Loyalty and Inertia

There are three things that keep people from moving their accounts from one financial institution to another. The first thing is inertia. Currently, it is a total pain-in-the-butt to switch. But technology will eventually make switching financial institutions painless. Capital One has already created a debit card that can attach to any account anywhere.

The second thing keeping people from switching is the perception that life isn’t any better on the other side of the fence. And it’s certainly not so much better that it’s worth the pain and agony of switching.

But the other thing that keeps people from changing financial instutions is emotional loyalty. I just had a conversation with someone in the Pioneer Valley via Facebook. She told me that her husband insists on keeping his credit union account despite the fact that they have an account at a bank which has far more branches and ATMs throughout the region. I HAD to ask the name of the credit union. Turns out it was Springfield Teachers CU.

Here’s the interesting thing about Springfield Teachers CU. They have dropped their name in favor of their meaningless acronym (STCU). They have gone community charter. They have opened a branch two cities over and more than 10 miles away from their original location. (My friend couldn’t remember where, only that she thought the location was odd.)

What is keeping her husband at STCU? It has to be something about the loyalty he feels toward that institution, and/or the ownership he feels toward it. So how exactly did dropping its name, and turning its back on its core membership (by throwing open the doors to anyone and everyone) help foster that feeling of loyalty and belonging? Anyone? Anyone? Bueller?

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2 Responses to “Loyalty and Inertia”

  1. rshevlin Says:

    you might want to check out: http://www.bankswitcher.com/

  2. Morriss Partee Says:

    Thanks for the heads up on bankswitcher.com. And their blog, Why I fired my bank is interesting too.

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