Case Study: Bank Of America

How it learned that what customers really want is to Keep the Change


Innovation in services is rare. In financial services, the last big breakthrough was online banking, nearly a decade ago. In October, 2005, Bank of America (BAC ) brought out a radically different product that broke the paradigm. It's called Keep the Change.

The concept solves a critical banking problem -- how to get consumers to open new accounts. The product works like this: Every time you buy something with a BofA Visa debit card, the bank rounds up your purchase to the nearest dollar and transfers the difference from your checking into your savings account. It also matches 100% of transfers for the first three months, and 5% of the annual total, up to $250 a year. Since the launch, 2.5 million customers have signed up for Keep the Change. Over 700,000 have opened new checking accounts and 1 million have signed on for new savings accounts.


How did Bank of America create Keep the Change? In the spring of 2004, it hired an innovation and design research firm in Palo Alto, Calif., to help conceive of and conduct ethnographic research on boomer-age women with children. The goal was to discover how to get this consumer segment to open new checking and savings accounts.

For the next two months, a team of five BofA researchers and four researchers from a West Coast consulting firm visited Atlanta, Baltimore, and San Francisco. They observed a dozen families and interviewed people on the streets. They watched people at home as they paid and balanced their checkbooks. They tagged along with mothers as they shopped at Costco, dined at Johnny Rockets, and made deposits in drive-through tellers.

Ray Chinn, senior V.P. for new product introduction, along with Faith Tucker, another BofA senior V.P., saw two themes emerge from the research. In Atlanta, the team met a mother who always rounded up her checkbook entries to an even dollar because it was quicker. People also rounded up their financial transactions because it was more convenient. The second realization: Many boomer women with children couldn't save. For some, it was a lack of money. For others, it was a matter of not being able to control their impulse buying.


In the summer of 2004, Chinn and Tucker put together a team of product managers, finance experts, software engineers, and operations gurus and held 20 brainstorming sessions. The team generated 80 product concepts, boiled them down to 12, and overwhelmingly favored one: rounding up the financial transactions of consumers and transferring the difference to their savings.

The team created a Web-based cartoon that showed a woman buying a cup of coffee in a store for $1.50. Then it displayed the rounding up and putting the 50 cents into a savings account. Tucker and Chinn tested out the cartoon and concept in an online survey of 1,600 consumers. The result? Sky-high scores on uniqueness. In December, 2004, Diane Morais, Chinn's and Tucker's boss, pitched the idea to the bank's consumer division and got the green light. The first challenge was a name. A woman in a focus group suggested Keep the Change. That stuck.

Three features were added to the original concept: (1) a summary of the rounded-up transactions in a consumer's checking and saving accounts, (2) a fail-safe feature that automatically prevented a transfer from pushing a customer's account into overdraft, and (3) a promotion to match the rounded-up transfers to savings up to $250 a year.


The next challenge was selling Keep the Change to the public. The team stumbled upon an approach in another focus group when someone suggested getting people to dig for change among the cushions of a couch. The bank tweaked the idea by creating a custom-made 20-foot-long red-velvet monstrosity that would really grab eyeballs.

To launch the product on Oct. 5, the bank staged a marketing event-cum-press conference in New York's Grand Central Terminal. The staff lugged the mega-couch into the station, stuffed it with coins and invited people to look for change. The bank sent replicas of the sofa to malls in Boston, Dallas, Los Angeles, and Miami and co-sponsored events with the National Football League. Wives of NFL players and retired gridiron stars such as Ed "Too Tall" Jones were hired to show up at malls and dig for change. Proceeds were donated to charity. Bank of America ran TV commercials for the program during the winter Olympics. The bank continues to promote Keep the Change on its Web site, and it has bought ads with search engines. To date, BofA says 99% of the people who signed up for Keep The Change have stayed with it.

By Spencer E. Ante

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