New York Times Hits Banks, Again…and Misses

Liz | 10/16 at 05:33 PM

Further embellishing its anti-bank, anti-capitalist credentials, the New York Times ran a front-page article today complaining that the banks are hoodwinking customers by entrapping them into using online bill paying. The fast-growing use of banking over the Internet apparently leads to rising customer retention rates. I’m not surprised; it takes forever to set up your online accounts and get all the data inputted; nobody would choose to start over on a whim. The author of the piece is incensed; he considers that people who have invested the time establishing online accounts through which they can pay their mortgages, their credit card bills and so forth, have been tricked into complacency. He points out that even if they are hit with an unpopular fee, such as the recently announced debit card fee from the Bank of America, they will likely grin and bear it rather than jump ship to another bank.  The NYT provides this as yet another example of how the dastardly banks are trying to nail the little guy. First they give him a service—an unquestionably convenient and often free service – and then they make him want to keep it! Oh the conniving so-and-sos!

It’s almost as bad as trying to lock in newspaper readers through selling subscriptions. I bet the customer retention rate for those who buy long-term subscriptions is higher than for those who purchase their daily paper at the newsstand. Is that why the NYT constantly flogs its subscriptions? Just another poke at the unsuspecting consumer?

 Most people like online banking. It is a huge money-saving convenience that our banks have developed – one of many innovations that have allowed our extremely competitive financial sector to contribute billions to the positive column in our balance of trade accounts. It may also be that online banking makes it harder for people to change banks, and it may be that “customer stickiness” is one reason that bank executives rolled out the service with enthusiasm. That is what smart marketers do.However, the banks can lose their customers if they impose sufficiently onerous fees and terms on their account holders; irked enough, clients will stream out the door. That’s what competitive markets are all about.

The New York Times editorial board, which really, really detests banks and bankers, is overjoyed that they have helped gin up the protests known as Occupy Wall Street. They have consistently put words in the mouths of the hapless demonstrators, today claiming that the protests around the world were linked in “frustration with the widening gap between the rich and the poor.” I have listened carefully to interviews with OWS participants over the past few weeks, and have yet to hear a single soul voice that complaint. Mostly they mutter vaguely about “change”; reporters never press them on exactly what kind of change they want. The NYT and other liberal media outlets are trying to mold the message from this motley crew to fit with their world view, and running endless stories to support the notion that greedy corporations – and especially rapacious bankers—are squashing the little folk. Today’s piece vilifying online banking as opportunistic snookering is an excellent example; it is truly absurd.

 Here’s what could really get the country riled up: take away their online banking.

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