#MoveYourMoney: Not As Good for Banks and Credit Unions As They Think It Is
// July 23rd, 2010 // Banking, Banking business strategy, Banks, Brands and Branding, Credit Unions
I suspect this might be a pretty unpopular perspective. I’m not trying to be a downer, rather a realist, entrepreneur and business strategist.
Over the last several months, the “move your money movement” has gotten a lot of attention, thanks to websites like http://moveyourmoney.info. On Twitter you’ll frequently see hashtags like #moveyourmoney and #banklocal. More and more, I see links posted to articles all over the web talking about how credit unions and community banks are a great alternative to big banks. Many seem to be hailing this as one of the best things to happen to community banks and credit unions. Although I’m not studying market share numbers, it does seem rather undeniably true: consumers are moving their money from big banks to smaller, local banks and credit unions.
There’s just one problem. And it’s a big one, rendering this “movement” only mildly useful for any individual bank or credit union.
When a consumer opens an account at your bank or credit union because of #moveyourmoney, they are doing so because they DON’T want an account at a big bank. Furthermore, they’re opening an account at your bank or credit union simply because you are a smaller, local alternative…NOT a big bank.
Do you see the problem? They are not choosing you for who you are…they are choosing you for what you are NOT. And unfortunately, you are just one of thousands of banks and credit unions who are NOT big banks. (Metaphor/Translation: “Honey, I’m not marrying you because I actually love YOU, you silly goose; I’m marrying you because you are NOT someone I hate…and you are available. Duh.”)
So what does this mean? It means that these new customers and members you’ve just acquired are not necessarily a good fit for you at all (just because they’re a bad fit for Chase doesn’t mean they’re a good fit for Acme Credit Union). It means they will be just as fickle and transient as your other customers/members; just as price-sensitive and ready to “move their money” again when a better deal comes along.
You see, there’s one simple fact, and there’s unfortunately no way to get around it (not even with a grassroots effort like #moveyourmoney):
Long-term prosperity at your bank or credit union only happens when consumers proactively choose to bank with YOU for who YOU are: because they feel you are the one and only fit for them, and they refuse to live without you.
The Bottom Line: If you are growing because of the “move your money” effect, you are the random and lucky recipient of a cultural shift outside your control…and you will become keenly aware of just how outside your control it truly is, once the effect starts wearing off. Instead, focus on attracting people who love YOU.
14 Responses to “#MoveYourMoney: Not As Good for Banks and Credit Unions As They Think It Is”
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Really neat way of looking at this. And what happens when things pick up or the “next best thing” comes along. Boom… they leave you just like my girl friend left me in 12th grade for the bigger, better guy.
When you attract those who love you for who you are, they are also more likely to become an advocate for you and share that love with others who they care about.
[...] This post was mentioned on Twitter by Ondine Irving, Jeff Stephens. Jeff Stephens said: New post: why #moveyourmoney is not as good for #banks and #creditunions as they seem to think it is: http://bit.ly/aoBQqO [...]
Thanks so much for commenting. Yes, the advocacy point is a huge one, too. Meaningful word of mouth definitely only really happens when people love you for what you are.
This is such a good, “I never thought about it that way” post. I think you’re definitely right too – “They are not choosing you for who you are…they are choosing you for what you are NOT.” This can be a problem especially for smaller banks/CUs who are not yet able to compete technologically with big banks. Their online banking, for example, may not be as good as BOA’s, disappointing new customers. In big picture terms though, it seems that any shift away from big banks is still good for the CU/community bank sector as a whole, especially if they concentrate on adapting to please the new mix of customers.
In January 2009 (before “Move Your Money” was launched), I wrote a similarly themed piece entitled, “Your Deposits Are Up? So What…”
http://thefinancialbrand.com/4287/your-deposits-are-up-so-what/
Bankers have always confused consumer contempt for the competition as some form of “brand love” for themselves, just like they confuse “inertia” with “loyalty.”
I think this is true about any business advantage that is based on a misstep by the competition: the best way to take advantage of it is to pick up new customers while you can, but assume it’s a temporary blip and that you need to focus on service and your core competency during these capricious times just as much as you do when things aren’t going your way. What do we do to ATTRACT business; what do we do to KEEP the business? We need to ask ourselves those questions every day.
Dan, it’s nice to hear from you–thanks for chiming in. I think you’re right-on that #moveyourmoney has some positive effects for the CU/community bank category as a whole. In my opinion, many credit unions and community banks have assumed incorrectly that the categorical benefit translates into a benefit for their company individually.
Jeffry, thanks for reminding us of that article–I had forgotten about it and appreciate you bringing it back up. I love the way you phrased your comment: that financial institutions have always confused consumer contempt at the competition for brand love. That is so true. And I think many of the community banks and credit unions who felt that way are going to start seeing some of that false brand love appear to wear off in the very near future….
Carl, you’ve made a good point: that this overall bump the community bank/credit union category is experiencing should not change the we SHOULD be doing business every day anyway. I agree. For the individual credit union or community bank, the real upside of this #moveyourmoney thing is simply an increased opportunity to show people what your company is all about, and then let them decide whether they align with your or not.
Could this be why marketing and biz dev budgets are getting chopped every day? They are depending on the bank exodus to drive membership.
You know, I hadn’t thought of that, but I bet you are right that is probably at least partially responsible for such budget cuts. I feel like because of #moveyourmoney, people at credit unions and community banks are saying (at least to themselves, if not out loud): “FINALLY, our time has come! Consumers are seeing that we’re the better choice, and now we can enjoy success.” My fear is that’s an artificial high, soon to be followed by a big low when that wears off.
Jeff, you and everybody else make some great points. However, I am going to disagree, well not disagree per say, but offer a different scenario. There are many community based financial institutions out there who have a great community relationship with their marketplace. The kind that is measurable in research and the kind that drives word of mouth marketing. If a money center bank customer decides to leave due to the #MoveYourMoney movement and chooses the community based financial institution that they know to be “great” because they have heard and observed this “greatness”, is in fact choosing the community FI not because it is “not a big bank” but because it is a great bank. In this situation, these new customers will be more like your core customers and less fickle than the I chose you because your are “NOT a big bank” customer.
Either way, I hope that no banks or credit unions are sitting back simply enjoying the new customers, most of whom will not bring a profitable relationship to the bank.
@dmgerbino
David, thank you for offering a different point of view. The idea of #moveyourmoney as impetus for customers to make a healthy change they may have wanted to make anyway is valid. I didn’t mean to imply that #moveyourmoney is without value to local banks and credit unions, because it obviously does deliver some important opportunities to them. But the customer who is moving from a big bank to a local bank/credit union still has multiple choices (even the tiniest of markets) and I think it’s critical that they make their final selection based on finding a specific, individual bank/credit union they align with. My fear is that the customer will be thinking “I’m moving my money from a big bank to a small one….so I’ll just pick the local bank or credit union that is most convenient for me.” Rather, if I’m a bank, I’d much prefer to have a customer say ‘I’m choosing Bank X because they are the one and only fit for who I am and what I stand for–for me, they are the ONLY choice.”
Jeff,
you said “Rather, if I’m a bank, I’d much prefer to have a customer say ‘I’m choosing Bank X because they are the one and only fit for who I am and what I stand for–for me, they are the ONLY choice.”
I could not agree with you more. That is what ALL community based financial institutions should strive for.
@dmgerbino