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A few months ago, Dennis Santiago from Institutional Risk Analytics catapulted from financial tech wizard to media celebrity. Dennis was tapped by The Huffington Post team (Disclosure: I am a contributor to the Huffington Post) to mastermind an effort to help disgruntled bank customers move their money to local banks or credit unions.
I caught up with Dennis to get an update on one of the most explosive grassroots movements of 2010 …
Damien Hoffman: Dennis, what’s the current status of the Move Your Money Campaign?
Dennis: We’ve started doing a series of tests to see how much of the country has looked at the Move Your Money tools. At this point we see 28,000 out of 42,000 zip codes being searched in a little under sixty days.
Damien: Wow. That’s great for a grassroots campaign.
Dennis: It’s nominally approaching seventy five percent of the zip codes, but I discount that back somewhat because sometimes people do a wild card search or a little bit of duplication. What’s interesting is we looked at how many zip codes contained banks or big branches, and there are only 21,000 of those. So, it’s possible people using the Move Your Money tools have pretty much canvassed the entire universe of banking in the United States.
Damien: How about the traffic stats?
Dennis: At the very beginning the traffic rates were enormous. The main Move Your Money site itself was running 250,000 uniques a day. We were tracking individual zip code search transactions at the rate of about 60,000 a day.
That rate dropped down to about 30,000 a day during low periods. However, every time somebody went on television the traffic would jack up back to about 50,000-60,000 for that particular day.
Damien: How are all those people contributing to the movement now?
Dennis: Interestingly, the movement is morphing. If you look at the Move Your Money concept, it’s actually a very well crafted voice that erupted at the beginning of the year. However, it is based on a series of other movements and attempts by grassroots people to find ways to make a difference primarily in the concept of taking your money and investing it more locally.
There have been a number of invest local movements that have come out in the last year or so. Congruent with the credit crisis, people at the grassroots level have been saying, “If all that stuff is going on up there, what’s our best strategy at the local level?” This has been about ordinary people to making a statement about their money.
During the initial wave, we saw a lot of people shifting smaller checking accounts over to local banks or credit unions. Now, our surveys are showing the banks are beginning to see people with substantial amounts beginning to take action. They needed some time to prepare to move more assets, but that’s beginning to happen. There are several banks now reporting that they’re seeing five-figure, six-figure, in some cases seven-figure transfers.
This is very different in character from the earlier “I just want to open a checking account to make a political statement phase.” Now we’re seeing larger, smarter money making moves.
In addition, the movement is morphing even further in that you have state, county and municipal governments now considering whether they can take advantage of something like this. They want to shift their operating and investment accounts from national banks to local ones. This will create an acceleration effect on their local economy by causing their money to circulate locally.
That’s actually a very powerful and classic economic amplifier if a dollar shifts around inside a local neighborhood before it drifts off to the global economy. That’s just very good for local economies.
Damien: Are there any states taking the lead yet?
Dennis: The one that moved quickest is New Mexico. They are considering legislation that would cause all of their operating accounts to have to be deposited and operated with banks that operate within the state.
Damien: That’s great news for local economies. Has this improved the image for local bankers?
Dennis: Yes. The little banks have reacted to it very positively because for the last year and a half their main complaint has been, “I’m a very hard working local banker focused on my business. Why does everybody think I’m as bad and nasty as the big banks that are suffering from investment banking and commercial banking practices?” This really gave small banks a boost in terms of their self image.
Damien: Does that still contrast with public images for larger banks even though we’re moving farther away from the heart of the crisis?
Dennis: Large banks have very large scale problems they’re attempting to deal with. There is the investment banking side of things which has an image problem. Then, there’s the commercial or main street banking operations. They’re not quite sure what to do about these businesses yet.
Damien: Has the Move Your Money campaign increased competition for the big banks?
Dennis: The intensity of competition in banking has always been pretty intense. Although the Move Your Money campaign is increasing competition, I think big banks have always been very focused on winning in territories where they establish branches.
There are some banks that are tying to broaden their base because they’ve taken over fairly large failed institutions. Now they’re trying to recover the customer base as opposed to seeing them filter off to the smaller banks. If I were a big guy, I would keep my mouth shut and just watch so I could figure out what my next business move would be.
Damien: Well, Dennis, we’ll check in with you again to see how things unfold over the next several months. Thanks for taking the time to give us a clearer picture of a very successful grassroots movement.
Dennis: My pleasure. I look forward to speaking again soon.
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