This month, First Interstate Bank of California became the last of the state's three biggest banks to start storing canceled checks rather than mailing them back to retail customers in monthly statements.
On May 1, the Los Angeles-based bank made check safekeeping, as the service is called, available on a voluntary basis for no additional fee - but also without the financial incentives that some other banks offer.
The move promises some modest cost savings for First Interstate, on the order of 10 cents to a dollar per account per month, consultants said. Check safekeeping allows banks to cut check sorting expenses and postage costs.
Bank of America started offering check safekeeping nine years ago. Wells Fargo Bank also offers to store retail checks.
Bank of America requires all of its checking account customers to pay an extra dollar a month if they elect not to use safekeeping. Wells Fargo cuts $1.50 from monthly checking account fees for customers who use safekeeping.
But even though check safekeeping is relatively widespread in California, the manner in which First Interstate is adopting it could push a handful of customers to leave the bank, a senior official acknowledged.
Starting in July, check safekeeping will be mandatory on First Interstate's low-end Basic Banking account.
If users of this account want to get their checks back, they will have to switch to another type of account that charges higher monthly fees if minimum balances are not maintained.
James T. Shoaff, senior vice president in charge of deposit product marketing, acknowledged that it's "not inconceivable" that some people won't want to make the change and will look for another bank. But, he added, any loss of customers should be minimal.
That's because fewer than a tenth of First Interstate Bank of California's checking account customers use the Basic Banking account.
Mr. Shoaff also said that, given the modest cost savings and customers involved, the adoption of check safekeeping in California is not likely to have a significant impact on First Interstate's profits.
Instead, Mr. Shoaff said, the service is being introduced in California to bring the bank's checking account features in line with those offered by the other state banks that make up $57 billion-asset First Interstate Bancorp, the nation's 14th-largest bank holding company.
First Interstate operates banks in 13 western states. It is in the midst of a transition to "common systems," in which each of the banks will use the same back-office data centers and mainframe software, and sell the same products and services.
As part of that change First Interstate expects to make an improvement to its check safekeeping service that would make it more attractive to some customers, Mr. Shoaff said.
Specifically, the institution will make a check imaging service now available in First Interstate banks in Washington State and Alaska available in every First Interstate bank. With this service, photocopies of checks are printed on account statements, just as American Express does with charge card receipts.