If there’s been only one constant since the financial crisis began, it’s been that your bank sucks. Whatever bank that is, they’re bastards. They either rob you through fees, lock up your cash, or refuse to work with you through a problem.

The large banks especially have not fared well in the public’s eye as a result. Things have been tough, many merged or purchased toxic banks, sometimes under duress. As a result they bought bad operations as well and have had to deal with the fallout, now under the umbrella of their brands which are taking huge hits to public trust.  It’s not hard to find examples of fraud or just stupid behavior from these banks. It hurts people and hurts the banks.

However the worst stories are more like lightning strikes, and most of the day to day hatred of banks are controllable issues. These issues get less media attention because of the lack of shock value. A fee here, a screwed up payment there, or an insensitive employee. All the while the backdrop of poor business decisions and the fact that these are companies that hold your hard-earned money compound the day to day problems.  And when something happens to our accounts it feels much more like a violation. It’s one thing for a cell phone company to charge a $5 fee, but it’s a whole other thing if a bank wants to because now we’re talking about charging fees directly on my money. The festering anger is of no surprise to anyone. Ultimately though, most people hate their banks because they’re with the wrong bank.

While banking is a commodity product, the service is much more specialized. Online banks target customers that don’t need teller or branches. National banks try to cater to everyone, but are only able to offer true value to those that use their full range of services. Credit unions invest in providing basic services for customers at a good value, but don’t have the scale of larger banks.

But few people actually select their banks on aligning their needs to the bank’s resources. They get the same bank as their parents. Or they select the bank that is nearest to their residence at the time they need an account. Banks invest heavily in making customers “sticky” or less likely to move money. There are very few actual barriers to switching on the customer’s side.  However, hardly anyone actually reevaluates their needs and decides whether they are still with the right bank.  The bank is happy to help you make that decision in the context of their own company, but the consumer needs to be more proactive.  Instead, what we see are customers getting so fed up with one bank they leave in a fury to the next bank down the street.  Thy cycle continues.

More often than not, people end up hating the large banks. The large banks have the highest expenses and their value usually isn’t in the form of good interest rates but in aggregated services. If you aren’t in need of those services you aren’t likely to be happy with your bank.

This is somewhat similar to shopping for clothes. On the outside all stores seem the same if you don’t take the time to consider what type of clothing you need. But if you go to Saks and expect the Macy’s experience and prices you’ll be in for a shock. We don’t shop for clothing this way, but this is similar to how we treat our bank choices.

Banks are easy targets these days and they certainly deserve a hefty amount of the anger that is directed towards them. But a significant source of strife today and into the foreseeable future will come from consumers just being with the wrong bank.

Image: Sunset Parkerpix

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categories: banking, business, personal finance