By James Limbach
July 16, 2010
Consumers' discontent with banks has been obvious for quite some time now and may have reached a tipping point.
A new report published by market and consumer information concern Mintel finds that consumers might be willing to act on that dissatisfaction and look for alternatives to their traditional checking accounts.
Unhappiness with banks is legion, and ConsumerAffairs.com has received an earful over the years.
Aaron of Augusta, GA, says Bank of America continues to come up with new ways to keep you from your money. "No matter what type of check is deposited (this time a Federal Contracting Check under $2000), they held it for 10 days with no exceptions," he writes. "To me this amounts to stealing my money, because I know they receive payment in about two days. This is not the first time they have done this. Nevertheless, I am doing my best to get away from these criminals."
"CitiBank won't cash it's own checks!" writes Thomas of Oakland, CA."I attempted to cash a CitiBank check a friend wrote to me at the CitiBank branch. After asking me to sign the check and then entering my California driver's license details into the computer, and asking me how I wanted me cash, the teller decided she also needed my fingerprint. When I refused she, then her supervisor, and then the branch manager refused to cash the check."
In a new Mintel survey, 19 percent of those asked said they would be interested in using prepaid cards to pay bills, rather than a banking account. More importantly, 25 percent of households earning more than $100K per year -- the more profitable and desirable customers for banks -- agreed that they would be interested in using prepaid cards. Their main motivation is to avoid overdraft and/or other types of banking fees.
"This is significant, because if banks were to lose mass affluent customers, it could have a considerable impact on their bottom lines," says Susan Menke, Ph.D., vice president and behavioral economist at Mintel Comperemedia. "This means that the traditional category of the 'underbanked,' previously characterized by lower-income households and recent immigrants, now has the potential to include individuals with higher incomes who are leaving their banks for less traditional ways of handling their financial transactions."
Opportunity for prepaid providers
What are the most popular ways for prepaid providers to offer incentives to attract this new class of customer? According to Mintel, approximately six in 10 people say they would be interested if a rebate or cash-back were offered for using the prepaid card and seven in 10 find purchase discounts at merchants to be an attractive offer.
"There are a number of trends that appear to be springing out of dissatisfaction with the banking system, and the use of prepaid cards could be indicative of a larger trend -- that customers are becoming more open to using new or unfamiliar methods for conducting their transactions," adds Menke.
There is some good news for banks, however. Only three percent of survey respondents say they would prefer to have their salary loaded on a prepaid card rather than direct deposit to a bank, cash or a check.