The online bank Tangerine is currently running a terrific TV commercial about how hard people work.
Give it top marks for production values, emotional punch, gritty realism – and hypocrisy. "You work hard for your money," the spot concludes. "Does your bank?"
If you judge by the tiny 0.8-per-cent return on its signature product, a savings account, Tangerine doesn't break a sweat.
Banks talk to us a lot about how they are here to help. They tell us we're richer than we think, and that they offer worry-free banking or banking that fits our lives. In the gap between this rhetoric and real-life customer experience lie opportunities for all kinds of alternative ways to bank.
The small technology-based startups collectively known as fintech are one example. Another may just turn out to be credit unions. The country is blanketed by local and regional credit unions that haven't been notably successful in pulling business away from our six big national banks. Now, a couple of credit unions are getting more aggressive by creating banking subsidiaries to serve people across the country.
Meridian, Ontario's largest credit union, recently announced plans to build a national bank that is expected to open in 2018. Alterna Savings, another Ontario-based credit union, has already jumped into the banking business.
Alterna Bank was founded in 2000, and then launched this year as an online bank with a no-fee chequing account, term deposits and a high-interest savings account now paying 1.95 per cent.
Alterna Bank is using its savings account to demonstrate how it does business in a more client-friendly way than established banks such as, say, Tangerine. Though it operates online, Tangerine is owned by Bank of Nova Scotia.
Tangerine has a strong, no-fee chequing account offering, but its savings account pays a rate that is less than half the average of what you can get at the many competitors tracked on the Canadian High Interest Savings Bank Accounts website.
To divert attention, Tangerine offers bonuses called teaser rates to new clients. The bank's website currently shows a special offer by which new clients earn 2.4-per-cent interest on their first savings account for six months, and have an opportunity to earn $50 in bonuses.
Rates bonuses are also available to current Tangerine clients, but not everyone. The bank said in an e-mailed response to questions that it presents these offers to clients based on their savings history – "this means their previous savings activity and interactions with Tangerine."
More specifically, the bank said the criteria for offering bonuses could include current or previous balances, dormancy, whether the client has an automatic savings program or has transferred balances in and out.
Alterna Bank offers 1.95 per cent to all clients, new and existing. Because it's a member of Canada Deposit Insurance Corp., this money is as safe as it would be at a Big Six bank.
Maintaining its high interest rate on savings will be a big test for Alterna, just as it was for another recent newcomer called EQ Bank. EQ came into the market in January with a 3-per-cent savings rate that has since been reduced to 2 per cent. That's still a top rate according to Canadian High Interest Savings Bank Accounts.
As a bank owned by a credit union, Alterna has some advantages over the likes of Tangerine and EQ in keeping its savings rates high: There are no shareholders to demand ever-rising profits and dividends.
"Because we're owned by our members on the credit union side, we don't have to hit the same returns as the Big Five banks," said Rob Paterson, president and CEO of Alterna Bank and Alterna Savings Credit Union.
Mr. Paterson believes people are starting to understand how today's ever-challenging financial world puts extra responsibility on them to look after their money. At the same time, they're more aware than ever about bank tricks like teaser rates.
"We've decided to provide very straightforward products and services, but with preferred pricing and also a preferred experience," he said.
Alterna offers paperless account opening and is working on technology that will advise people when they're holding excess cash in a chequing account and would earn more in a savings account. Online mortgage applications are coming, with competitive low rates.
These are early days, but it so far it looks like Alterna works hard for your money.