Update on balance sheet and (un)profitability of Motus Bank | motusbank | Discussion forum

It makes me wonder what Meridian's strategy is or was, and what its expectations were.

From depositor's perspective, they only ever had good rates at the very beginning - until very recently.
I have no idea where they even get new business as they appear not to advertise - or at least not in my direction.

motusbank had or has some possibilities as it is a relatively-full-service totally-online bank. Again, I wonder what is strategy for making that niche work?

I ithink raising depositor rates is a good move though. Unlike the for-profit banks, they don't have to make extravagant amounts of money, but they do have to make some!

Personally, I think Meridian needed to fix its timelines for transfers before it opened a bank. I think people go to an online bank expecting greater efficiency than at a bricks and mortar bank.

Maybe.
but they're going to have to put some money into advertising if motus is to succeed in whatever configuration... and lose that dreadful name!!
Maybe they can't afford the advertising, or are waiting for some future growth opportunity. Just think of all the money that was poured into ads by Oaken and EQ!
Right now it feels like motus is relying on word of mouth.

Maybe, or maybe not. This has become a crowded space in recent years with a number of start ups and some failures (or consolidation) is inevitable.

Not directly related, but in the CU space, there were 350 CUs (ex Quebec) end of 4Q14. That reduced to 220 CUs end of 4Q2021 and to 212 CUs end of 2Q2022. My thought being that it is likely impossible to survive long term with less than maybe $300M in assets. #100 on the current CU list is Grand Forks District CU with $309M in assets. Like many other similar stand alone CUs in the BC Kootenays, it is hard to imagine this one will survive on its own post 2030.

Added: I think that unless there is national exposure, e.g. the likes of LBC Digital, Motive Financial, EQ Bank, or Oaken Financial due to a national 'parent', it will be hard to develop scale.

JenE said
As I’m thinking of depositing TFSA GIC monies with Motusbank, I’d appreciate thoughts on the wisdom of this, based on the rather negative thoughts of some posters. If Motusbank was to close up shop, what would the fate be of these 5 year GICs?

My understanding is that you would be covered up to $100,000 (motusbank is CDIC-covered).

But in my view, the real financial risk -- and the one that keeps me from opening TFSAs at motusbank and People's Trust/Bank -- is that even if CDIC comes to the rescue and you get your funds back, my expectation is that they would no longer be sheltered. So it would be essentially like withdrawing them.

If it happens in December then that's not really a problem -- just wait a couple of weeks and slide them back into a TFSA somewhere else. But if it happens early in the year (and if my assumption is correct) then the tax-on-interest cost could be painful.

AltaRed said
My depreciating nickel thoughts.... I think the Motus experiment is a half-hearted attempt by some Meridian board member(s) who had a 'me too' copycat moment to get into federally chartered banking like Alterna without any real commitment/motivation/resources to make it happen. Meridian members have no particular reason to sign up for Motus and anyone outside Ontario could care less with other competitive established alternatives readily available. Time to stop the bleeding.  

I agree with this, and would add that part of the 'me too' motivation was to specifically to target younger digital natives (and I guess older digital immigrants who don't care about brick and mortar).

According to one person at Meridian who I've talked to about this -- and who candidly shared his insights -- the big problem they have right now, is that people who are comfortable with digital banking are ALSO comfortable moving their money out if the rates aren't competitive.

In other words, I think some folks on the board thought (as folks on the board often do) that the technology, itself, would be enough to make the relationship sticky. Sure, good technology helps. But it's not enough; especially if the same people who have money in a HISA at motusbank can easily (like in their sleep) move those funds to EQ, or chase Tang and Simplii across the promo landscape for a while.

On top of this, if you are both a motusbank and a Meridian customer, if you walk into a Meridian branch or phone your branch, they will not help you with your motusbank stuff. That may seem obvious and expected from the business side, but customers make their own rules. My Meridian contact told me that some customers were frustrated (and a few outraged) that they were 'pitched' to join motusbank through Meridian, but once they signed up it was like a giant wall went up. Even if they were told this would happen, they didn't connect the dots and realize what it would mean to their day-to-day banking experience.

How bad is the situation? Is it really that bad that people actually think these guys will not survive for next 5 years? I really like the rates. I am looking forward to invest 160K in 2 different GICs.