It’s been a busy week – too busy to concentrate enough time and attention to write anything worth reading.
Fortunately enough, ten years ago I wrote what follows – about how my bank ticked me off and how your company could easily turn into a similar perpetrator without anyone even realizing what a succession of what seemed like reasonable decisions when they’re taken one at a time.
It’s another example of the “third axle alternative” at work. I hope you enjoy it.
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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.