WASHINGTON (2/27/13)--Bank of America--the bank that started the Bank Transfer Day movement in September 2011 when it proposed a $5 fee on debit cards--made a mistake by introducing that fee, Bill Cheney, president/CEO of the Credit Union National Association, told Bloomberg News.
"Clearly, it was a strategic error, especially since they backed down from it," Cheney said in an article, which centered on a number of gaffes made by the bank's executive management, gaffes that the bank is still recovering from. Cheney was the only credit union system executive interviewed in the article.
The article pointed out that credit unions "were among the beneficiaries of [BofA CEO Brian] Moynihan's missteps, gaining 650,000 new account holders in the month after the $5 fee was announced." It also noted that "Moynihan hit his nadir with the debit-card fee, which was seen as a move by greedy bankers to reach further into consumers' wallets."
The decision to charge the fee, said the article, "was met with protests at branches from Los Angeles to Boston." Thousands closed their accounts. Five weeks later, the bank reversed its decision.
The article also addressed customer dissatisfaction at the bank. "Rather than court new customers, Bank of America's strategy is to wring more profit from existing ones, soliciting checking-account holders for mortgages, credit cards and investments. That's easier when people appreciate the job you're doing for them. The bank had the lowest customer satisfaction of the four biggest lenders in 2012," the article said, quoting the Ann Arbor, Mich.-based American Customer Satisfaction Index.
Credit unions were the top-rated institutions on that index. And the Bank Transfer Day surge, which urged consumers disgruntled with bank fees to switch to a credit union or local institution, helped prompt a gain of 2.2 million new member accounts at credit unions.
The article, "BofA Surge Affirms Buffett Bet as Moynihan Recovers From Gaffes," appears in Money News (moneynews.com Feb. 26). For the full article, use the link.