The Savings Bank of Manchester, based in Manchester, Conn., has found a new and profitable way to promote image-based check statements to its customers.

Using roughly the same technology that produces the miniaturized computer copies of checks used in image-based check statements, the $700 million-asset bank has begun to print advertisements for its check image service at the bottom of sample statements sent to customers whose canceled checks are held at the bank.

Bank executives acknowledge that the ads are little more than an adaptation of the statement-stuffers that banks have sent for decades, but they say that material printed on the statements has proved to be remarkably more effective.

Requirement Pays off

"We're taken the regulatory requirement of sending customers statements and turned it into a very effective marketing tool," said Douglas Anderson, executive vice president at the Savings Bank of Manchester.

A typical direct mail campaign nets about a 3% response, with about half of the respondents buying, he noted, but the image statement ads more than quadrupled that rate.

Bank officials attribute the success to the fact that the advertisements are an integral part of the statement, and thus cannot easily be ignored.

10,000-Customer Sample

The marketing campaign was structured around 10,000 randomly selected checking account customers, each of whom received sample image-based statements in addition to their regular truncated statements, no-frills documents containing the basics of customers' monthly checking account activity.

At the bottom of the image statements, the customers were told how they could receive the statements regularly.

The bank's survey showed that 78 percent of those who received the mailing said they saw the advertisement.

600 Buy Service

Of those, about 600 customers -- all of whom had previously received free truncated statements -- agreed to pay @1 monthly for the image-based statements.

"The fact that truncated statement recipients -- perhaps the most fee-adverse group of retail banking customers -- embraced the statements says something about both the power of the marketing approach and the product itself," said Mr. Anderson.

Manchester Savings began offering check image statements last year, via an arrangement with New York City based Nationar, a state-chartered banker's bank and technology outsourcing company. Nationar worked with bank officials to adapt their check imaging system to print the advertisements.

In the Black Already

Including premium checking account customers, more than one-third of the bank's 30,000 checking customers now get the image statements. Mr. Anderson said the bank is already turning a slight profit on them.

Over the next year, the bank hopes to get another few thousand customers to buy the image statements. It also plans to advertise other services on the image statements.

"Image statements are still in a stage where small banks can beat their bigger competitors to the punch," said Les Dinken, a retail banking consultant based in Westport, Conn. "It's important that the smaller banks take advantage while they can."

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