Facebook Faces Down World's Third Largest Bank

03 September 2007

LONDON: HSBC, the planet's third largest bank was no match for the people power of Facebook, which last week forced the banking giant to retreat on its decision to withdraw students' interest-free overdrafts once they leave university.

In July the bank decided to axe the interest-free overdrafts, asserting that many students, who did not intend to make HSBC their main bank, were running accounts with other banks to take advantage of interest-free borrowing facilities.

It also alleged there to be high levels of bad debt on these accounts, with students piling-up overdrafts and then "effectively disappearing".

Some cynics argue that instead of penalizing such enterprising embryo bankers, already well-versed in money manipulation, HSBC should have offered them trainee-management positions.

However, a massive revolt by graduates, fomented by exposure on the social-networking website, brought about a hasty U-turn by the bank, which declared itself "not too big to listen to customers".

The coup was masterminded by National Union of Students vp Wes Streeting, who set up a Facebook group called "Stop the Great HSBC Graduate Rip-Off". It attracted over 5,000 supporters.

And stopped the bank's move dead in its tracks.

HSBC undertook to freeze interest charges on overdrafts up to £1,500 for students who graduated this summer. It also agreed to refund any interest charged in August.

Said Streeting: "There can be no doubt that using Facebook made the world of difference to our campaign."

While Andy Ripley, HSBC head of product development, said the bank would work with the NUS to "enhance our new account offer so that it fully reflects the needs of recent graduates".

In the current financial climate, even the world's third largest bank needs all the friends it can get.

Data sourced from Financial Times; additional content by WARC staff