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Today’s Note on Bank of America

November 9, 2011

Today’s Note is about a blog post titled “Bank of America: A Case Study in Tone Deafness.”  The post appears on HBR.com’s blog page and recounts the now infamous saga of Bank of America first announcing a five dollar a month fee to account holders who wish to have debit privileges, then walking back that announcement amid customer rage.

As a Bank of America customer, that notorious fee incident was something both frustrating and personal to me. Apparently, many others felt the same way. The author, Rita McGrath, noted that BofA “famously introduced a fee for using its debit cards, to a withering storm of protest.One customer was sufficiently enraged to gather 200,000 signatures asking the bank to reverse its decision.” [all italics are mine, and denote quotes from the post.]

McGrath goes on to note “The other misstep Bank of America made was miscalculating whether their competitors would follow. ” This didn’t turn out to be true. If it had, we might all be paying $50 to $100  a year in gratuitous bank fees, now. But times are tough, the banks decided the discretion was the better part of survival. McGrath tells us:

Unfortunately for Bank of America, the other banks took one look at the angry hordes and decided to back off. The revenue raised was simply not worth the risk of customer anger. So B of A was stranded with a vastly unpopular program in a very competitive, low-interest-rate market where having lots of deposits is a competitive advantage. It was a symbolic as well as a substantive disaster. It reinforced the image of greedy banks seeking to stick it to their customers. It didn’t help that the daily headlines about “Occupy Wall Street” were raising people’s consciousness about the unfairness of wealth distribution.

McGrath’s post is a good take on the situation. It is well worth a read.

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