Moving His Money

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The MoveYourMoney movement seems to be pretty popular among my credit union friends. I still see the #moveyourmoney hash tag show up in tweets that link to the endless populist string of big bank bashing articles.

Here’s one story of a guy who’s moving his money.

I have a great next door neighbor. He’s a small business owner, running an auto body shop in the next town over. So when my car needs something done, I drive it to his house, he takes the car into the shop, brings it back to my house, and I pay him for what he did.

On the other side of the relationship, however, about all I can do for him is commiserate with him when he has a “my bank screwed me” story. Unfortunately, he told me one of those stories recently.

He business banking relationship is with a community bank that’s one town over from the town where his business is in. Two weeks ago he became the victim of fraudulent activity on his account, when he noticed some automatic withdrawals. The account was red-flagged by the bank, but not closed out because he was waiting for funds from his credit card processor to clear.

Despite the red flags on his account, a fraudulent check for $10k was written on his account. Upon seeing this transaction, my neighbor notified his bank and asked that something be done.

He was told to file a police report, which he did in the town in which his business is located. The police department told him they wouldn’t accept the report, that it needed to filed in the town in which the bank is located. So he went there and was told by that police department to file a report in the town in which he lives. Our police department wouldn’t take the report either, saying that because neither his business nor his bank were located in the town, that they didn’t have any jurisdiction over the incident.

He was also told by his bank that: 1) it would look into the incident and would get back to him by April 19, and that 2) it didn’t believe that it was liable for the $10k.

As of today, he hasn’t heard back from his bank.

In the meantime, however, his accountant placed a few calls and found out that the check was deposited in an account held at Citibank. Citi promised to look into it — which it did, calling the accountant back with information about the account that same day.

Another thing my neighbor has done in the two weeks that he’s been waiting for his bank to resolve this issue is to call two of the larger banks in the area about what he should do, and, more specifically, about what they would have done in a similar situation. He told me that this is how he’s learning what to do here — by contacting his bank’s large bank competitors.

My neighbor, who has had his business banking relationship with the community bank in question for 10 years now, also has some personal accounts and a loan with that bank.  That relationship isn’t going to last much longer.  He indeed, will be “moving his money” — to a large bank.

Why do I tell this story here? It’s not because I’m an apologist for the big banks. Back in 2002, I started writing about customer advocacy (the belief that a bank does what right for its customers and not just its bottom line), about how large banks were not perceived to be customer advocates to the extent that credit unions and community banks were, and about how linked the perception of customer advocacy was to future purchase intention and customer loyalty.

By and large, large banks have ignored those warnings until recently.

But another thing I’ve written about is how the perception of customer advocacy is linked not just to benevolent policies and procedures, but to operational excellence. Many consumers attribute a perception about customer advocacy to firms that don’t make mistakes.

And by and large, smaller banks and credit unions have ignored this lesson. It’s not enough for them to have friendly, helpful people in their branches, and to rest on the fact that they haven’t gouged customers on overdraft fees to the extent larger banks may have.  They have to be good at what they do.

I’m sure my neighbor’s bank has been perfectly cordial in their communication with him. But the fact that they haven’t been able to resolve this problem in two weeks — and that they’re willing to let a 10-year relationship walk out the door for $10k — doesn’t speak well of their operational excellence.

If this were a one-off incident, it wouldn’t be worth mentioning. But I’m pretty sure it isn’t an isolated case.

Some community banks and credit unions may be getting too smug. I suspect, though, that the smugness I’m detecting is found more among the marketing community than among the senior executive suite.

This isn’t a good sign for those marketers. The populist anti-big bank sentiment isn’t going to last forever.  America loves to find new villains to crucify. Knowing when to jump off the #moveyourmoney wave is a decision that needs to be made.

Personally, I think it’s time to jump off that wave, forget the populist stuff, and get back to some serious marketing.

In many community banks and credit unions, marketing isn’t the strategic partner and contributor that it would like to be. To raise their strategic profile they’re going to have find ways of making their organizations understand the importance of operational excellence to the strength of the relationship with some customers and members.

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