By Dana Flavelle
Canada’s second largest supermarket chain is now offering discount banking services, giving rivals like PC Financial and ING Direct a run for their money.
Sobeys Inc. and BMO Bank of Montreal jointly announced a co-branded service Monday that they say will save the average customer $180 a year in bank fees.
The savings come from waiving BMO’s regular $13.95 a month fee plus providing $25 worth of free cheques when a new account is opened.
Sobeys and BMO had already collaborated on a Club Sobeys Mastercard. Now they’re adding a no-fee chequing account and high interest savings account that pays 1.3 per cent on deposits. Savers must maintain a $5,000 minimum to receive the rate, the same as in a regular BMO savings account.
Account holders can also earn rewards that can be redeemed in Sobeys’ stores.
“Our continued partnership with Sobeys represents an opportunity to offer new products that would appeal to households focused on better managing their household expenses, including grocery,” says Lynne Kilpatrick, senior vice-president, personal banking, BMO Bank of Montreal.
The grocer didn’t rule out adding other services in future. PC Financial and ING both offer other products, such as mortgages, RRSPS and loans.
The move comes as more full-service banks recognize they need to be in the discount banking business or risk losing customers to rivals already in that market, said David McVay, president of financial consulting firm McVay and Associates Inc. PC Financial is backed by CIBC, he noted.
The bank didn’t rule out doing similar deals with other retailers, said Nick Mastromarco, director, retail partnerships and direct sales for BMO Bank of Montreal.
For the supermarket, the deal is likely to produce a new source of revenue, McVay said.
Both firms are Air Miles sponsors so it’s also an opportunity to tie more purchases into the rewards program, McVay added.
“The combination of no fees, high interest earnings and faster reward points accumulation is a fresh idea that will help our customers save money on bank fees and groceries as they manage their financial needs,” said Chris Goodale, Sobeys’ vice-president, loyalty, customer insight and financial services.
Customers can access their accounts at any one of the 900-plus BMO branches and extensive ABM network, the companies said.
Sobeys also plans to install more ABM machines in its stores, boosting the number to 100 by year end.
The program goes by different names in different provinces.
In Ontario and western Canada, the program is called BMO Club Sobeys, while in Atlantic Canada it’s BMO Sobeys Air Miles, and in Quebec it’s BMO IGA Air Miles.