Switching to Banking Online? Banks Use Autopay Defense
Alternative to Bank Fees will be Online Banking
Banking online sure seems appealing with all these new bank fees being initiated. With some banks gaining negative attention for charging fees for previously free services such as using a debit card, customers are now considering banking online more than ever. Some are considering finding a new bank to take their business, however it is only a matter of time before all big banks incorporate fees, so maybe banking online is the way to go.
Banks are smart, and they don’t want you to switch to banking online. It turns out that all those “convenient” features that let you pay your bills automatically and let you receive your paycheck directly to your account do more than save you time with paying bills or save a trip to your local branch—they prevent switching.
Why would you want to switch banks when it would be a pain in the butt to change over your bills and paycheck info to another institution? Even if the institution actually meant banking online?
A report in the New York Times relates the existence of marketing studies like one commissioned by Fiserv, which develops online bill paying systems, that shows how using the internet to pay bills automatically reduced customer turnover for banks by up to 95 percent in some cases.
I guess we now know why online bill paying tends to be a free service!
The debate here becomes the following:
Is it wrong that a product that was marketed for convenience is being used against the consumer?
Of course the banks will say this is not true. They believe customers will stay with them because of superior customer service. Isn’t that argument convenient? Banking online would be different however for some the convenience of never having to go to a bank is alluring.
Advocacy groups, such as U.S. Pirg, argue banks consciously make it harder to switch. This is the thing: If it is all about convenience, then it shouldn’t be an annoying process to change the AutoPay over to another bank—right?
While banks obviously don’t want to be seen as the bad guy, it is clear that it is in their best interest to not only keep the customers happy, but also keep them captive.
“The name of the game is to find the levers that increase customer loyalty and retention at a reasonable cost,” said Kirk Gripenstraw, an expert on customer analytics who worked on the Fiserv studies.
There are many ways to keep customers—many businesses offer reward programs to encourage repeat business.
Awesome, this is positive reinforcement.
To use AutoPay as a way to keep customers is basically saying, “if you switch banks, you will have to take time to deal with changing the AutoPay on your bills,” in other words, there will be particular inconvenience if you choose to disable your features designed for your convenience.
According to surveys by Javelin Strategy and Research, in 2011, only 7% of consumers have switched banks, compared to 12% in 2010.
Knowing the psychology behind this might make you want to switch banks, just out of spite. This means that if you recently have become unhappy with your bank due to extra fees; consider other banks or maybe the local credit union. Switching over the info may be a hassle, but the only way to really show the bank that their new fees aren’t acceptable is to go to the competition.
Your bank should, in some ways, be your friend—and some clearly are nothing more than big, heartless financial buildings with automated levers and pulleys. If your bank charges fees would you switch to banking online? I don’t know how I feel about banking online, however I do enjoy the fact that I would not have to pay debit card fees every time I used it!