ABA Banking Journal - September 2007 - (Page 30)

COVER STORY KEYBANK Just give people what they want I f it’s possible to have a financial epiphany, KeyBank’s Michael Griffin has had one. A while back, Griffin was part of the bank’s effort to bring the unbanked into the fold by offering free checking and free savings accounts. People who opened the free accounts had a year and a half to bring their balances up to a target level of $500. The program began as part of an effort by the $89 billion Cleveland-based regional to find a product set that would bring new customers into its urban branches, in an attempt to make the offices more profitable. The program flopped—but the Griffin and the bank learned a critical lesson. What do the unbanked want? The bank didn’t come up with the plan out of thin air, but as the result of focus groups and consultation with various community development organizations. Among the things staff heard was that the unbanked often had no choice but to deal with check cashers and payday lenders. Key believed it had a better plan. “But once we’d gone out with our offer, we found not a lot of takers,” says Griffin, whose title is senior vice-president and director, multicultural markets and asset management, Community Development Banking. Some of the problems became clear on examination. “Many people were on ChexSystems and couldn’t open accounts,” says Griffin. “Also, it was not a product that the market easily understood.” But the biggest revelation for KeyBank was that many seeming prospects for its basic banking accounts didn’t want them. They appeared to be content with check cashing service. This is where the change of mind began to come, for Griffin and for Key. “We’re a bank and we think that people should manage their finances through a checking account,” says Griffin. “But 30 SEPTEMBER 2007/ABA BANKING JOURNAL with check cashers, the bank that’s not necessarily everydecided to undercut the going body’s model.” rates in its markets, subject to Delving deeper, Key local laws. In Cleveland, for found that check cashers instance, Key charges 1.5% of enjoyed the benefit of familface value, with a minimum iarity, and bankers didn’t. fee of $3 and a maximum of Some people felt banks $22.50. didn’t really want them in the branch. Finger scanning used To these people, says Griffin, “a check casher is KeyBank’s Michael Griffin Service is provided at a dessomeone from the neighbor- says many check cashing ignated KeyBank Plus winhood, someone like them. By customers really live in dow on the teller line. The contrast, a banker is a guy in two financial worlds: designation is necessary a suit, someone from down- “banked” and “unbanked.” because only that particular station is equipped with the town, someone cold.” So Key decided to become a check check cashing terminal and related equipment, supplied by Valid Systems, casher, but with a difference. Fort Worth, www.validsystems.net. A bit of a stretch KeyBank Plus customers give the teller In early 2004, the company rolled out their driver’s license or similar official ID KeyBank Plus, which provides check and provide the teller with their Social cashing for payroll and government Security number. First-time customers checks at selected Key branches. The pro- have their index finger scanned, as well. gram also features financial literacy train- This expedites subsequent transactions. ing, and is promoted in materials with The vendor’s system quickly checks varigraphics featuring representatives of ous databases, and, assuming no hitches, many ethnic and racial groups to whom the teller pays out the cash, less the bank’s the bank is trying to reach out. Hence the fee. Concerns that customers might not “hip hop” dancer in the graphic, appear- accept the finger scan requirement turned ing on page 28, which Griffin admits was out to be a nonissue. a bit of a stretch for somewhat conservaIn spite of charging below-market rates tive Key. and paying for dedicated technology, KeyBank Plus customers can cash Griffin says that Key makes money on checks without opening a checking or the check cashing service. He declined to savings account with Key. Initially the share specific numbers. company launched the service in urban Cleveland branches, and then it began “Graduation” isn’t everyone’s goal moving out to the suburbs and into other Recent research by Key and the Center states. A total of 120 branches offer check for Financial Services Innovation (availcashing, now, and, roughly 10,000 people able in our digital edition at www. are being served that previously didn’t ababj.com) indicate that some customers have feet in both the “banked” world, of have any relationship with Key. Griffin says the program has cashed over checking accounts, and the “unbanked” $20 million in checks with minimal losses. world of check cashing. Griffin says this The bank does not handle third-party jibes with Key’s experience. “Access to the money quickly is an checks, which it believes are too risky. What first brings people to Key, issue,” Griffin explains. He notes that KEYBANK continued on page 38 frankly, is price. In going head-to-head www.ababj.com/subscribe.html https://www.key.com http://www.validsystems.net http://www.cfsinnovation.com https://www.key.com http://www.cfsinnovation.com http://ababj.com http://ababj.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - September 2007

Contents Editor's Column Briefing: Why Money Sense is a Top Priority Briefing: Sleight of Mind Briefing: Snapshot: What the First Half Tells Us About the Second Half Briefing: ABA Resources ABA Chairman’s Position Briefing: Get Away and Get Ahead: ABA's Banking Leaders Forum Community Banking: Trim the Fat: Winning the "Battle of the Buck" Community Banking: Pass the Aspirin Cover Story: Meeting the Challenge of the "Unbanked" Bank Marketing: Don't Miss the Boom! On the Job: Time to Power Up Your Presentations? Insurance Sales: The Art & Craft of Cross Selling Tech Topics: The Price is Right? Tech Topics: Security: Protect Information First Tech Topics: Hackers for Hire? You Bet'cha Tech Topics: Case in Point: Tellers Scan, Too, at First Federal Compliance Clinic: Adverse Action Clarified The Economy Banker’s Mart To Advertise/Index of Advertisers

ABA Banking Journal - September 2007

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