The Occupy Wall Street movement has largely faded out of the news in recent months. But at least one activist move against Wall Street institutions appears to have been extremely successful -- both in terms of its stated goals and in getting ordinary Americans to take action and put themselves into better financial shape.
A recently released survey of customers from J.D. Power and Associates provides some more information about the impact of what became known as Bank Transfer Day. But before talking about the survey, let's first bring everyone up to speed on what Bank Transfer Day actually was.
Bank Transfer Day and you
Last fall, Bank of America (NYSE: BAC ) made the mistake of announcing that it intended to start charging monthly fees for its customers to use debit cards. In response, a group of people organized on Facebook to announce Bank Transfer Day, which happened on Nov. 5. With at least 73,000 supporters, the group urged customers at big banks to move their accounts to smaller community banks and credit unions to protest proposed higher fees.
The movement eventually led B of A, along with several other banks including Regions Financial (NYSE: RF ) and SunTrust (NYSE: STI ) , to scrap plans to charge fees. But it also resulted in people actually moving their accounts, as the Credit Union National Association said that nearly 700,000 people had become members of credit unions leading up to Bank Transfer Day.
Making the move
In contrast to the CUNA, J.D. Power clearly didn't have a horse in this race, making its survey results even more credible. According to the survey, a much larger percentage of customers at big and midsized banks switched their accounts to smaller banks last year. The rate averaged between 10% and 11.3%, up from a range of 7.4% to 9.8% in 2010.
Interestingly -- though not surprisingly -- many of the customers who switched said that they were already displeased about other issues at big banks, including customer service. Yet it apparently took the threat of fee hikes and an organized movement to finally get them to jump off the fence and actually take their business elsewhere.
Not the last time
Big banks seem to have gotten the message last year, but unfortunately, you can expect the quest for more fee-based income to continue. After all, banks are still reeling from the losses that the financial crisis caused. B of A is still working through the myriad issues raised by the problem mortgages it picked up during the crisis. Moreover, even with the recent foreclosure scandal settlement putting an end what could have been a much more expensive, drawn-out fight, B of A -- along with fellow settling banks Wells Fargo (NYSE: WFC ) and JPMorgan Chase (NYSE: JPM ) -- will face a big bill for getting that dispute behind them.
Addtionally, remember that in many cases, getting rid of customers was actually positive for the big banks. Customers with small balances and few money-making transactions aren't profit centers for banking institutions unless they generate lucrative overdraft fees and other income. Seeing them move away will likely save big banks money and improve their profits.
Even if Bank Transfer Day didn't hurt big banks as much as some activists may have hoped, it will be much more positive for customers in the long run for one simple reason: It shows that they're empowered to take action to boost their own personal financial situations. By moving to smaller institutions that are better suited to meet their needs, millions of customers will get better service and have a more valuable experience. That, in turn, should help encourage many people who otherwise would've been too intimidated to take further steps toward smarter money management moves like investing.
In the end, the winners of Bank Transfer Day were those who saw the light and made moves to save them money. That's a lasting lesson that could serve you well throughout your lifetime.
Now more than ever, it's important to make smart decisions about your money. To get some more tips, including three promising stock picks for your portfolio, let me invite you to read the Motley Fool's latest special report on retirement. It's absolutely free, but only for a limited time, so read it today while it's still available.