Safe deposit boxes can have benefits beyond revenue

Safe deposit boxes

Safe deposit boxes aren’t big revenue drivers at most community banks, but for some customers, they can be an important service. They provide peace of mind when breaches and hacks have eroded trust for many.

By William Atkinson


By David McGuinn’s estimates, the safe deposit box has been around for nearly 160 years, and it’ll be around for quite a bit longer. The founder and president of Safe Deposit Specialists in Houston says roughly 30 million Americans rent boxes today—many at community banks. While they may not bring in money, he adds, safe deposit boxes can be important for many customers.

“Many financial institutions have considered safe deposit as a loss leader for so long that it is difficult for them to view this service as a successful marketing opportunity and a profit center,” he says. “Fortunately, many institutions are now realizing that consumers will pay a lot for a little peace of mind.”

However, the number of people using safe deposit boxes has grown steadily over the years, a trend McGuinn expects to stay constant.

“Demographic trends may be the most influential force affecting the safe deposit box market,” he says. “Those who chart trends cite the increasing urban population with its attendant rise in burglaries as one big reason why people want safe deposit services for their valuables.”

Furthermore, there are benefits for community banks that offer this service. For one, customers who have safe deposit boxes at a bank are less likely to close their other accounts and switch institutions. “Customers stay with you longer,” McGuinn says.

There are a number of ways community banks can market safe deposit, ranging from websites, lobby displays or brochures to employee box rental incentive programs. Banks may also consider discounts on these services or offering a discount on boxes as a perk for large depositors, club account members or other key customers.

The tougher question is how to make safe deposit boxes profitable. McGuinn says it starts with pricing them properly. “One very successful method used by many financial institutions nationwide is to price all safe deposit boxes based on the amount of vault space occupied,” he adds.

This is accomplished by calculating the square inch measurements of the compartment door. For example, if a community bank selects the popular rate of $2 per square inch, the annual rental rate for a 3-by-5-inch box would be $30. A 10-by-10-inch box would be $200.

“An adequate and uniform rental rate system should be established and maintained for all safe deposit box sizes,” McGuinn says. “Unfortunately, it has been an accepted standard for many years to charge less per square inch for larger boxes and more for smaller ones. This rent pricing system is unfair and not equitable for all box renters.”

Providing peace of mind

Many community bankers see the benefits of offering safe deposit boxes to their customers, even when digital storage solutions have become an option for some documents. “Providing peace of mind for clients is the primary reason we continue to provide safe deposit boxes to store important papers and valuables,” says Scot Davidson, community banking executive and senior vice president for $20.5 billion-asset Old National Bank in Evansville, Ind.

At $1 billion-asset Gorham Savings Bank in Gorham, Maine, safe deposit boxes play a minor role in the community bank’s overall suite of products and services available to customers.

“For some clients, typically older ones, they are a very important service we provide,” says Rebecca Winslow, the community bank’s director of community relations. “First and foremost, the boxes provide the peace of mind that their valuables are safe and can only be accessed by the clients and co-renters, if applicable. For many, having a home safe may be more convenient, but that is not always an option for those who have valuables such as stamp collections, jewelry and important documents. A safe deposit box provides the security they are looking for.”

“Offering safe deposit boxes helps with our goal of being viewed as the provider of all the financial services our clients need for every stage of their lives.”
—Scot Davidson, Old National Bank

One benefit to the host bank is receiving fee income from safe deposit box rentals. “We also consider it an important part of being a full-service financial institution,” Winslow says.

Safe deposit boxes play a similarly strategic role at Old National Bank by offering a security solution that can’t be replicated at home. Plus, existing customers who are looking for a box don’t have to go to another bank or financial institution to find one.

“Offering safe deposit boxes helps with our goal of being viewed as the provider of all the financial services our clients need for every stage of their lives,” Davidson says. “We provide one of the most secure methods of storing those items that may mean the most to our clients.”

To bring this 150-year-old service into the future, Gorham Savings Bank is considering the introduction of virtual safe deposit services, which would entail document storage protected by very strong security.

“This service is currently available with a few larger financial institutions,” Winslow says, “and we anticipate this type of service to resonate with clients going forward, especially those who have been victim to infiltration of malware and other cybersecurity breaches.”


William Atkinson is a writer in Illinois.

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