I recently interviewed an executive at TD Bank about their brand new suite of checking account offers and products. I asked about how the products differ from what other large U.S. banks are offering their customers right now, and also got some insight into how TD plans to compete in the post-Durbin environment.
Interview with John Rosenfeld, Head of Retail Deposits, TD Bank:
What differentiates TD’s new checking account from what other banks have to offer?
TD Bank has refreshed our checking suite to offer our customers more choices than any other bank to tailor a checking account that best suits the consumer’s individual needs. TD Bank gives customers better checking value through more choices.
We introduced a new lower cost, hassle-free alternative product – TD Simple Checking – with a flat monthly fee of only $2.99 with paperless statements and no daily minimum balance requirement at all. In the first few weeks of sales, our customers have shown us that this is a very popular option. There is a significant interest in innovative account structures.
We also enhanced our TD Relationship Checking product by eliminating numerous service fees for things like money orders, bank checks, stop payments, overdraft protection transfer fees. We also offer these customers a free second checking account and as many free savings accounts as they could want!
TD Bank also offers a $1 discount off checking account maintenance fees, if the minimum balance requirement is not met, for those who opt into online statements. We did not increase our monthly fees to account for the $1 paper statements; rather we are offering to reduce what has been our standard monthly fee by the $1.
Finally, we didn’t change all our checking products, like Convenience Checking for example, because we are reaffirming our inherent value to our customers. And Convenience Checking is the quickest way to free checking with a minimum balance requirement of only $100; checking at TD Bank has more value with a host of hassle-free services that gives the customer access to better control their money.
How do you balance the need to profit from customers with providing low-cost checking accounts to depositors?
We believe the best way to achieve balance is to offer high value products to our Customers that are profitable at their core. With the majority of the industry raising fees and minimums every week, we intend to deliver on our promise of providing hassle free products and un-paralleled customer services which has brought us a large fan base, i.e. customers. This is exactly why we are promoting our free “Checking Check-Up” to everyone. We want people to really evaluate their current checking account and how well it aligns with their needs.
Do you still see opportunity for growth with debit card products linked to checking accounts, or does the Durbin Amendment make this more difficult?
The Durbin amendment is intended to ensure that interchange fees that are paid by merchants to banks are proportional to the cost of providing the debit card transaction capability. This change will clearly impact the profitability of checking accounts; the idea is that merchants will pass the savings on to consumers. Different banks have approached the loss of revenue in a variety of ways; some banks have chosen to simply raise fees and minimums, some have contemplated placing a cap on the size of purchases that can be made with a debit card and other banks have eliminated or discontinued services that they previously offered. At TD Bank, we view the debit card as a necessary convenience to access your checking account. Convenience is a core value of ours and we have no plans to limit the use of our debit card.
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Disclosures: No financial relationship or position on TD Bank or any other firm mentioned in this story at time of publication.