WYSIWYG Banking

WYSIWYG Banking

What the heck is WYSIWYG Banking? Why is it not possible to have a single bank account, that I can do all my banking with, without having to worry about transaction counts, and fees? This was the core of the presentation from Dan Dickinson of EQ Banks on the weekend, where they explained how their single account solution works (Tangerine also has a similar type of account), but this got me thinking about how (thanks to technology) banking has changed, yet, some “traditions” continue on (i.e. the Chequing Account, the Savings Account and the High Interest Savings Account).

Bank Fees and accounts should be WYSIWYG Banking

What are you seeing ?

What do I mean by WYSIWYG (pronounced “wiz-ee-wig”) ? In the 80’s the tech world wondered at text editors which were WYSIWYG, but in the 60’s we loved a song by the Dramatics of the same name:

What You See is What You Get

OK, so the Dramatics song is actually called Whatcha See is Whatcha Get, but you get my point. Having an editor that showed you what your final document might look like was a huge breakthrough.

What do I mean by this archaic technology phrase? Why is it that if someone talks about a new and exciting banking account it comes with about 30 disclosures/commentaries (usually in a very small font at the bottom of the page) (disclosure: I stole that line from the EQ Bank guy), how is this that much different from one of the standard accounts I have.

If I do more than 2 withdrawals or payment transactions on my HISA (High Interest Savings Account), I get dinged with a huge fee (I think it’s like $7.50), and my chequing account pays no interest whatsoever, but I keep asking why? Yes, in the days of ledgers, and paper records keeping this made sense (maybe), but now the record-keeping is all technology based, so why can’t I have a single bank account? Why must I have:

  • A chequing account, where I do most of my banking like paying bills, writing cheques, etc.,
  • A savings account (or a HISA) to put my rainy day money
  • An Emergency Account, that is a safe place to put money, but I can still get at quickly if there is a problem.
  • Not to mention all the registered savings accounts that I have.

It is starting to get to the point that I have as many bank accounts as I do log in IDs on the Internet (OK not that many but I have well over 10 different accounts, and that is only with 1 bank, I have other accounts at other banks).

Tangerine and EQ Bank look like they are trying to get to a single bank account (or WYSIWYG Banking), but they are not quite there yet.

Yes, this is a great song too!

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Debt Cash Grabs and Your Bank

A while ago, Gail Vaz-Oxlade put out a simple Facebook post that blew my mind.

I had heard this could happen, but evidently it happens a great deal, when folks build up large debts, or get too delinquent with their debts. The terms of your banking agreements make this all legitimate (so read them over closely to see what other interesting things your bank can do, I am sure there are others), but it does seem interesting that banks want you to consolidate your banking in one bank, and they will entice you to do this with great “deals” on things.

Customer Retention

Don’t put all your eggs in this one mousetrap

Does this mean you should go out and diversify your assets and your debts so that they are at least arm’s length away from each other? Might not be a bad idea, if you are the kind of person that builds up large personal debt loads and is very likely not to pay those debts back (or has a tardiness streak in you), but then again, if you were that kind of person, would you think of this?

It seems there are folks who try to game the system, and will bounce around from bank to bank attempting to stay one step ahead of debtors prison (or the bill collectors), but I haven’t met many of those folks. Is your bank suddenly garnishing your money a real concern? Not for most folks, but it is something you should keep in mind, just like if you buy your lottery tickets with a credit card, it is treated like a cash advance.

File this one in your TIL file (Today I Learned).

 

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Financial Knowledge Draining Away

I was reading a very interesting article in the Bloomberg Businessweek† “Chowing Down on Boomers’ Brains“, which talks about the huge loss of “tribal knowledge” with the retirement of the Baby Boomers from the workforce, and it has me wondering just how well our Banks are going to deal with this “brain drain” from their ranks? Evidently some very large firms in the states (GE, GM and others) have this as a major risk in the near future.

As an example in my little part of the Government, about 25% of our department is going to retire this year. This might be an extreme example, but how we are going to keep all that “tribal knowledge” or “industrial memory” is not clear to me (as most folks are not being hounded to do “brain dumps” of what they know).

Retirement

Collective Knowledge Wandering off Into the Sunset

What does this have to do with banks, you might ask? The banks and government have 1 common stream, they both have very nice Pensions for their employees (in most cases), so in most cases folks who can retire, will retire (i.e. will not keep working because they can’t afford to retire).

