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In sync: Banks begin to blend

Fleet move resembles Bank of America model

FleetBoston Financial plans to offer all its customers free online bill payment starting next month, a first step in the process of bringing its product lines in sync with those of its soon-to-be new owner, Bank of America.

Free online bill payment is one of the signature customer services offered by Charlotte, N.C.-based Bank of America, which is expected to close its $47 billion purchase of Fleet by the end of the second quarter of 2004. Officials at the two banks are discussing how to blend their offerings and say no final decisions will be made for at least several months.

But Fleet's online bill payment announcement, expected this week, is a strong signal that Fleet customers are likely to have their checking accounts converted to the Bank of America model.

Analysts say Fleet customers would generally benefit from such a shift, getting lower fees and a simplified checking account structure overall. The chief negative with Bank of America is its interest rates, which tend to be relatively low on money market accounts and CDs and high for home equity and new car loans.

Suzanne Moot, a banking consultant with M&M Associates in Milton who is not associated with either bank, analyzed their two account structures and concluded Bank of America offered generally superior products. She said she expects Bank of America to adjust its interest rates in this region when it takes control of Fleet if it wants to remain competitive.

"I think that the Bank of America products are fairly simple and straightforward," Moot said. "From what I can see, it's a fair deal for consumers."

Free online banking is one way Bank of America offers value to customers. More and more consumers are finding it cheaper and faster to pay their bills online, either directly at a biller's website or through a bill consolidator like their own bank.

Like most banks in this area, Fleet offers free online bill payment only to its best customers. But, starting next month, the service will become available free of charge to all Fleet customers, including the 132,000 who currently pay $4.50 a month, or $54 a year, for it.

The other differences between Fleet and Bank of America accounts are more subtle, but still significant. According to Moot's analysis, monthly fees are generally lower on Bank of America accounts and in some cases are waived if the customer signs up for direct deposit. Fleet generally only lowers the fee with direct deposit.

A disadvantage of the Bank of America account structure is that it counts only deposits toward the balance needed to waive fees, while some Fleet accounts include mortgages, credit cards, and other banking relationships.

Bank of America doesn't offer "free checking" but its self-service access account comes close. There is no minimum balance requirement, monthly fees are waived with direct deposit, and the account comes with a free ATM/debit card. The chief restriction is only three teller transactions are allowed each month.

Sovereign Bank officials recently said they hope to take $1 billion worth of business away from Fleet as it's absorbed by Bank of America over the next two years. It's hard to see how that would happen unless Bank of America makes a serious misstep. As the announcement on online bill payment indicates, existing Fleet customers are more likely to see improvements in their accounts as Fleet adopts the Bank of America model.

Joe Bartolotta, a spokesman for Eastern Bank, said it's too early to say what will happen as Bank of America's acquisition of Fleet progresses, but his bank's analysis of Bank of America's offerings indicates Fleet customers, if converted to the Bank of America checking account structure, would find little to complain about.

"The cost of their various accounts is comparable or slightly better than what Fleet offers," he said.

Zoo woes

Zoo New England, which operates the Franklin Park and Stone Zoos, can't seem to shake the black cloud that's been hanging over it. First came the funding problems, then the gorilla escape, and now a number nine slot on the top 10 list of charities that spend the highest percentage of their budget on administrative expenses. Charity Navigator, which analyzes the tax filings of thousands of charities, reports that Zoo New England spent 59.1 percent of its money on administrative expenses when the industry average is 10 percent.

John Linehan, president of Zoo New England, said it couldn't be true. After checking, he discovered that bills that should have been listed under program expenses -- such as heat and electricity for all the exhibits -- were inadvertently listed under administrative expenses. He said the zoos actually spend 24 percent of their revenue on administrative expenses, 71 percent on programs, and 5 percent on fund-raising.

A Hefty bag job

After reading a recent column note about Lipton cutting the number of tea bags in its boxes but not the price, Jeffrey St. Amand of Franklin called to report a similar experience with Hefty trash bags.

Amand said he recently bought the 13-gallon size Hefty tall kitchen bags and noticed the number of bags inside had dropped from 55 to 45 but the price held steady at $3.99.

"You could write an entire article on the downsizing of grocery products that have occurred over the past few years," he said. He's right, and I have.

Lisa Foss, a spokeswoman for Pactiv Corp., the Illinois company that makes Hefty trash bags, said the company increased its price by cutting the number of bags because resin costs had jumped dramatically due to an increase in energy prices.

"We felt it was easier for the consumer this way rather than increasing their out-of-pocket expense," she said.

That's a nice turn of phrase, but my guess is Pactiv, like all the other downsizing manufacturers out there, raised its price this way because there was less chance consumers would notice.

Bruce Mohl can be reached at mohl@globe.com.

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