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Study Big banks risk losing big bucks--185B in deposits

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WASHINGTON (11/14/11)--Bank Transfer Day had a positive impact on credit unions' membership but practically no impact on community banks, and an unestimated impact on the big banks, which are staying mum about accounts they lost as a result of consumers' dissatisfaction with high fees.

The Independent Community Bankers Association (ICBA) reported that community banks saw little of consumers' mass exodus from big banks on Bank Transfer Day Nov.5.  An unscientific quick poll ICBA conducted Nov. 7 among its members indicated that only 3% of community banks responding saw an increase in customers as a result of National Bank Transfer Day.  Seventy-five percent of those polled said they had not seen an increase, and another 22% said they didn't know. 

That contrasts  with a similar poll ICBA conducted on Oct. 17, when community bankers were asked if they had gained customers who have transferred from larger financial institutions out of frustration with their practices. In that poll, 57% said yes, 26% said now, and 7% didn't know.

The grassroots campaign that resulted in 700,000 new member accounts at credit unions since Sept. 29--the day it was revealed Bank of America planned to charge the now-rescinded $5 a month fee for debit card use--has sparked predictions about the implications for big banks.

The 10 largest retail banks are at risk of losing $185 billion of their deposits over the next year as customers move their accounts to more consumer friendly institutions, according to a survey of 5,600 bank customers conducted by Wilton, Conn.-based consulting firm cg42 and released Wednesday. That survey found that half of those polled are uncomfortable with how large some banks have grown; 71% said their banks do not have consumers' interests at heart; and 70% said they want to spread out their relationships among several banks (American Banker Nov. 9).

The survey, conducted in June, said the bank most vulnerable to consumers switching accounts was Bank of America and indicated that 10.3% of BofA customers could defect to other financial institutions during the next 12 months. The second most vulnerable bank to losing possibly losing customers was Citibank, followed by Wells Fargo, Capital One and JPMorgan Chase. The least vulnerable banks were PNC, SunTrust and U.S. Bank, the survey found.

CUs react to Wisconsins new concealed-weapon law

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MADISON, Wis. (11/14/11)--Wisconsin credit unions likely will chart their own paths in response to a state law that went into effect Nov. 1 allowing people who have obtained a concealed-carry license to carry a concealed weapon--such as a firearm--on them.

Most of the state's big banks don't intend to post signs prohibiting concealed firearms because of the difficulty in policing a ban on weapons for bank customers, said The Milwaukee Journal Sentinel (Nov. 6). Once posted, a bank must enforce the ban, and many banks have not finalized their approach.

That's true for some credit unions as well. "We have not finalized our conceal-and-carry policy right now," Rebecca Gerothanas, senior vice president of marketing at Summit CU in Madison, told News Now. "We will probably know in a week or so."

Other credit unions follow policies set by companies whose employees they serve. For instance, Aurora CU in Milwaukee is part of Aurora Health Care. "We follow the Aurora Health Care policy and  don't allow concealed weapons," Mary Pike, Aurora CU member service representative, told News Now. She said the credit union posts signs that indicate it forbids weapons on the premises.

"It's been a huge topic of discussion for us, and we haven't adopted a policy yet," Cathy Tierney, president/CEO of Community First CU in Appleton, told News Now. "We have a board meeting on Nov. 28 and I will go to the board with a recommendation to post [signs prohibiting concealed weapons]. I'm sure the board will accept the recommendation.

"A lot of credit unions and the Credit Union National Association have been discussing this a lot," she added. "Some people in the northern part of the state gave negative feedback on banning concealed weapons because there are a lot of hunters up there. Our employees wanted us to post. Out of 300-plus employees, only a handful didn't want us to post."

The other factor to posting is immunity. "My understanding is that if a credit union or any organization does not post, there is supposedly immunity under the law if something happens, such as someone getting injured or killed,' Tierney said. "You're immune from having responsibility. If you do post, you may give up your immunity--the question is what are you doing to monitor and make sure."

However, immunity is an untested concept, according to Community First's attorney, she added. "Until there is case law that really clearly defines it, it is a risk-reward situation," Tierney said.

Each credit union will have to determine what is best for it in terms of its policies regarding members coming into branches with concealed weapons, Chris Henzig, director of communications for the Wisconsin Credit Union League, told the Journal Sentinel.

