While some companies are embracing the ‘Occupy’ demonstrations popping up across the United States, others like Bank of America have made the decision to ignore the impact that these demonstrations can have on consumer sentiment.
Less than two weeks after ‘Occupy Wall Street’ demonstrations began in downtown New York, executives at Bank of America thought it a good time to roll out a new $5 monthly charge to its customers making check card purchases in a given month. Two other large banks, JP Morgan and Wells Fargo, are also reported to be considering similar fees.
Bank of America is now taking heat (including being spoofed on Ellen) for its recent fee introduction from both legislators and the media. Senator Dick Durbin, D-Ill. urged customers to take their money to different banks. A Fox Business Network anchor went further and made headlines when she cut up a Bank of America debit card on air.
Consumer watchdogs will argue that the fee is not fair and that the government needs to protect consumers; however, the damage for Bank of America has already been done thanks to all of the negative press its announcement has received. Recent reports of sluggish performance on the bank’s website over the past few week have even been attributed to the bank’s fee announcement.
Whether or not you believe in the varied grievances claimed by the ‘Occupy Wall Street’ protesters, it is obvious that Americans do not think highly of large banks. A 2011 US retail banking satisfaction study by JD Power and Associates shows that customer satisfaction with America’s larger banks continues to lag behind that of smaller banks. Also interesting to note is that satisfaction with fees decreased to just 43 percent of respondents in 2011.
It is yet to be seen whether Bank of America will backtrack like Netflix, which recently upset customers with its own mishap. In Netflix’s case, an increased pricing scheme stayed; however, following customer outrage and a 40 percent decline in the company’s stock price, the company decided not to follow through with a plan to separate its DVD by mail and streaming services. Netflix eventually listened to its customers but still suffered from many customers dropping the service altogether. Bank of America should react quickly to prevent the same folly. Some will simply change banks to avoid fees, but the reality is that mobile banking is changing the way people think about banking.
These days, companies like Charles Schwab are taking advantage of smartphones with mobile deposits, eliminating the need for the local bank branch. Further they are tempting new customers with interest-bearing checking accounts that offer unlimited ATM fee reimbursements and free checks, all without monthly service fees or minimum balance hassles customers have come to expect from America’s largest banks.
Much like Netflix’s price changes caused its customers to reevaluate their need for the service at a higher price, many of Bank of America’s customers will do the same. The question is, will Bank of America notice before it’s too late? Already, competitors are lining up to take advantage. So it comes as new surprise that BofA is running ads to try to restore its tarnished reputation.
"The ads describe the bank's charitable donations and small business loans, as well as its efforts to ease loan terms for underwater mortgage borrowers, known as 'loan modifications,'" according to Reuters. Critics, however, aren't impressed.
The ads are "irrelevant," commented Kathleen Day, spokeswoman for the Center for Responsible Lending, a North Carolina-based nonprofit that advocates for homeowners, to Reuters. "The only thing that matters is that they and other banks clean up their servicing operations so they can do more loan modifications and never do the same thing to the economy again."