“The Internet banking services that have been sold to customers as conveniences, like online bill paying, serve as powerful tethers that keep them from jumping to another institution,” says the second paragraph in the Sunday front-pager, continuing the captivity motif suggested by the phrase “on [the] hook” in the headline.
It isn’t necessarily news to bankers and longtime students of the industry that automatic bill payment, not to mention things like direct deposit of paychecks, promote customer inertia. We remember retail banking executives from Washington Mutual, then a relative up-and-comer, making pretty much the same observation to us back in 1999. But, as the Times notes, it is coming an unpleasant surprise to many consumers who’ve been turned off by the onslaught of post-Durbin fees imposed by the megabanks and want to bolt.
Meanwhile, what the New York Post describes as “a Facebook-driven crusade to get people to withdraw their money from regular bank accounts” has designated Nov. 5 Bank Transfer Day. They chose the date because it’s Guy Fawkes Day, but instead of lighting bonfires or blowing up buildings, this movement (started by a Los Angeles art gallery owner) is merely encouraging people to move their money to credit unions.
The Post also notes the stickiness factor: “For many customers using automatic bill payments or direct deposits, unwinding all their transactions and moving them to a different financial institution can quickly become daunting. … Banks are counting on the inconvenience.”