Home » Commentary: Seismic shift in banking protocols begs others to follow suit

Commentary: Seismic shift in banking protocols begs others to follow suit

by The 100 Companies

If you told me that the President of the United States would one day use the words “overdraft fees” in a State of the Union address, I might’ve called you a liar. But this year, President Biden did just that, calling out overdraft fees and other “junk fees” used by companies to overcharge their customers and get away with it. For some, it was a shocking moment. For others, it was a long time coming.

Well, I’d like to think that President Biden would recognize a kindred spirit in Amplify. We’ve been fighting our own battle against overdraft fees for more than a year now.

When Amplify Credit Union got rid of all our banking fees on February 2, 2022, it was a tectonic event. We became the first full service financial institution to enact this policy. It shifted the dynamics of how we do business and how our members view their relationship with their bank. We forged our own path when industry insiders scoffed and gave us dire predictions about how catastrophic this could be—none of which turned out to be true.

Maybe banks are a little more addicted to fee income than they would like the average Texan to believe.

In 2020, U.S. based financial institutions collectively made $8.82 billion in aggregate fees totaling nearly 6% of bank profits that year. When we crunched the numbers at the end of 2021, we found that the average Amplify member paid three-times as much in fees as they earned in interest. Those are the kind of numbers that make you rethink your entire business model—which is exactly what we did. If the benchmark of any financial institution is to embrace financial freedom for its customers, then we needed to upend the apple cart when it came to our approach to bank fees.

We owe it to our community to evaluate and change the way we generate revenue to ensure equity and quality service to our members and customers. Somewhere along the way, the banking industry decided the best way to do business was to charge the people with the lowest account balances billions of dollars in fees. Well, we gave back nearly $2 million to our members, and we did it as an intentional rejection of the current system. We could not continue to promote a disingenuous brand that is self-serving instead of serving others, and we owned that. The result? Deposits are growing, our employees are excited and our members are happier than ever.

If we really care about financial inclusion, it must be more than just a philanthropy opportunity. Financial inclusion must be baked into our systems at a structural level. There has never been a more appropriate time to collectively make this switch as we know the financial inequities that fees project on low-income consumers, younger consumers and people of color. Our communities cannot thrive if we continue to have financial products that perpetuate the cycle of poverty amongst our neighbors.

This is also why Amplify is pleased to host an affordability summit in April with Mayor Watson’s participation. Affordability in Austin is a growing concern, and it is not just housing that is impacting people’s ability to lead the lives they want to in Austin. This will be an opportunity to bring together other disruptors who can advance the conversation and challenge conventions around financial inclusion and making our region more affordable.

The president is right, fees are junk. Amplify has proven we don’t have to make our members’ lives harder by charging unnecessary fees. There are other paths available to us, ones that empower–not punish–customers in a moment of need. I am proud to lead an organization like Amplify that can restore trust in an industry that has squandered so much goodwill over the past two decades. We know better, so let’s do better. I challenge other institutions to join us in this mission.

– Kendall Garrison, CEO, Amplify Credit Union

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