As bank competition intensifies, an old promotional tool-paying consumers for subpar service-is appearing more often and increasing in scope.

Milwaukee-based Firstar Corp., among the most aggressive users of pay- for-delay programs, said last week that it will extend the concept to four more states-Wisconsin, Iowa, Minnesota, and Illinois.

The program-started by Cincinnati's Star Banc Corp., which bought Firstar last year and took its name-had been available only at Star's branches in Ohio, Indiana, Kentucky, and Tennessee.

"The only thing that distinguishes us from our competitors is our service," said Jay B. Williams, director of marketing at Firstar.

The bank pays $5 for delays at tellers' lines and a host of other inconveniences. These range from the unavailability of customer service representatives to inaccurate account statements. It even pays $5 if the bank fails to provide a same-day response to questions submitted before 3 p.m.

Though some bankers describe such programs as small gestures and dismiss them as arbitrary or gimmicky, many have found them an inexpensive way to stand out from the crowd.

Firstar has been paying out $16,000 to $20,000 a month to customers at 720 branches, said Steven W. Dale, a spokesman.

"It's something we're going to see more of, not less," predicted Janet Eissenstat, a spokeswoman for the American Bankers Association. "The industry is very competitive right now, especially on customer service."

The significance of the good-service guarantee policy lies more in its symbolism than in the amount of money paid, said Les Dinkin, a managing principal of NBW Consulting Group of Westport, Conn. By offering money, banks are stressing that good service is "more than a promise," he said.

M. Terry Turner, the president of retail banking at Nashville-based First American Corp., said the bank has gotten positive feedback from customers since it began giving $5 for teller line waits of more than five minutes.

But, he added, the bigger benefit is that it inspires employees. "It puts our company's commitment in front of everybody."

Some banks, such as Pittsburgh-based PNC Bank Corp., say cash payouts also identify problem areas. "We look at where we're paying out, such as at ATMs or teller lines, and it really allows us to focus on that," said Brian Goerke, a PNC spokesman. PNC offers $5 for a variety of missteps, ranging from out-of-service ATMs to failure to call a customer by name.

Mr. Goerke said payouts have decreased since the bank instituted the guarantees last year, but declined to reveal the amount paid out.

Some banks think money-backed guarantees send the wrong message, bringing attention to a bank's flaws.

"It's more productive to offer rewards and incentives that make a long- term difference in customers' banking experience," said James Schepker, a spokesman for Fleet Financial Group. Instead of customer service guarantees, Fleet offers periodic incentives, such as a $2 account deposit for customers who use an ATM to make a deposit.

Other banks find money-backed guarantees useful on a short-term basis, but discontinue them once the message has gotten across.

Several years ago, Chemical Bank (now Chase Manhattan Bank) offered $5 for any seven-minute wait on a teller line. The bank reduced the maximum wait time to five minutes before discontinuing the promotion, said Ken Herz, a Chase spokesman.

"It ran its course," Mr. Herz said. The bank had paid "a couple thousand" dollars over the two to three years the program ran, he estimated. "Customer surveys showed that we had convinced people that customer wait-time was very good."

But Mr. Williams of Firstar said the bank's guarantee program was less an admission of error than an acknowledgement that bank employees are only human. He said the bank monitors the program's performance by making sure branches maintain a consistent level of refunds.

"You're not a hero if you come in at zero," Mr. Williams said, "because no one's that good."

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