The Third Axle Alternative is alive and well.
The third axle alternative, in case you don’t recall it, is deciding to weld a third axle onto your car when a nail punctures one of your tires, instead of fixing the flat.
Before we get to why it’s important to you, let me take a few moments to talk about me, and a bank that’s working hard to lose my business.
When I opened IT Catalysts, I worked with the bank that already took care of my personal checking, my wife’s personal checking, and our household checking, all of which were free checking accounts … excuse me, they were FREE! Checking Accounts as I recall how they were advertised at the time.
So were my two business checking accounts (one for IT Catalysts, one for IS Survivor Publishing).
For convenience, I had the same bank provide my business Visa card. A few years later I switched my personal Visa card to the bank as well.
And then the service charges started to appear.
On every single checking account.
I called customer service, explained that my idea of FREE! Checking isn’t compatible with paying service charges, and asked what had changed.
What had changed, it turns out, was that the bank had redefined the types of checking account it offers, along with the conditions necessary to maintain FREE!-dom. Long story slightly less long: The bank couldn’t stop the service charges, but it could automatically refund them right after it charged them, welding on another axle as it did so.
The fix lasted a year, at which point the service charges reappeared. Another call to customer service; another discovery that the terms had changed. For my business accounts, this meant:
- Switching to a different class of checking account.
- Opening two business savings accounts.
- Transferring $150 from each business account to one of the savings accounts on the first day of each month.
- Transferring $150 back from the savings accounts to the checking accounts on the third day of each month.
- Sticking my left pinkie in my right ear.
- Pushing my left foot in and my left foot out, pushing my left foot back in and then waving it all about.
We didn’t long ago switch banks for two reasons. The first is our suspicion that all the rest are just like the one we’re already working with. The second is the inconvenience of switching all of our accounts, automatic payments, and so on, to a different financial institution.
Why am I telling you this? To vent, of course.
But also as a cautionary tale.
Unencumbered by facts, I can nonetheless make a pretty good guess that the Third Axle Alternative is at work. It matters to you as an IT leader.
But first, back to me and my venting. Here’s what I think happened: FREE! Checking sounded like a terrific idea to the banking executives when money was plentiful and there was more competition. And so they offered it. Then, with banking consolidation eliminating competitors and an ongoing need to grow profits, the bank decided to use the lure of free (as opposed to FREE!) checking as an upselling tool — customers could still get their checking at no charge, but only if they were good customers — the kind that buy several products and services.
Instead of figuring out products customers actually want — fixing its metaphorical flat — my bank created a set of artificial financial upselling incentives, built around an ever-more complex collection of bank-account types — a third axle.
(What banking customers actually want: I’m pretty sure most of us want no choice at all with respect to our bank accounts. We want one type — one where we can put money in when we have it, take money out when we need it, and send money from it to someone else when the situation calls for it. As the bank already makes money by loaning out depositors’ money, and more on float when we use on-line banking to pay someone … we figure the bank makes a profit without charging us an additional fee.)
Anyway, instead of ending up with more-profitable customers, my bank ended up with the $150 back-and-forth transfer — a fourth axle developed by bank staff as a way to placate customers like me who were irritated by the third axle.
Brilliant!
Nice Column! Very true.
When the network is slow we just add another server or add more RAM to the complainers PC.
—Just kidding—However, we thunk it!
I feel your pain. Unfortunately, ‘Free’ isn’t going away soon. Too many of us have brains hard wired to fall for this scam. If we weren’t we wouldn’t have coupons, Groupons, Ponzi schemes, etc. Bottom line is they make money by jerking you around so they will continue the practice. The whole concept of a contract that can be unilaterally altered at will with a notice in 6 pt. font is ludicrous but we all sign up for it when we get a new account. I just consolidated from 3 institutions to 1. Although I believe they all use these tactics I used a simple measure to choose the survivor. Is there a person that has to look me in the eye and explain their duplicitous behavior. So I picked a local bank (Oregon only in my case) that has a micro branch in my neighborhood. And I make a point of doing an occasional transaction in person so they know me and they know I know them. You’re less likely to get stabbed in the back by someone you know than a stranger (often 15 times removed from you on an org chart) and if they do stab you at least they don’t do it anonymously .
Cheers 🙂
Program patches, fixes, and revisions have often added axles to applications when what was really needed was a complete rewrite. We tend to tolerate inconveniences in many areas long after they should have been deemed unbearable.
I’m really waiting for the column on Insurance companies, Bob…I think a prerequisite in working for them is to have an advanced engineering degree in building roadblocks; and, from the looks of things, the banks don’t seem that far behind.
Good article…it’s amazing corporate America is able to function. But, I guess that’s why we coined the phrase: “functioning alcoholic”
A CPA once advised me to have more than one bank. This has proven valuable advice. I not only keep personal seperate from business, but use 2 banks for business.
His advice was based on years of observation that, “they (banks) get a little weird” from time to time.
George
Your paragraph on “What banking customers actually want: I’m pretty sure most of us want no choice at all …” reminds me of the deregulation of the telephone companies a few decades ago.
In both cases, what these companies SAY is actually just PR putting a favorable-sounding rationalization on other forces that put them in a bind (market forces, government regulations, court cases, etc) which are what actually what caused the change. In other words, it’s MangementSpeak.
So during deregulation, the phone company said, “We’ve heard the public, and the public said it wants choice” (that’s almost a direct quote, if I remember right). But it’s classic ManagementSpeak: What they seem to have MEANT was, “we feel we’re losing the court case and being forced to deregulate and split into pieces. How can we put as good a face on it as possible? Let’s tell them that we’re just giving our customers what THEY wanted!” But choice wasn’t what people at the time actually wanted at all. People actually wanted a reliable phone system (which they had all along) at a low price (which they didn’t have). They didn’t really care who provided it or how much choice there was, as long as they got what they wanted.
(Now, cable TV is different. I think that there, people actually do want more competition. But I digress.)
Unfortunately, transitions are a bear. During the transition, the public got neither reliability nor low cost nor choice. (It just had a different provider than before, but at that time there was still no choice in who that local provider was.) Today, on the other side of the hump, things are much better. Maybe not perfect, but better. So there’s hope.
Let’s hope things end up better with banking and with readers’ IT projects, too. And let’s hope they actually take the time and effort to ask their customers and constituents what they REALLY want and need before they foist something like a third axle on them.
You probably already found out but here goes anyway. Find a local bank that caters to local business instead of a corporate conglomerate bank. OR, better yet, join a credit union. At a credit union, you are a member/owner, rather than a customer/victim.
I too woke up years ago to note the bank was finding many creative ways to extract money from me. So I voted with my feet and went to a smaller credit union where I am known to all the staff, and the CEO greets me by my first name on every visit. I have the services I need, including good rates for loans,efficient processing, and the nice feeling of doing business with a group that wants to help poorer members help themselves. I was amused to find they were issuing me a 3 digit account number I can now remember while still having security levels to protect me as I access my account. And I like having free direct transfers from my account to my broker, and ATM access through a huge credit union network at no charge. We are happy campers !