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		Home Page News You Can Use Two banks offering small businesses free checking Initiatives launched as Bank of America gets set to enter market By Sasha Talcott, Globe Correspondent, 2/17/2004 With the competition in New England's banking scene escalating, two banks are shaking up the small-business market by offering a product that is still hotly debated in banking circles: free business checking. Banknorth plans to roll out a free business checking account in March, and Sovereign Bancorp launched one in January. The accounts spell big benefits for consumers, especially small businesses that often get charged for dipping below the banks' mandatory minimum balances. But many major banks, including Citizens Financial Group, say business customers require so much investment of time and resources that free business checking is not worth the cost. The business-checking rollouts come at a crucial time for the banks. Bank of America, which bills itself as "the bank for small business," is set to enter the New England market in April after it merges with FleetBoston Financial Corp. Its local competitors are busy crafting new products and plotting strategy to go head-to-head with the national powerhouse. Sovereign and Banknorth executives are betting that small to midsize business customers, upset over the pending Fleet merger, will prove ripe for the picking. Bank of America does not offer free business checking, defined as an account with no minimum balance and no monthly fees, by Greenwich Associates. "The question is: How much can we winnow away from this new entity as it changes?" said Rick Dempsey, Banknorth's executive vice president of corporate marketing. "There's an awful lot of the small to midsize businesses who will want to work with us." They could be right. Nearly half of all small business customers are likely to switch their bank if offered free checking, according to a study by Greenwich Associates released in December. But the study also found that three-quarters of the major banks still do not offer the service. Those decisions are key to the livelihoods of small business owners like Melinda Miffitt, who runs a small Hyde Park taqueria with her husband. Miffitt said her business checking account at Sovereign charges her $9 every time she falls below the bank's $5,000 minimum balance. "The minimum is so high," she said. "It's a very small business. We often dip below." Sovereign now plans to offer its small business customers new free accounts that will take away many of the fees. Since introducing free business checking in January, Sovereign estimates that new business accounts have soared 35 percent, to 2,500 a month. "We do think it will be a very strong product for us to attract new customers," said Joe Campanelli, Sovereign's president and chief operating officer. While an increasing number of New England banks are offering free personal checking to lure retail customers, free business checking has been much slower to catch on. Before January, none of New England's major banks offered the service. Both Sovereign's and Banknorth's free business checking accounts come with one important drawback: a limit of 100 monthly transactions at the bank. After that, Sovereign charges $2 per transaction and Banknorth charges 50 cents. The battle for business customers goes far beyond checking accounts. Businesses tend to bundle all of their products at one bank, seeking one stop for everything from loans to credit cards to foreign currency exchange. That makes businesses more work than the average consumer, but more profitable for the bank. While Banknorth and Sovereign are betting that free checking will lure business customers to expand into other products, Bank of America and Citizens are pushing their record on small business lending, with Bank of America ranking number one nationally and Citizens ranking number one in New England. In the ultracompetitive world of business banking, Citizens plans to attract business customers by focusing on personal relationships, said vice chairman Bob Mahoney. The bank frequently surprises new business clients with pizza and doughnuts, and Citizens's chief executive, Lawrence Fish, makes more than 15 calls and visits per week to personally thank customers. "It's not rocket science," Mahoney said. "If the bank can give the customers access to an experienced banker, not overloaded with accounts, who knows the customer well, that's what it's all about."   Back to Original Article: News You Can Use   Continue with: Who are those guys? Google expands Web index as Yahoo begins to cut ties with longtime partner Small-Caps Still a Good Long-Term Buy World economic climate best since '00-Ifo/ICC poll Econ Team Argues Bush Policies To Create Jobs Japan economy surges in Oct-Dec on strong exports Unchecked euro rise would hit recovery-German banks
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