Foolish Bank promotional ideas

Of all the idiotic ideas to come out of the banking industry, these two recent brainfarts are my favorites. I’ll be curious to see how long it takes for either of these banks to drop these promotions, or go bust:

idiotic bank idea #1: Washington Mutual offers free ATM usage for non customers.

This is a twofold winner: First, it raises the question “Why would anyone become a member of this bank? You get the main advantage of opening an account — free use of their ATMs — without having to open an account!

If I was shopping for a bank, and it was between Chase, Citibank and WaMu, I would pick the non-Wamu bank. Why? Cause it would give me twice as many bank ATMs to choose from, cost free. Duh.

This promotion has the added bonus of annoying Washington Mutual’s existing customer base, who now has to wait at longer lines for the free riding non customers at WaMu’s ATMs. Simply brilliant.

How often do you see a major financial institution pay for advertising that 1) discourages becoming a client; 2) Bothers and frustrates the existing clientele? Seriously, what rocket scientist thought this up? And why isn’t he working the fry machine at Mcdonalds?

idiotic bank idea #2:Long Island Sumpthin Bank: free ATM usage everywhere!

Explain this Crazy Eddie model to me: Open up a no fee checking account, and all of your ATM usage –including any other bank — is free! That’s right, we will subsidize all your the $1.50 or even $2 fees. Why? Cause we’re INSANE!

The only thing which keeps people from using the closest bank (I.e., most convenient) is that damn fee — which, if you recall, is exactly what the banking industry promised us wouldn’t happen oh so many years ago.

How on Earth can these guys stay in Business? I spend about $10 a month on ATM fees, and that micro-payment annoyance is only kept in check cause I’m in Manhattan 5 days a week, where there is a bank every 14 steps. If it were free, I’d run up $1000s of dollars per year in fees. Unless this is merely a promotional thing which lasts a very short time — which is not stated on the advert — it sounds like the next

The funny thing is, I hear this commercial on Bloomberg radio constantly, and cannot for the life of me remember the bank name.

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  1. BusinessPundit commented on Nov 23

    Stupid Business Ideas

    Barry Ritholtz thinks that banks have some pretty foolish promotions….

  2. anonymous commented on Jan 25

    Actually, it’s pretty simple: The owner of the ATM *always* gets what’s called an “interchange fee” of 30 to 60 cents to compensate use of the ATM, from the accountholder’s bank, regardless of how much they choose to surcharge the accountholder him/herself. If WaMu captures business from everybody using ATM-less (internet/out-of-area) banks, and a small share of everyone else’s too, they’ll make plenty in interchangefees.

    Additionally, it generates free advertising and good PR, and fits into WaMu’s self-styled image as the “friendlier bank”. And they can run ads for THEIR free checking and what-not on the screen while you use the machines.

    As to the second one, it’s probably even simpler… they decided that was going to gain them more by attracting customers than they’d lose in the cost of the fees themselves. I’m a bit more skeptical that would work in the long term, though.

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