Canadian banks are pouring resources into technology as consumers turn to smartphones and computers to handle their daily banking needs. But the humble chequing account is still where the battle for customers is being waged.
Canadian Imperial Bank of Commerce will make this abundantly clear at the beginning of April, when it launches an account it hopes will attract new customers, hold onto existing ones and drive up the bank's customer-satisfaction scores.
The key distinctions of the CIBC Smart Account: Monthly fees will be lower when customers bank less frequently, and Interac e-transfers – which allow customers to send money to friends electronically, generally for a $1.50 per-transaction fee at most banks – will be free.
"Through our research, we found that clients were drawn to flexible accounts that automatically give them the best pricing," said Veni Iozzo, CIBC's senior vice-president of products and payments.
The reason banks continue to battle for chequing accounts goes well beyond the goal of attracting additional deposits. The bank that holds a customer's chequing account – or transaction account – has a big advantage over its competitors when it comes to offering additional products, such as credit cards, mortgages and mutual funds.
What's more, the more services a bank offers, the deeper its relationship with a client. That relationship is particularly important at a time when about 80 per cent of transactions are made outside of a branch, lowering brand loyalty.
It is little wonder, then, that rival banks have campaigns of their own to attract new customers to chequing accounts, including the offer of cash incentives and electronic gadgets. They also offer free banking transactions when minimum balances are maintained.
But CIBC believes that its new chequing account will bring something different to the competitive landscape because customers won't have to estimate how many transactions they make each month to find an account appropriate for their level of activity.
Monthly fees start at $4.95 for 12 transactions (including e-transfers), and customers pay $1.25 per transaction after that, with the total capped at $14.95 a month, which is less than what many Big Six competitors charge. Fees are waived altogether with a balance of at least $3,000.
"You are always in the right account, regardless of what life stage you are in, regardless of how your banking changes," Ms. Iozzo said.
Whatever revenue CIBC surrenders because of lower fees – retail bank fees account for about 5 per cent of the big banks' overall revenue – it hopes to make up for by offering more services to more customers.
"We're counting on a relationship here," Ms. Iozzo said.
But the measure of success of the new account goes beyond attracting new customers. Victor Dodig, CIBC's chief executive officer, has set his sights on improving the bank's customer satisfaction scores with the goal of rising to the top spot among the Big Five.
That might sound audacious. In retail banking, Toronto-Dominion Bank has ranked highest in overall customer satisfaction in the annual J.D. Power survey for 10 straight years; CIBC ranked fourth in 2015. However, the scores separating the banks are relatively narrow, suggesting that a warmer view on bank fees could go a long way to improving CIBC's standing.
The big unknown, though, is how rival banks will respond if the new CIBC account, and free e-transfers, proves to be a hit with consumers. Rivals can simply match the offer – as banks have done countless times before when one bank opens ATMs, extends branch hours or lowers stock trading fees.
"It may happen. Others may come forward," Ms. Iozzo said. "But for us, we're saying we want to earn our clients' business. And we believe that the more innovative we are, the more they'll reward us with their business."