It has been two weeks since Arianna Huffington began imploring people to move their money to small institutions, and big banks do not appear any worse for the wear.
But whether Huffington's much-talked-about campaign proves to be anything more than a flash in the pan is beside the point. The point is that the pundit turned Web entrepreneur has tapped into an undeniable aspect of the consumer psyche — a festering resentment of big banks and a growing frustration with government officials seen as having donned kid gloves for a task that might have required brass knuckles.
At first blush, any problems presented by the Move Your Money project seem to be confined to the realm of optics. After all, Huffington appeals to a narrow slice of a fragmented society, and even her biggest fans might be stymied by inertia when contemplating the idea of moving their checking accounts — especially with so many other New Year's resolutions in need of follow-through.
But down the road, the suspicion and anger that has been building toward big banks could cause damage at the margins. That may sound minor, until one thinks about how much of a company's fate — particularly in industries becoming more and more commoditized — is decided at the margins.
"Banking for many people is a pretty low-involvement kind of purchase," said David Crockett, an associate professor of marketing at the University of South Carolina's Moore School of Business who studies the sociological aspects of consumer behavior. "There's a lot of esoterica that they cannot understand, but for what they do understand, banks tend to provide fairly standard offerings with subtle variations."
In other words, it would take an awful lot of dissatisfaction to persuade customers of Citigroup Inc. or Bank of America Corp. — or any company that has similarly engendered public angst over the course of this crisis — to actually yank deposits. But it also would be easy for those customers to look elsewhere when it comes to taking out mortgages, selecting wealth advisers or seeking any of the other products and services that banks would hope to cross-sell to clients.
The successful execution of cross-selling, a concept that has widely enchanted but largely eluded the industry to date, will become increasingly important to banks as the deposit-gathering train loses steam and as more fee income gets lost to new regulations. But it will be all the more difficult for banks to achieve if the receptiveness of clients is compromised.
In online postings, aggrieved bank customers inspired by Huffington's Move Your Money campaign describe their participation as an exercise in revenge, a way to take action against a system in which they otherwise feel profound helplessness. Dramatic — and yet these people will be a mere blip on the radar screen for big banks.
The real impact of the movement is in the education it provides people about their banking options — something that may not move them to close accounts, but could stick with them next time they need bankservices.
Since Move Your Money's Dec. 29 kickoff, daily Web traffic has more than tripled on the National Association of Federal Credit Unions' CULookUp.com, a credit union locator site. That's no proxy for new account openings, but NAFCU President Fred Becker said it is a good indication that bank customers are looking for alternatives.
"The trust and confidence issue has overcome the perceived convenience issue," Becker said, referring to what he sees as a common misperception about the product breadth and ATM access offered by credit unions - a misperception that the trade group aims to clear up every time it attracts another visitor to its Web site.
In a poll last week on American Banker's Web site, 39% of respondents said the reputations of big banks have been hurt enough to drive customers elsewhere. Only 24% agreed that inertia would be a powerful enough force to keep big banks' customers where they are, with the rest of the respondents unsure how the dynamics would play out. The survey results are unscientific, but they indicate that consumer frustration is palpable.
The impact is impossible to quantify, but it is showing up anecdotally. Louis J. Cappelli, chairman of Sterling National Bank in New York, said he fielded effusive compliments last week from a woman he introduced himself to at a branch in Manhattan, and from a man who called to thank him for good service at a branch in Queens.
Nothing strange about a local bank chairman hearing nice things from customers, but Cappelli said it was notable in that "it happened to me twice" in the same week.
Perhaps his antennae were just up more than usual because of the publicity Huffington's campaign had been generating.
Or maybe it's customers whose antennae are up now.