TD Bank vs. Milton Friedman: Great Expectations

It appears TD Bank, America’s Most Convenient Bank, doesn’t understand the concept of trying to “under-promise and over-deliver.”


As part of its current marketing campaign, TD Bank prominently advertises that its personal banking branches are: “Open 10 minutes earlier and later than posted.”

That sounds great, but now those are the “posted” hours, effectively. TD Bank’s customers are going to bake those extra 20 minutes into their schedule; as a result, the local bank manager and the TD Bank brand’s goodwill now will get no bonus points for being open until 7:10 PM.

My initial reaction is to make the analogy of those people who set their clocks 10 minutes ahead, in an effort to “trick” themselves into snapping-up and out of bed in the morning. The problem, though, is that trick only works the first day or two, until the self-deception is internalized and rendered useless. What then? Move the clock yet another 10 minutes ahead? It’s silly – just get up when you’re supposed to, or don’t, but leave the clocks alone.

My second reaction is to point out the amazing irony of this marketing campaign: it’s amusing (in the dorkiest way possible) that a large, national bank (of all businesses) has failed to consider the relationship between expected and unexpected “inflation” when setting (or “expanding”) its branches’ hours of operation, in an effort to enhance customer satisfaction.

Milton Friedman would be shaking his head...

As Satyajit Chatterjee of the Federal Reserve Bank of Philadelphia summarizes in his piece, The Taylor Curve and the Unemployment-Inflation Tradeoff (2002):

… suppose that the natural rate of unemployment in the economy… is 5 percent, and suppose that policymakers want to lower the unemployment rate to 3 percent. According to the natural rate theory, the only way in which the monetary authority can sustain an unemployment rate of 3 percent is by generating actual inflation that’s higher than expected inflation. Initially, the monetary authority may succeed in generating higher-than-expected inflation and get the unemployment rate below the natural rate. But eventually people will catch on to the fact that the monetary authority is generating more than the expected amount of inflation, and employment contracts will begin to take the new higher rate of inflation into account. Once that discrepancy between actual and expected inflation disappears, the unemployment rate will rise again to 5 percent. Thus, unless the inflation rate is continuously different from what people expect, the unemployment rate will return to the natural rate.

TD Bank, the point is: just keep your hours as they are – we’re all going to be banking online soon, anyway.


The Basics

I'm a lifelong learner, and I enjoy thinking about and discussing markets, business ideas and economics. 

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