So you’ve decided to take a look at this whole online banking thing. After all, your friend does it and brags about how they don’t have to wait in line anymore because they’ve beat got the system beat. Online banking has become very popular in Canada - a recent ING study finds 33% of those who do bank at their branch do so mainly to deposit cheques, with 46% wishing they had a mobile or online method to do so. There's no doubt it's convenient. The problem is that you’re not all that sure about who to trust, where to go, and how to set it all up. Here are a few questions that might help you determine the best option for your cash and investments when opening an online banking account.
1) Do you have brick-and-mortar locations or are you a purely online bank?
All of Canada’s major banks and the vast majority of smaller financial institutions have an online presence, but there are banks out there that only exist as an online entity and don’t have physical “bricks and mortar” locations. Ally was one of the leaders in the field until they were purchased by RBC, but Canada’s more prominent online-only options currently include ING (owned by Scotiabank but being operated independently as of right now) and PC Financial. Online-only banks have become popular in many circles because of their ability to pass the cost savings of not having physical locations on to their customers. Consequently, these banks can often offer no-fee accounts, attractive high-interest savings account options, and very competitive GIC rates amongst other little perks.
2) What accounts do you offer your online customers?
Some banks only offer basic chequing and savings accounts online while others include TFSA, RESP, and RRSP accounts as well. You’ll have to contact your specific lender to see what kind of combination their platform is able to provide. Many lenders will ask you to come to a branch location to fill out the application and get an account set up, but once the account is activated, transactions can be completed online.
3) What sort of customer service experience do you offer?
If I have to choose between waiting online for a half-hour while navigating five different branches of a phone tree, and immediately connecting with someone through an online chat window, I’m going to choose the latter option without hesitation. Not everyone has the same level of comfort with non-traditional communication however, especially when it comes to somewhat sensitive topics like their savings and investments. Decide what works best for you and compare your preferences to what is offered by each institution you’re considering. Personally, I’d recommend doing a little basic research and seeing what their online reputation looked like before making any commitments.
4) What is your track record with “blackouts” and security?
Earlier this year BMO saw its online platform go down for a brief period of time. This was understandably alarming to several customers. Most people like to have access to their money at all times, so perhaps having a small amount of money in a chequing account or a safety deposit box is a good hedge against this happening to you. That being said, ask around and see who has had the most dependable and secure web presence for your own peace of mind.
5) What kind of discount brokerage platform does your bank offer?
If you want to go beyond the basic banking needs of savings accounts, lines of credit, and a mortgage, you may want to explore what discount brokerage options your potential bank will provide. If you wish to control your own investments within registered or unregistered accounts you’ll want to compare what each bank can offer you. Some tout more user-friendly interfaces, while others specialize in low transaction fees, while still others might simply work best given your current banking arrangement. Personally, I enjoy the freedom of avoiding lines at physical locations as much as possible, so I often use online banking. If you still aren’t sure how comfortable you are with the idea, you can always gradually move assets over and get used to the idea and user experience before deciding how deeply you want to commit.