Bank of America Should Become a Credit Union

I have decided that the best course of action for Bank of America may be to become a credit union. Despite the regulatory hurdles and government scrutiny that the bank would need to deal with, it may be an easier course of action than trying to catch a break with our industry's trade press, the general media and definitely those using social media to respond to every move the bank makes.

For instance, American Banker published a story last week from Ed Roberts entitled, Bank Transfer Day Spurs Big Membership Growth at CUs. The story cited that the credit union industry had near record growth in the second half of 2011 . . . 'after the ill-fated September announcement by Bank of America of monthly debit fees prompted Bank Transfer Day'. This growth of 850,000 members in the final six months of the year contributed to an annual growth for the credit union industry of almost 1.3 million new accounts, reported the NCUA.

According to my calculations, a growth of 850,000 new members for the second half of 2011 represents an average of fewer than one incremental new account per credit union (not per branch) a day. The statistics are roughly the same when you look at the annual growth rate as well. Assuming that the number of new members represented incremental growth, the 1.3 million new members reflect only a 1.4% growth over 2010 according to the 2010 Government Census. 

How does this become newsworthy? In almost all U.S. major newspapers, a version of this article ran including a reference to both Bank Transfer Day and Bank of America. The Los Angeles Times ran a headline, Banks' Fees Pay Off - For Credit Unions while Forbes ran an even more sensationalized headline, Credit Unions Membership Soars as Customers Spurn Big Banks. Does any other industry get as much press for close to flat line growth? Shouldn't this be more realistically considered business as usual? 

Did Social Media Cause Big Bank About-Face?

A month after Bank of America and other large banks announced the levying of a monthly debit fee for debit card use, virtually all of the big banks that were either testing or had implemented a debit fee have backed off of their plans amid a groundswell of negative publicity.

On Friday, Chase and Wells Fargo announced that their respective debit fee pilots would end, and today SunTrust and Regions Bank announced a change of fee policies with refunds for fees already charged customers. Over the past week, many of the other top banks in the country like U.S. Bank, PNC Bank and TD Bank made strong statements that they would not be implementing debit fees. And  in an surprise move (after the initial posting of this blog), Bank of America rescinded their planned $5 debit fee based on 'consumer concern'.

Was this unprecedented big bank about-face caused by the significant public response initiated through blogs and social media?

Almost immediately upon the announcement of the $5 fee by Bank of America, a grassroots movement began on Facebook under the name of 'Bank Transfer Day'. President Obama and Richard Durbin blasted Bank of America for their decision and trade publications like the Credit Union Times immediately jumped on the Bank Transfer Day bandwagon, sharing local and regional initiatives while encouraging member organizations to extend November 5 Saturday hours.