Independent Banker - September 2020 - 43

Next: Managing vendor risk requires diligence
and switch institutions. " Customers stay with you
longer, " McGuinn says.
There are a number of ways community banks
can market safe deposit, ranging from websites,
lobby displays or brochures to employee box
rental incentive programs. Banks may also
consider discounts on these services or offering a
discount on boxes as a perk for large depositors,
club account members or other key customers.
The tougher question is how to make safe
deposit boxes profitable. McGuinn says it starts
with pricing them properly. " One very successful
method used by many financial institutions
nationwide is to price all safe deposit boxes based
on the amount of vault space occupied, " he adds.
This is accomplished by calculating the square
inch measurements of the compartment door.
For example, if a community bank selects the
popular rate of $2 per square inch, the annual
rental rate for a 3-by-5-inch box would be $30. A
10-by-10-inch box would be $200.
" An adequate and uniform rental rate system
should be established and maintained for all safe
deposit box sizes, " McGuinn says. " Unfortunately,
it has been an accepted standard for many years
to charge less per square inch for larger boxes and
more for smaller ones. This rent pricing system is
unfair and not equitable for all box renters. "
Providing peace of mind
Many community bankers see the benefits of
offering safe deposit boxes to their customers,
even when digital storage solutions have become
an option for some documents. " Providing
peace of mind for clients is the primary reason
we continue to provide safe deposit boxes to
store important papers and valuables, " says Scot
Davidson, community banking executive and
senior vice president for $20.5 billion-asset Old
National Bank in Evansville, Ind.
At $1 billion-asset Gorham Savings Bank in
Gorham, Maine, safe deposit boxes play a minor
role in the community bank's overall suite of
products and services available to customers.
" For some clients, typically older ones, they
are a very important service we provide, " says
Rebecca Winslow, the community bank's director
of community relations. " First and foremost,
the boxes provide the peace of mind that their
valuables are safe and can only be accessed by the
" Offering safe deposit boxes helps
with our goal of being viewed as
the provider of all the financial
services our clients need for every
stage of their lives. "
-Scot Davidson, Old National Bank
clients and co-renters, if applicable. For many,
having a home safe may be more convenient,
but that is not always an option for those who
have valuables such as stamp collections, jewelry
and important documents. A safe deposit box
provides the security they are looking for. "
One benefit to the host bank is receiving fee
income from safe deposit box rentals. " We also
consider it an important part of being a fullservice
financial institution, " Winslow says.
Safe deposit boxes play a similarly strategic
role at Old National Bank by offering a security
solution that can't be replicated at home. Plus,
existing customers who are looking for a box
don't have to go to another bank or financial
institution to find one.
Quick stat
Roughly
30
million
Americans rent
safe deposit
boxes
Source: Safe Deposit
Specialists
William Atkinson is a writer in Illinois.
independentbanker.org Q 33
" Offering safe deposit boxes helps with our
goal of being viewed as the provider of all the
financial services our clients need for every stage
of their lives, " Davidson says. " We provide one of
the most secure methods of storing those items
that may mean the most to our clients. "
To bring this 150-year-old service into the
future, Gorham Savings Bank is considering
the introduction of virtual safe deposit services,
which would entail document storage protected
by very strong security.
" This service is currently available with a few
larger financial institutions, " Winslow says, " and
we anticipate this type of service to resonate with
clients going forward, especially those who have
been victim to infiltration of malware and other
cybersecurity breaches. "
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