If you want a concrete example of the danger of “brain drain due to retirement”, you need only look at the infamous Y2K fracas, where banks had to pay an exorbitant amount of money to “contractors” to repair COBOL code that could not deal with the concept of a year having more than 2 digits.

Is this going to happen again? I don’t know, but I just wonder how much “collective knowledge” in the banks (about day to day business, information technology and other operational areas) is simply wandering off into the sunset of retirement? I guess we will find out when we see how many folks are hired back on contract to maintain antiquated but essential systems. Another interesting angle to this discussion is that the CRA is a government agency and is most likely suffering the same issues with retirements as well? Maybe they will forget how to tax us? (OK, maybe that one is a stretch).

Can the banks plug the brain drain? Let us hope they are thinking about that.


– Note that while Bloomberg Businessweek is an expensive magazine to buy and read, it is available from the Ottawa Public Library (for free) using the Zinio application, keep that in mind.


Photo by satit_srihin. Published on 31 January 2016 at FreeDigitalPhotos.net

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Financial Redundancy

In the high-tech world the term redundant is actually a good thing. Most folks think of redundant in terms of jobs, and being declared redundant (i.e. being laid off, or the like), however in the high-tech world redundant is actually a vital part of reliability. If there are redundant systems in place, or redundant connections then there are backups in place to take over if one of the systems fails, and that is what I mean by Financial Redundancy.

Last week there was a very good tweet that inspired me to think about this concept.

The point being made is that you need to have a separate bank account in a different bank or savings concept (trust company or the like) just in case your main bank account or bank gets compromised in some way. What do I mean by compromised?

  • Your account has been hacked and thus locked out so you have no access to it, until the issues with the security intrusion is remedied.
  • Your bank “goes down”. This can be a myriad of possible issues including: Interac failure, Computer system crash, bank is hacked (as mentioned in the tweet), etc.,
  • Your bank fails? Yes, this is ridiculously drastic, but it has happened, and I am sad to say, it will happen again (ask the folks who had money in Savings and Loans in the states)

Really the question is what do you do if you don’t have a redundant money supply to fall back on? You could use your credit cards, and you already have a redundant system there don’t you (pretty much everyone has more than 1 credit card, a Visa, a Mastercard, an Amex, maybe even a Diners Club), so why don’t you have some redundant savings in place too?

Redundancy

This Seems Redundant

An idea is maybe putting your Emergency Fund (which we all should have in some fashion) at a different bank? That way it really can help in an emergency.

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No I Can’t Do Anything About That

That is a direct quote from a TD representative when I asked if anything could be done about the interest rate on my Unsecured Line of Credit.

For the longest of times, this Unsecured Line of Credit was “Prime + 1.5%”, but about 2 years ago, it was raised to “Prime + 2.0%”, which while annoying, was something I could live with, however, about six months ago I got a terse piece of Snail Mail announcing, “Yeh, it will be Prime + 3.0%. I was quite irked by this (as a customer of TD), and decided the next time I was in the Bank (say to cash in an RESP) I would ask about this.

The Answer

The Answer is Always No, if you don’t ask

In the interim, my daughter got her Student Line of Credit from CIBC, which I co-signed, and she got that at Prime, so I figured I’d bring the documentation with me (to TD)  to see if I could motivate my friendly TD rep to do something about my unsecured line of credit rate.  This is where the title of this post came in to play.

First I was easily able to cash out my daughter’s RESP (as I had move all E-series Index Funds into the Money Market fund, won’t get fooled twice on that one), in a relatively quick few minutes. I then had to have my “investing profile” updated to allow me to do what I wanted in another account, again done quite quickly as the rep simply cloned the last time I did this update.

At this point I brought up my Unsecured Line of Credit and the high interest rate (in my opinion) and the fact that I have good enough credit to co-sign a loan for prime only, and the answer was short and to the point:

“No, that is an unsecured line of credit and I cannot lower that rate.”

I asked if there was any chance to discuss it, and was dismissed with, “Your Daughter has a professional line of credit loan, not the same thing, we can’t do anything for you”.  I believe I also asked if anybody else could help, but was told No. Now I have said previously, The Answer is Always No, unless you ask, but evidently it can be No even if you do ask.

If I remember the happy young lady at the CIBC, when she gave us the details about my daughter’s student line of credit, told me that an unsecured line of credit rate for me would have an interest rate depending on my credit rating and how much debt I carry, but she’d gladly check it out for me if I wanted her to do that. I guess I’ll be going to visit CIBC in the near future.

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