One Angry Customer And One Brilliant Business Plan Thumbnail

This is a member post written by Darwin, the author of the blog Darwin’s Money. Darwin is a numbers guy with an MBA constantly evolving to today’s financial innovations and opportunities. If you like this article, subscribe to the Darwin’s Money RSS feed for more.

I was TDBank this past weekend setting up a new business account for my latest small biz venture with an old college buddy (CAD Drafting Outsourcing).  Anyway, while I was talking to the bank manager, there was a period of like 10 minutes where the change machine was going nuts behind me counting change.  It was pretty annoying because it seemed like it was never going to end and it was quite loud.  After it finally stopped, there was a commotion.  I heard a lot of yelling and some guy started dropping the F-Bomb repeatedly.

We’re All About to Be Killed – WTF?

I turned around to see what was going on and there was a thug standing there covered in tattoos going crazy on the bank teller.  He said he’s had it, he’s not taking their BS and he left the store.  I heard one of the other managers yell, “Just call the cops”.  The, “He’s going out to his car, call the police”…”Too late, he’s coming back”…Does he have a gun?.  We all thought we were going to be shot.  This guy was screaming at the top of his lungs, left the bank and returned from his car after retrieving something.  He was clearly disturbed, prone to violence and quite perturbed.

Upon re-entering, the conversation strangely turned to, “What do I have to do to set up this stupid account?  I’ve been coming here for years and this change-counting thing was always free“.  And I never figured out what he went to his car for, but evidently, it wasn’t a gun.

Brilliant, Just Brilliant Business Idea

Evidently, TDBank used to allow just anyone to walk in the store, have the change counter take their change and then give them the cash at the counter.  More recently, they enacted some sort of fee (perhaps 6%?) for non-customers.  So, this guy was unaware of this new requirement and was very upset when he realized he couldn’t just “get his”.

Part of the conversation included him saying, “This really pisses me off.  This was always one of the perks of having a TDBank/Commerce whatever around here.“.  I have to hand it to the bank employee, as he was pretty cool about the whole situation, and he replied, “Yes, sir; that is a perk for customers and you’re not a customer at this time.”  Finally, the guy “got it“, that the bank expects you to be a customer and they didn’t want random people just “using” them anymore.

The brilliant part is, I wonder if this was TDBank’s plan all along (previously Commerce).  For years, perhaps over a decade, allow everyone and their grandmother to come into any branch for free change-counting.  Occasionally, some small sub-set of people would like the bank enough or find it convenient to just set up an account anyway.  Others would just associate the bank with that place to get the change converted and go their for years.

Well, one day, TD flips the switch.  Without publicizing it very well, enact this new policy that requires people to sign up for an account in order to retrieve their change – or be subject to a charge.  Overnight, TDBank sees one of two things happen: 1) Either their fees spike and previously unplanned free cash flow comes pouring in [after all, the change machines were already in place, so this is just excess profits], or 2) a mass influx of new accounts are opened.  With acquisition costs being what they are in the banking industry, this is a goldmine.

And in order to open an account, there’s an initial deposit required and then a minimum account balance requirement.  Either one of these scenarios (and either a or b is playing out thousands of times per week across North America) are an immediate boost to their bottom line and long-term cash flow.

It’s genius.  I just wonder if they planned it this way from the start or they started to feel like they were being taken advantage of.

This is a prime example of the “Free to Fee” initiative that some companies can pull off while others fail.

Do You Have Examples of Free to Fee Working or Failing in Various Businesses?

Pure Genius or Dumb Luck?