Photo by Getty Images Three children open new accounts at a Bank of America, circa 1949.
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Big banks increasingly want no part of your—or your kid's—piggy bank, the latest in a series of moves that are giving retail customers fewer reasons to walk into a bank branch.
Yet, despite a trickle of closures in recent years, more branch locations remain in the Chicago area today than a decade ago.
Chicago market leader JPMorgan Chase's recent decision to stop counting customers' loose coins set off a surprising firestorm. Competitors took note, with one bank—Rosemont-based Wintrust Financial—preparing print and radio ads promising that “you can count on us to count it for free.”
That bankers view a low-profile service such as coin-counting as a potential differentiator in Chicago's cutthroat banking industry shows just how difficult it is to persuade customers to switch banks in an era of direct deposit, automatic bill pay and online banking. It also reveals the tension banks feel between controlling costs and keeping a personal connection with customers who increasingly perform routine financial transactions remotely.
A survey of major retail banks in town finds a somewhat surprising division—while some big national and regional banks no longer count coins for free, others still do. Besides Chase, don't bother bringing your loose change into a branch of Bank of America, Citibank or PNC Bank. (They will take coins you've rolled in wrappers that they'll hand out for no charge.)
Bank of America hasn't offered the service in years, ending the practice in Chicago after it bought LaSalle Bank in 2007, a spokeswoman says.
Pittsburgh-based PNC halted the service a year ago in Chicago, although the bank offers it in other markets. “Our decisions about where to provide these machines are based on use and demand,” spokeswoman Marcey Zwiebel says.
'SLOWS OUR SERVICE'
As for Chase, spokeswoman Christine Holevas says, “Counting coins, whether manually or via a machine, slows service to our customers.” She wouldn't comment on the cost savings to the nation's largest bank, which says it had been counting coins for customers only in Chicago and some other Midwestern markets before pulling the plug July 1.
With nearly 400 branches, Chase has by far the largest retail network in the Chicago area.
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Photo by Manuel Martinez Umberto Monroy, 73, owner of a Maytag laundromat, visits the Wintrust Bank branch at 4343 N. Elston Ave. to deposit coins he collects from his machines.
But other big players like BMO Harris Bank, Chicago's second-largest retail bank by both branches and deposits, will count coins for customers. Ditto Fifth Third Bank and U.S. Bank. Typically, tellers dump the coins into a machine that tabulates the total almost instantly, or banks place the machines where customers can do it themselves and then present a slip with the sum to a teller.
“Our customers like it,” BMO Harris spokesman Patrick O'Herlihy says. He adds that the machines are used regularly, and
BMO Harris isn't contemplating discontinuing the service.
Midsized Chicago-based banks like MB Financial and First Midwest Bank offer it, too, branding it as part of what a local bank should offer.
Wintrust, with $20.8 billion in assets and about 125 Chicago-area branches, pounced on Chase's decision with print ads chiding, “Change adds up.”
“Opportunities like this don't come up very often,” Matt Doubleday, Wintrust's senior vice president of marketing, says of Chase's move. “The business of banking is commoditized. The way you differentiate yourself is in the service level.”
'IT DOES STRIKE A NERVE'
Jim Roolf, president of First Midwest's Joliet branch, says he gives change regularly to his 4-year-old grandson, who tromps along with his mom to the bank branch near where they live to get the coins counted and then deposits the cash into a college fund.
“As you try to encourage children to save, it does strike a nerve,” Roolf says.
Chase is at the forefront of the banking industry's mobile evolution. Depositors easily can deposit checks, get cash, pay bills and perform other transactions without ever entering a branch. Eliminating coin-counting gives customers yet another reason not to do business in person.
That would make sense if the ubiquitous branches in many parts of the area were being appreciably reduced. But Chase maintains nearly twice as many branches in the Chicago market as its next-closest competitor, with no plans to significantly scale back that footprint. (Square footage is falling, however, from an average of 4,400 square feet in older branches to 2,500 to 3,500 square feet in newer ones.) Branch staffing now is made up more of advisers and lenders than tellers. Nine of 10 Chase customers visit a branch at least once a year, the bank says.
So why do banks need a branch around the corner if customers only walk in once a year to discuss a loan or some other more-than-routine need? Wouldn't such motivated customers be willing to travel a little way for such important needs?
Banks keep branches open, in part, because of fear. They worry about what might happen if they close a lot of them, says Richard Fleming, partner at consultancy Bain in New York.
“There is a bit of a Mexican standoff,” he says. “Am I going to close my branches? Are you going to close your branches? Because there's a group of customers for whom (such convenience) is important.”
In the Chicago market, the number of bank branches has fallen modestly each year since 2009, according to Federal Deposit Insurance data. But the 3,031 local branches as of June 30, 2014—the most recent number available—still were well above the 2,746 as of the same date in 2004. And there were 338 banks in the market then versus 226 last year.
Banks have closed a net 279 branches since 2008. But 49 of them were Chase branches housed in Dominick's Finer Foods stores that went away when Dominick's owner Safeway closed all the stores in late 2013.