The last year has led to a massive movement as banks try and win customers over to their product by improving their online software. One very high-profile bank that has recently done so is Citibank, who have completely revolutionized the field of online banking.
Citi has created a new website that displays all financial information in one place, including credit cards. They even have tools in place that allow the user to download information from accounts held with other banks.
Even more impressive is their expenditures tracking software, which shows the user how much money they have spent in each particular category, from gas to retail to dining. This, along with their budgeting features, is intended to further help their customers control their spending and keep people out of debt.
Personally, I think this software makeover is a great thing. Online banking allows for so much more capability than personal banking ever could, and it is time banks took full advantages of online abilities. These tools could make a real difference in people's lives by by helping them manage money in easy to use and understand ways. No longer will people have to create their own budgets and try to track their own spending when banks are willing to do it for them. Citi's software is truly one of the best things to happen to online banking.
Sunday, November 27, 2011
Sunday, November 13, 2011
Trapped by Online Bills
This is somewhat of a continuation of the topic I introduced last week in terms of controversy involving new fees being introduced by major banks. This week, an article by the New York Times detailed a major issue related to online banking: people who participate in online banking are finding it increasingly difficult to switch banks due to their reliance on the online software.
This problem is primarily due to online bill paying. Online banking software has made it so that people have numerous bills being paid over the internet. Switching banks would mean a major hassle in terms of stopping bill payments in one account and re-entering them to be paid by the other bank. This inconvenience prevents people from switching banks, which allows the banks to make controversial changes like raising fees with less fear of customer abandonment.
This fact can easily be represented through the statistics. In the last 30 days, 44 million people have used online banking software to pay their bills, which is up from just 32 million five years ago and just 7% of people have chosen to switch banks this year, down from 12% last year.
Earlier this month, Representative Brad Miller of North Carolina introduced a bill that attempted to make it easier for people to switch banks. The bill stated that, among others (you can read the full list here), a person has the right to close his or her account at any time for no charge, whether his or her account be positive, negative or zero. Unfortunately for all of us, this bill has little chance of passing through the Republican Congress.
Thus, the question I ask you is whether it is fair that a company to make their software complex just in an effort to keep customers. Online bill payment is such a convenience that people are definitely going to use it. To me, it seems morally wrong to take advantage of this fact to prevent customers from switching to a competitor.
Sunday, November 6, 2011
#Occupybanking?
Most of you by now have probably heard about the Occupy Wall Street movement (if not, here is a handy wiki article with a breakdown). What you may not have heard of is the much smaller, but somewhat more related movement called Bank Transfer Day. While this might not be completely related to my blogs topic, I believe that it is an interesting tale of the use of social media within a protest against the major banks.
The protest was started by Kristen Christian, who created a Facebook event for yesterday, November 5th, entitled "Bank Transfer Day" as a form of protest against higher bank fees. She urged people to transfer their funds from major banks to local credit unions, and by Friday afternoon more than 78,000 people had joined the cause on the groups Facebook page. The Occupy Wall Street movement has extended their support to Christian's cause, which has helped the rise of the movement.
In such a short time, they have been able to make a difference. According to this nytimes article, more than 650,000 new accounts have been created at credit unions since Bank of America announced their plan (which they have since dropped) for 5 dollar fees for using debit cards.
Major banks have a legitimate worry in terms of losing customers to small credit users. The Wall Street Journal reports that it costs major banks $350 to $450 to maintain an account, compared to just $175 to $250 for small credit unions. Thus, banks add extra charges to try and recoup their costs. While we may not see a major shift from big banks to credit unions, as banks offer a ton of services (like online banking) that many credit unions do not, it is interesting to see how much momentum the Bank Transfer Day picks up, and whether we will see reform in banking policy over the next few years.
The protest was started by Kristen Christian, who created a Facebook event for yesterday, November 5th, entitled "Bank Transfer Day" as a form of protest against higher bank fees. She urged people to transfer their funds from major banks to local credit unions, and by Friday afternoon more than 78,000 people had joined the cause on the groups Facebook page. The Occupy Wall Street movement has extended their support to Christian's cause, which has helped the rise of the movement.
In such a short time, they have been able to make a difference. According to this nytimes article, more than 650,000 new accounts have been created at credit unions since Bank of America announced their plan (which they have since dropped) for 5 dollar fees for using debit cards.
Major banks have a legitimate worry in terms of losing customers to small credit users. The Wall Street Journal reports that it costs major banks $350 to $450 to maintain an account, compared to just $175 to $250 for small credit unions. Thus, banks add extra charges to try and recoup their costs. While we may not see a major shift from big banks to credit unions, as banks offer a ton of services (like online banking) that many credit unions do not, it is interesting to see how much momentum the Bank Transfer Day picks up, and whether we will see reform in banking policy over the next few years.
Subscribe to:
Posts (Atom)