3% rate could be sustained, if needed | EQ Bank | Discussion forum

Well, as I said, inertia and ignorance go a long way when it comes to people acting against their own best interests in choosing bank accounts. But, ultimately, with enough advertising and education, people will prove to be smarter than initially assumed. Canadians have been a bit "funny" about their banks, with this archaic sense of loyalty, and the banks have done well by that. But I don't see it as the way of the future.

ING started in Canada in about 1998 as I recall, and it was, I believe, the first of the new breed of higher-interest banks. (Had these not developed, we would not have this website at all.) It did so well that it got bought by Scotia, and no doubt continues to grow. I can personally probably account for about $1,000,000, maybe more, that has migrated from Big Banks to ING/Tangerine over the years, just by my own actions and referring others; and more has gone out of Big Banks to other destinations at my suggestion or instigation.

And now we have Oaken, Peoples, Zag, Eq, and perhaps others I've forgotten, all CDIC-insured, all offering significantly better rates than Big Banks most of the time. These banks are open because people found it worthwhile to make the switch. It seems like about 1 new bank per year opens, and they seem to be thriving.
By spending serious money on advertising, Eq has been overwhelmed with clients! This is clearly a growing trend. And I suspect that younger people, with apps for everything, and known, as a generation, for their relative lack of brand loyalty - except perhaps in tech - will have little difficulty adapting to the accessibility and superior rates of the newer banks, once they get their bugs worked out. My observation is that young adults don't seem very interested in bricks and mortar or standing in lines waiting for service. Any branch where you DON'T have to stand in line is likely to be closed.

I agree there will always be a need for some bricks and mortar branches. But, in reality, these are closing all the time. One of the TDs within a few km of me closed very recently, leaving a slew of people with no branch of any kind handy. The RBC branch used by an elderly relative is closing in June, forcing a trek to the suburbs. Every time a branch closes, a group of people who are very annoyed with one of the BigBanks are looking for an alternative., and every year more of them will discover that they can actually do better outside of BigFive.

Meanwhile, Oaken and ING/Tangerine have opened... branches! Not very many yet, it's true, but I think we are moving towards a levelling.

It's understandable that anyone who holds bank shares would want the banks to be seen in a positive light and will enjoy receiving the dividends, even when the value of their stock may be far less stable than the dividends and the banks are reporting losses on their investments. This, however, is not the province of the person who simply wants a reasonable return on their savings account and GICs and who understands that dividends come with market risk.

I am not sure how interested the Big Banks are any more in the deposits of ordinary folks. The reward offered to the depositor is shameful, and they keep closing branches. It seems that their real interest on the retail side is in the people with large investment accounts.

I was probably wrong to say that the Big Banks don't have any strategy for keeping their market share in the face of changing values and demographics. They are content to just let people leave, it seems, for now, but they do have one strategy, and it may work for them. Following Scotia's lead, they will probably all try at some point to acquire a well-functioning smaller bank. Eventually, that may be the only way they can hang on to our deposits. I anticipate that banks like Oaken/Home Trust and Peoples may eventually be bought up by the Big Banks, precisely so that the latter can remain competitive and still make money, by having a separate division that they are not interested in operating directly. Or they may render it so meaningless that it is absorbed into their normal banking operations, hoping to retain the customer base. However, there will always be a new upstart on the horizon. I was always led to believe that competition was supposed to be a healthy aspect of capitalism.

I must admit to some confusion about VanCity. I too remember it as a leader in the credit union movement, much admired by some of us who didn't live there. I too have a recollection, however vague,that it had somehow disappeared or been swallowed up.

It has certainly faded from view, and you never hear anything about it any more, at least where I am.

However, if the internet is to be believed, it seems to still be functioning on all cylinders. http://www.vancity.com but undoubtedly with less spectacular service. Rates aren't even mentioned.

That's a sad story. It may illustrate how people can continue to have faith in an institution which dos not serve them well out of an irrational sense of loyalty - or else why would they still be in business? It's the same story with the Big Banks for many people.

I know we have gone off course. But you folks have found all the reasons why I must have dropped dealing with Vancity. They were just so ho hum and they had a lousy parking arrangement and not to mention their walk in ATM was often out of order. I didn't find fees an issue...must have had a seniors account. Coast Capital has better rates for GICs and there savings accounts, fee wise, were the same as a chequing......just no cheques. They have now trimmed to 10 free withdrawals a month then $1 each there after. I rarely get charged. Coast Capital has poor service too and I only use them to pay bills with and any surplus goes to Manitoba