On Sunday mornings, you can see more than just devout churchgoers or joggers on the streets of American cities. A businesslike person heading out on a day off could very well be a client of Commerce Bancorp. There are no days off at this bank. On Sundays, there are sometimes lines at local Commerce branches. In addition to convenient working hours, the bank offers a host of other enticements for clients: it installs machines in its offices that can turn small change into dollar bills, opens additional cash desks during the busiest times, and extends its working hours. In terms of its operating principles and the abundance of conveniences in service, this bank is most similar to a supermarket. The comparison is no accident. Commerce is based on the belief that trading in checks and loans is not much different from trading in fruit or oatmeal. Vernon Hill, Commerce's founding president and chairman, openly admires the business models of Sam Walton, founder of the world's largest supermarket chain, Wal-Mart, and Bob Nardelli, head of Home Depot.

Hill himself cut his entrepreneurial teeth in the fast-food business. He still co-owns 45 Burger King franchises in the Philadelphia suburbs. As a banker, he never learned to speak the dull language of the gnomes. "We're making banking a human face, and we're making it fun," he says. He's trying to add color to the traditionally gray business of selling banking services, and it's paying dividends. Last year, Commerce's deposits grew 40 percent to $11.3 billion. By comparison, the top 30 U.S. banks saw an average increase of 13 percent, according to First Manhattan Consulting Group, a financial services research firm.

Commerce's financial performance is impressive. In 2001, revenues grew 34 percent, and profits grew 29 percent. Management is focused primarily on increasing deposits, since retail banks make their profits primarily by lending from deposits. According to First Manhattan Consulting, deposits account for 87 percent of consumer credit profits and 90 percent of small business credit profits. Commerce relied on human interactions even during the tech boom, when nearly every bank was trying to persuade customers to switch to online banking. At the same time, against the backdrop of hundreds of bankrupt online banks, Commerce has one of the most successful websites, used by 29 percent of its customers. Commerce's branch banking principles have been adopted by its American competitors, including Wells Fargo, Fleet, and Bank of America. But in retail banking, as Gordon Goetzmann, president of First Manhattan Consulting, points out, "there's really no one else like it" Commerce. Hill agrees. "What we've done is have the highest deposit rates at the lowest cost," he says. "The consumer is making a conscious decision: I'm giving Commerce my money and I'm accepting a low deposit rate in exchange for better service. And that's a smart decision." Hill's goal is to improve the "poor banking experience" offered by his U.S. competitors. His bank is trying to be more customer-friendly by breaking away from the traditional "stupid" ways that bankers interact with consumers. The "stupid" part, Hill says, is that other banks are "always closed," or charge too much for a checkbook account, or try to convince customers who are used to going to a local branch to go online. It's these little inconveniences that are causing banks to lose customers.

Commerce considers itself the world's most convenient bank. In Hill's understanding, it is a bank that is "always there for you." If a customer has a question, he or she always has someone to call and can be sure that he or she will get an answer. An example of "convenient change" for marketing purposes at Commerce is the Penny Arcade machine. The soft pink machine, located in every Commerce branch, exchanges a pile of small coins for a check, which can in turn be turned into a paper bill. People sometimes bring in whole pots of change, happily turning it into weightless bills with the help of the Penny Arcade. This service is available not only to bank customers: any person who simply passes by can empty their bulging pockets (and fill their wallet at the same time). This entire strategy has an end goal, which Hill never forgets for a minute: spending money on such tricks should ultimately be profitable. Commerce Bank has already spent $10 million on Penny Arcade machines. "It doesn't bring in any direct profit, but it does bring in more customers," says Hill. The idea is to convey to people that the bank takes its retail services very seriously and with care. In a time when the quality of banking services has reached a high level almost everywhere, it is necessary to look for new and unexpected moves in the competition for customers, says Hill. (FT, 27. 06. 2002)

Service is more important than interest