Bank of America’s situation is similar to Netflix in that they made a business decision without much in the way of preparation and communication. The Durbin Amendment to the Dodd-Frank financial reform legislation is the reason for the increase according to the bank and to some on social media. This amendment limits the fees banks can charge for debit card swipes. A perfect example to me of unintended consequences with regulation aimed at protecting consumers but interfering directly in the best protection consumers can have which is healthy competition. But there is little in the social media discussion that blames the government regulators rather than the bank.
Bank of America is taking the heat big time on social media from this action of raising fees. However, their voice in responding to the criticism has been silenced because their website has been off and many are complaining about the speed of online services. As seems increasingly common these days, public or consumer anger turns into “hactivism,” with one result being the inability of the victim to engage in the conversation or communicate their key messages. Cyber security is becoming a significant crisis communication concern.
Undoubtedly other banks will be adding similar fees. So those many angry customers of BofA may go through the hassle of switching only to find their new bank doing the same thing. The first airline to add baggage fees took an awful lot of heat as well. But the others soon joined in, and without searching it, I can’t remember who the first airline was. Perhaps the same will happen to Bank of America—the consumer outrage will turn to general outrage against banks rather than the one who went first.
I think it will be different in that there seem to be all kinds of ways that banks can increase fees and with a large number of consumers switching accounts as seems likely from the heated comments, the other banks would be wise to hold off on adding the debit card fee, or like Citi bank find another way of adding revenue. So whether the present problem affects the bank longer term rather than a quick blip of customer loss depends on what competitors do and how much animosity against the bank has been built up. Is this the straw that causes mass customer reaction?
No doubt banks have to find ways to increase fees from consumers and the closer the fees are to the costs of doing business, the better. But building understanding of the realities even the biggest banks face, allowing time from the reaction to cool down before taking action, and then making certain you have the ability and actually do engage in conversation with your customer base seems a much better way forward than we have seen with Bank of America. In contrast, their actions and communication seems like the arrogance that Reed Hastings, CEO of Netflix, admitted to and apologized for.
Given BofA’s other reputation issues, it certainly seems that it would have been in their best interest to let one of the other guys take the lead in this new era of higher bank fees. Sometimes its best of the leader lets someone else take the lead. Pioneers, as they say, often get arrows in their backs.
Bulldog Reporter seems to think that this anger and backlash is all part of the bank’s grand strategy to switch customers to using the more lucrative credit cards. It is surprising to me that Dog, which seems hypersensitive otherwise to social media backlash, would blow this reaction off as some part of a grand strategy.
I also find it interesting that in this post that the bank spokesperson says they are “doing their best to explain the impact.” Hmm, seems their best could have been a lot better.