Money doesn't actually talk. We do.

Why Your Bank Needs a Free Coin-Counting Machine

So last week a banking-industry consulting firm, the Tower Group, issued a report that showed that more banks could make more money if:

a) They installed coin-counting machines in their branches

b) They charged customers for the service

By Tower’s lights, the banking industry could rake in an additional $500 million if they took these two steps.

Reading the report, I think that Tower is absolutely right and absolutely wrong about this issue. Let me explain:

In the past several years, the retail-banking community has been given a swift kick in the kishkes by New-Jersey-based Commerce Bank. Commerce offered extended operating hours, fancier branches and lower fees for many of the services people use at their bank. Compared to stone-faced behemoths such as Citibank and Chase, Commerce was a breath of fresh air.

But this overall strategy also included a Trojan horse, and that Trojan horse was the bank’s Penny Arcade. If you walk into most Commerce branches, you’ll see a machine or two that will count buckets of loose change. Unlike the Coinstar machines that you might find at supermarkets, Penny Arcades don’t take a cut of your change as a fee if you want plain cash in exchange for your coins. Instead, the arcade simply counts your coins and prints out a receipt you can take to the teller to get crisp bills.

And here’s the crazy part: The Penny Arcade is free for anyone, whether they have an account at Commerce or not.

It seems like an act of corporate generosity–and, actually, it sort of is–but having Penny Arcades in a branch also benefits the bank, as I discovered when I went to use one about a month ago. In rapid succession, I noticed three things:

1. I was in the bank on a Sunday afternoon. I’ve never been in a bank on a Sunday afternoon, because no other bank I know of is open on a Sunday afternoon.

2. The branch was nice. There weren’t even bulletproof-glass partitions in between the tellers and the customers. Compared to my usual bank branch, which resembles a processing facility for the criminally insane, the change in decor was refreshing.

3. I was on a line about seven people long. In addition to two tellers, there was a greeter at the entrance and a manager who walked around. About a minute into my wait on line, the manager directed the greeter to leave her post and open up a new teller window. Three minutes after that (and after about four more people joined the line) the manager himself opened up a new window.

So here’s this bank, and because of its free coin-counting machines, I’m in one of its branches. And because I’m in one of the branches (and because the branches are open when I’m able to go), I’m able to see how well-run it is, how clean it is and how it’s a far more pleasant experience overall. Oh, and is that a poster advertising a no-fee checking account that reimburses all ATM fees? Huh. Since I’ve been in the market for a brick-and-mortar bank to complement my online account, that’s good to know. Can I have an application please?

The Tower Group is partially right when they say more banks should have coin-counting machines in their branches. Banks shouldn’t view coin-counting as a low-profit transaction though. Instead, they should see it as a low-cost advertising strategy. You get people into your branch, and from there, you can dazzle them with all the other things your bank can do.

But there are two major caveats:

• The service best be free, otherwise people will just pass it up for the supermarket or, say, Commerce Bank (or a similar spot that offers free coin counting; here’s a list of free and cheap places to find these machines).

• If you’re going to lure people into your branch, it better be worth visiting. Free coin-counting only works as a successful lure if you’ve nailed the fundamentals. Sadly, many bank branches still look and feel like a Soviet Department of Motor Vehicles office.

So yes, banks should recognize the free coin-counting machine for the Trojan horse it is. But they also need to know this: Trojan horses are only as effective as what’s inside.

– Sam Grobart