charge or test debit card fees. The latest to cave in: Bank of America, which announced Tuesday it will not charge its much-denigrated $5 monthly debit card fee. That fee, announced Sept. 28, stirred a month-long barrage of opposition from consumers and unprecedented media coverage of credit unions as an alternative.

Although the banks are reconsidering the debit fees, they have not indicated what they will do to make up for revenue losses in interchange fees.

"To be sure, this extraordinary chance at growth can not be squandered," Riha and Stritzke write in the report, referring to the opportunity spurred by consumer movements like Occupy Wall Street and Bank Transfer Day. "That said, leadership at the nation's credit unions and community banks must proceed with caution when courting these angry bank customers."

They outline several warnings for community financial institutions (FIs), including:

  • Regulatory concerns with use of the word "free" in advertising. Truth in Savings regulations state that advertisements cannot refer to or describe an account as "free" or "no cost" if any maintenance or activity fee is imposed on the account.
  • The need for FIs to perform a thorough competitive analysis of their financial products and services so staff will be better equipped to answer questions they may encounter from prospective member/customers.
  • Marketing advice to help FIs provide the extra push to switch accounts, including the use of incentives to court new business; and
  • Possible repercussions of courting risky customers, who might jump ship if an FI hints of a new direction in services in the future.

The paper concludes with a best-practices strategy, including four tactics credit unions and community banks should put into place before marketing to frustrated bank customers.
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