A handful of pennies.ANDREW VAUGHAN/The Canadian Press
In a sign of just how competitive the Canadian retail banking landscape has become, two major banks are willing to fight over your pocket change in order to get non-customers to switch accounts over to them.
Bank of Montreal has unveiled a plan to introduce automated coin-counting machines in new and renovated branches across Canada, as it prepares to revamp most of its aging network of branches. Toronto-Dominion Bank installed similar machines at 13 branches in Ontario over the past year on a test basis to see if they help get customers in the door.
Both TD and BMO are banking on one simple truth: People hate loose change, and many of them might be willing to switch banks if they had an easy way to get rid of it.
BMO has rolled out the most aggressive coin repatriation program of any Canadian bank. Canada's fourth-largest bank has installed eight coin-counting machines in new branches so far, including seven in Ontario and one in Vancouver. It intends to increase that number, however, as remodelled branches open across the country. By the end of this year, the bank will have a few dozen machines in branches spanning six provinces, at a cost of $22,000 to $26,000 each.
That's an expensive price tag for a machine that essentially gathers micro-deposits from people on the street. But the strategy is more complex, says Frank Techar, president of personal and commercial banking. The coin counters aren't intended as toys or gimmicks.
The machines don't charge fees or take a percentage of the haul the way most generic coin counters in supermarkets and malls do. However, users must take their receipt to the teller in order to get paid. At that point, BMO has the chance to pitch them on opening an account, if they aren't already a customer.
"We get a conversation - plain and simple," Mr. Techar said. "We get the opportunity to talk with you either as a customer or as a non-customer and find out what is on your mind … The new-customer angle is clearly important to us."
Deposits are crucial to banks, since they are an inexpensive way to fund the lending operations that bring in higher-margin revenues. Over the past year, Canadian banks have been locked in a heated battle to win these customers, with some banks launching aggressive switch campaigns offering cash-back and other rewards.
This is an extension of that strategy. The banks hope to convert users of the machine to new customers who will move accounts over and, later, make bigger deposits.
TD has been testing 13 machines in Ontario for about a year, a bank spokeswoman said. Canada's second-largest bank hasn't yet decided if it will expand them across Canada, and is "still looking at the effectiveness of them." Similar coin counters have become popular at TD's branches in the U.S. However, those machines, dubbed Penny Arcades, are geared toward children with sound effects and bright colours, whereas the Canadian coin counters resemble automated teller machines.
BMO's machines count 4,100 coins a minute, and each holds up to 58,000 coins. The software can store up to 65,000 transactions in each counter.
The daily onslaught of loose change has rankled government as well. In February, Finance Minister Jim Flaherty called the penny a "nuisance." Those comments came after a Senate Finance Committee in December determined that "removing the one-cent coin from circulation is long overdue," in part because it actually costs 1.5 cents to manufacture one penny.
An online poll by Angus Reid late last year determined that 55 per cent of the 1,016 respondents were in favour of getting rid of the penny.
However, Mr. Techar still sees value in change. Though coins may seem like a low-stakes game, the fight for new customers in Canadian retail banking is not. Any tool that offers an advantage in that battle is a welcome addition.
"People come in with coins in briefcases, coins in jars, coins in piggy banks. They come in with coins in bags. It's kind of funny, it's all over the place," Mr. Techar said.
While TD is still testing the idea in Canada, BMO says it is eager to expand. "It's an idea that we think is past the pilot stage," Mr. Techar said.
The technology behind coin-counting machines has been around for decades, but has become faster and more accurate in recent years. Customers hoping to slip a few pesos past the computer software will be disappointed.
"They're pretty intelligent machines," Mr. Techar said. "You can't trick them."
Grant Robertson