Alternatives to the big banks
Over the past few weeks, employees from all five of Canada’s big banks have broken their silence on pressures to meet sales targets at the expense of customer experience.
In nearly 1,000 emails,and anonymous interviews, employees from RBC, BMO, CIBC, TD and Scotiabank have come forward with their stories of feeling pressured to upsell, trick and lie to customers to meet unrealistic sales targets and, ultimately, keep their jobs.
As well, according to Statistics Canada, Canadians are paying an average of $216 annually in bank service fees*, which can be hidden in the form of overdraft fees, monthly account fees, email transfer fees, etc.
Consumers are starting to demand a better experience, and are turning to fintech companies for alternatives to traditional banking methods.
Mogo Finance Technology is a fintech company that is looking to disrupt the industry and offer an alternative solution in order to empower its customers to be financially savvy and ultimately in control of their finances. Its products offer an alternative to the hidden fees and high pressure sales tactics experienced at many of Canada’s big banks.
Avoid account fees If you’re using your bank debit card for all your day-to-day spending, it’s easy to go into overdraft if you’re spending aimlessly and not keeping track of your account balance. Overdraft comes with fees and can lead to a vicious cycle of spending and not saving.
With this in mind, Mogo recently launched its Spending Account, which comes with a Mogo Platinum Visa Card. Like a debit card, you’re using your own money so that you’re only spending what you have. But, by separating out your spending money from your fixed costs, you can avoid going over your budget and going into overdraft. Think of it as your dedicated spending account, separate from your chequing and savings account.
The Mogo Spending Account is free with unlimited transactions and no monthly or annual fee. Get out of the revolving
debt cycle In December 2016, Canadians owed $569 billion in consumer credit like credit cards and lines of credit — and that’s not counting mortgages. Credit cards have this sneaky way of keeping people in debt; a big reason for that is they’re what’s considered revolving debt — meaning you can borrow back what you pay down.
An estimated 46% of Canadians carry a monthly credit card balance every month, which can be a hard cycle to get out of. The longer you stay in debt, the more interest the banks can charge, and the more money they make.
One way Mogo recommends getting out of this cycle is by consolidating your credit card debt with an installment loan, like its MogoLiquid loan. Unlike revolving credit, a personal
loan has a term and requires you to pay back interest and principal in every payment, which means you have a set deadline for paying it off and getting out of debt. You’ll actually end up paying less interest in the long run. Be rewarded (not penalized) Banks don’t have any incentives or rewards for good payment behaviour, and according to the recent reports they are going as far as pushing extra products on customers even when it could hurt their credit.
From a recent CBC article: An RBC teller from Thunder Bay, Ont., said even when customers don’t need or want anything, “we need to upgrade their Visa card, increase their Visa limits or get them to open up a credit line.”
“It’s not what’s important to our clients anymore,” she said. “The bank wants more and more money. And it’s leading everyone into debt.”
A CIBC teller said, “I am expected to aggressively sell products, especially Visa. Hit those targets, who cares if it’s hurting customers.”
Mogo is trying to change this by offering a solution to customers that encourages and incentivizes them for making on-time payments, and helps them get on track to financial freedom. Mogo has a Level Up Program on their MogoMoney loans, where customers could be rewarded with a lower interest rate or higher loan amount for making payments on time.
Mogo also launched MogoMortgage this year, a digitallyled mortgage experience that’s supported by dedicated mortgage specialists who are on salary, not commission, so they’re focused on customer experience rather than sales.
MogoMortgage is also aimed at helping customers get mortgage-free faster. It breaks down your 25-year mortgage term into one-year goals that are more digestible and less intimidating, in a customized dashboard, available through Mogo’s website and the MogoApp. Mogo also rewards customers on milestones in their payment progress — like dinner out on Mogo to celebrate paying off the first year. Mogo also wants to help motivate customers to make extra mortgage payments by showing the value in the customized dashboard, so they can reach financial freedom faster.
*http://www.cbc.ca/ news/business/bank-feestips-1.4025828