Saturday, 10 September 2016

How to choose a bank

We’re frequently asked by consumers which bank they should choose. Despite the temptation we never recommend a particular bank. That’s not because we don’t have strong opinions on banks (because we certainly do), it’s because it’s not as easy as that. Every customer is different. What works for me might not work of you. What irritates you might not irritate me. The bank that’s right for me might not be the bank that’s right for you.

Some of the reason you might, or might not choose a bank are obvious.

The most obvious one is the products they offer.

All banks offer some sort of basic current account that allows you to receive your income and later spend it. So far, so boring. What’s more interesting is the range of specialist accounts that allow you to save money and earn some interest. They’re the sort of thing you should ask about. Banking isn’t just about being able to slip a card into an ATM and get cash to spend. It’s about saving money as well. But even this is a bit boring. Everyone knows this already.

The big question that a surprisingly small proportion of people consider is what they actually need. The starting point isn’t actually what they offer, it’s what you need, that’s what really matters. It matters most because you’ll likely have to pay for these things.

How many times a month are you going to use the ATM? How many times will you want to go to a branch to pay in cash? Cheques? How many of them do you write and receive? How many transfers will you want to make to other people’s accounts? How many foreign currency transactions are you likely to make?

These are the questions you need to ask yourself and then you need to sit down with the enormously detailed, very long and incredibly boring schedule of bank charges that banks are required to publish every year. Then you open your laptop and start building an enormous spreadsheet that calculates the total cost for every bank you’re considering.

Or not.

Let’s be realistic. None of us has the time to do that. We have lives to lead. We have jobs to go to, kids to feed and TV to watch.

Luckily there’s a simpler option. Even though they don’t often advertise it, most banks these days offer fixed-price banking options. Rather than paying a fee for every individual transaction you pay a single fee per month and then most everyday transactions become free. You can go to the ATM as much as you like and it’s all covered by that one fee. It also makes selecting the bank easier. Don’t bother will all the boring fees, just see who offers the best monthly fee.

Then look at geography. Where does the bank have branches? But does that matter to you in 2016? Do you really need to go to the bank at all? Almost every bank offers technology solutions these days. Internet and cellphone banking have revolutionized the way we store, move and spend our money. These tools mean that we hardly ever need to go to the bank any more unless we’re depositing cash or signing something. The combination of fixed-price banking and techie banking really is a game changer.

Incidentally, here’s a free tip for banks. I’ve told them all this before but maybe you can suggest it as well net time you visit your bank? It’s simple. Banks should pay us not to go into their branches. They should offer rate reductions to customers who never set foot in a branch. That’ll get us all online and reduce queue lengths like magic.

But here are some more practical tests you can use to select a bank.

The first thing you should do is wait until the end of the month and then visit a shopping center full of banks and take a look inside each one of them. How long are the queues? Are the people in the queues moving or standing still? Do the customers look happy? Do the staff look happy?

What does that tell you about the approach the bank adopts to customer service?

The simplest and perhaps the best thing you can do is ask your friends and relatives for a recommendation. What’s their experience with their banks? Have they been treated well? Do they need to queue when they visit? Does the bank help them or hinder them in their lives?

But please ask someone relevant. If you’re a 19-year-old student, then your 85-year-old granny probably isn’t the best source of advice. In the same way, if you’re an 85-year-old granny then maybe your 19-year-old student granddaughter isn’t the best source of advice either. Ask someone who has the same needs as you.

Once you get to the bank, let them do the work. Let them sell their bank and their products to you. Don’t tell them what you want, instead ask them how they can help you. Most of the time you’ll just hear them listing the accounts they have and explaining what each one offers. What you want to hear is something different. The first thing you should hear from them is a series of questions. Are you working? Are you married? Do you have children? How old are they? What are you ambitions?

A sensible employee working for a sensible bank will want to know a bit about you before they suggest which products you might want. They’ll want to custom-build a set of accounts for you and for your unique needs.

And if they don’t adopt this approach, if instead they open the conversation with “Bring in your Omang…” then you know this isn’t the bank for you.

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