Academic journal article ABA Banking Journal

Laughing All the Way from the Bank

Academic journal article ABA Banking Journal

Laughing All the Way from the Bank

Article excerpt

It's a great time to be a bank customer--at least if you live in the right part of the country and have an eagle eye. Where those areas are is not simply answered. Banks that are offering new customers various sums up to $150 to open a checking account range from those in rural Oklahoma, Georgia, and Indiana, as well some of the big names engaged in turf wars in Manhattan, which is undergoing a branch building binge.

Chase and Bank of America are among the latter, offering $100 to draw new customers through their doors and a further $25 referral fee for both those customers and any friends who follow.

Those financial incentives have some strings attached--either a customer commitment to direct deposit or a minimum balance ($1,500 or $750, respectively) to avoid fees. Valley National Bank--one of many new bank entrants to New York City--pays $150, but in stages that enmesh new customers with direct deposit, online bill pay, bankcard transactions, etc. Banco Popular goes one further by dispensing the first $25 of its $125 signing bonus only when the customer hands over their old bank's checks and cards to be destroyed!

On the other end of the commitment scale, Wachovia recently required only that prospective customers in its New York City branches stay six months, with as little as $1 in their accounts, in exchange for a $100 Visa gift card and a Zagat's restaurant guide. Feedback from Wachovia staff was that some branches participating in the offer had queues out the door and ran out of cards.

It's easy to see the pressing need to attract branch traffic in many parts of New York City. In Manhattan's Union Square, for example, if you do a 360-degree turn, you will face a bank on every corner, several of which did not operate in the city at the start of this decade.

Cash offers by banks--even if they are technically statement credits that might take a while--are fairly new.

"It's the 21st century version of trash and trinkets, but it's not sustainable," says Sherief Meleis, managing director at Novantas Consulting, Manhattan. "Where's it going to end, someone giving away $1,000? …

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