- The Washington Times - Monday, July 25, 2005

Tim Ryan is just the kind of customer Washington-area banks are trying to attract with a host of free services. On a hot Friday afternoon last week, the 28-year-old bartender carried a bag full of coins into the new Commerce Bank branch near Dupont Circle.

After dumping the coins into the bank’s “Penny Arcade,” the machine sorted the coins, counted them and printed out a receipt. Mr. Ryan carried it to a teller who reimbursed him with $203.63 in cash.

“It’s definitely more convenient than counting out all that change,” Mr. Ryan said.

The coin machines are one of “the little things” he says he uses to choose where he banks.

Coin machines are the latest in a growing list of free services in the cutthroat competition for customers as banks open more branches in the Washington area.

Others include no-fee personal and business checking accounts, online banking, banking by telephone, notary service, foreign currency exchange and an expanding network of ATMs. Most offer free ATM service for account holders but charge fees to others.

“There are a whole variety of free services that customers have come to expect,” said Alexander Boyle, vice president of Chevy Chase Bank, which operates 175 branches in the Washington area.

Although the banks lose money on the free services, they are a matter of survival in some instances.

Without them, “You would definitely lose out to the competition that continues to offer them,” Mr. Boyle said.

Banks that offer the free coin machines — to everyone, not just account holders — include Commerce Bank, Chevy Chase Bank, PNC Bank, Washington Mutual and Citizens National Bank.

Similar machines, such as Coinstar, have been around since 1992 in supermarkets and other retail outlets. However, they typically charge an 8.9 percent fee.

Commerce Bank, which opened its first branch in Washington this year, introduced the free coin machines in 1999 at its other branches in the Mid-Atlantic. Chevy Chase phased them in beginning three years ago. Most other banks are more recent.

The institutions are following the theory that customers who want coins counted also want loans to buy homes or businesses at some point in their lives, which is where the banks make much of their income.

An indication of their competitive intensity can be found in the most recent figures from the Mortgage Bankers Association. Between 2000 and 2003, the value of mortgage loans rose from $26.4 billion to $130 billion in the Washington area, a nearly five-fold increase.

“The Baltimore-Washington market is as intensely competitive as any market in the country,” said Joseph Pepitone, vice president of Laurel-based Citizens National Bank. “There are a lot of banks in this market, large regionals and community banks. The larger banks that aren’t here, want to be here.”

About 92 percent of bank customers visit a branch at least once a month, which is where free services and amenities help banks create the image that retains their business.

In the American Bankers Association’s 2003 survey, 70 percent of banks offered a new product or service in the previous year.

“Coin machines are simply a part of the evolution of bank product offerings,” said Heather McElrath, spokeswoman for the American Bankers Association.

Last year, Commerce Bank says its Penny Arcades processed more than 15 billion coins, worth $283 million. The interactive machines can count 6,000 coins per minute.

However, the machines create more work for employees.

Commerce Bank’s Penny Arcade is cleaned three times a day.

In addition to regular coins, customers sometimes have dumped paper clips, screws, pins and foreign coins into the machines, some of which can get caught.


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