"We don't advise [credit unions] one way or another," Henzig told the newspaper. "From what I know, different ones are going different directions on it."

Wisconsin is the 49th state to have a concealed weapons law, and it hasn't created many problems elsewhere, the paper said.

Many credit unions and banks in several states already ban hats, hoods and sunglasses to help thwart robberies.

iTheStreet.comi CUs among three hot trends

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MADISON, Wis. (11/14/11)--"Credit union" is among the top three "hot trend" Internet searches cited by a Wednesday article.

"'Credit union'" is trending as momentum continues to build in new memberships at credit unions following Bank Transfer Day, which occurred this past Saturday, Nov. 5," the article said.

The article cited Credit Union National Association (CUNA) statistics that on Bank Transfer Day alone, 40,000 consumers joined credit unions nationwide, depositing $80 million into their accounts. CUNA also announced that credit unions across the country added 650,000 new members in October.

Bethpage (N.Y.) FCU, saw an 85% increase in memberships during the five weeks leading up to Bank Transfer Day, compared to the same period year ago, said. Bethpage FCU also opened 1,471 new checking accounts during a one-week Bank Transfer Day promotion, the article said.

BECU, Tukwila, Wash., added 699 new members on Bank Transfer Day, a 40% increase from a typical Saturday, the article said.

CU System briefs (11/10/2011)

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  • BROOKLYN, N.Y. (11/14/11)--Polish & Slavic FCU, the nation's largest ethnic credit union, has elected Marzena Wierzbowska as its first female board chair, the credit union announced (PRNewswire Nov. 10).  It also elected four new directors: Malgorzata Gradzki, Beata Klar-Jakubowski, Leon Kokoszka, and Marzena Wojczulanis. Wierzbowska, who is in the middle of her second term on the board, completed journalism and political science studies in Poland and studied psychology at New York University. She has served as the director of the Legal and Social Services program at the Polish Cultural Foundation in Clark, N.J., and was director of the Community Action Program and manager/coordinator of the municipal ESL teaching program organized by the city of New York.  (Photo provided by the New Jersey Credit Union League) …

  • OKLAHOMA CITY, OKLA. (11/14/11)--Oklahoma credit unions recently raised $30,000 through a wine-tasting event to support the Credit Union House in Oklahoma City.  State credit unions own the facility and use it for meetings and industry gatherings. More than 250 people attended the wine tasting at the Credit Union House on Sept. 29. The event was sponsored by The Cellar and Pop's of Arcadia, and the presenting sponsor was CUNA Mutual Group. Door prizes were awarded along with a grand prize package of a trip for two to Napa Valley in California …

Marketers ignore customer complaints on social media

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NEW YORK (11/14/11)--The double-edge sword of social media turned around and bit big banks in the days leading up to Bank Transfer Day, to the benefit of credit unions' membership and deposits growth. According to a new poll that reports a "disconnect" between companies and customers' complaints, banks should have responded to customers' complaints raised on social media.

How best to deal with negative buzz is a perennial question, said (Nov. 10), reporting on a survey of U.S. company executives conducted in September by feedback management software provider MarketTools.

The study found that 34% of the executives polled know their customers used social media such as Twitter and Facebook to complain about their products and services. But nearly half of those surveyed (44%)  think that their customers don't comment or complain about their products and services online, and 22%  don't know.

"While it's possible that some business-to-business companies really don't have to worry much about customers turning to Twitter to vent their frustration, for consumer-facing firms, the probability seems high, raising the question as to whether executives are aware enough of online complaints."

The survey also found that while a sizeable number of marketers respond to customer complaints on Facebook or Twitter at least some of the time, many leave questions and negative feedback completely unanswered. On Twitter, 29% said they responded to such feedback "seldom" or "never."  On Facebook, 17% said the same.

"Consumers may not be happy with this frequency of response," said "Research tends to show that social media users want businesses to answer them, and that an interaction with a company representative online can defuse negative feedback sometimes simply by offering attention.

What's the lesson in this for credit unions?  More credit unions are using social media as a channel of communications with their members.  If the credit union gets feedback--constructive or otherwise--address it and acknowledge it.