EQ Bank’s 3-per-cent rate may prove temporary, but so could the bank itself. Innovative online banks in Canada have a way of either being wound down or absorbed by larger competitors.Hand-out
EQ Bank crushed the competition with its offer of a 3-per-cent interest rate on a savings account. Now, the new online bank is getting crushed by demand from customers.
Demand has so overwhelmed EQ's customer service department that it's limiting the number of people who can sign up for an account. Want-to-be customers are asked to "reserve a spot" on the EQ website. From there, a limited number of people will be invited to sign up each week.
"We are not sure how long this approach will remain in effect, but, it is really going to be judged by our ability to resolve any service issues and gear up our operations to handle higher volumes effectively," Andrew Moor, CEO of EQ parent Equitable Bank, said in an e-mail.
EQ made its debt in January with a savings account that pays a much higher rate than competitors. Tangerine, the big online bank run by Bank of Nova Scotia, is paying 0.8 per cent these days on its savings account, while alternative banks, trust companies and credit unions typically top out around 1.75 per cent.
The 3-per-cent rate offered by EQ has no expiry date, although the bank has said its intention is to use it as a short-term attention grabber. The strategy worked too well. On its website, EQ acknowledges that has failed to live up to its customer service standards. "We underestimated the response from Canadians, and this led to long customer service wait times and delays in account activations," the bank says.
In addition to the high rate, EQ offers a few innovative features. You get five free monthly Interac e-transfers, a cheque substitute that works by e-mail, and unlimited no-cost online bill payments. EQ's parent, Equitable Bank, is Canada's ninth-largest domestic bank, with about $14.4-billion in assets. Equitable Bank is a member of Canada Deposit Insurance Corp., the federally backed agency that protects savings deposits for up to $100,000 each.
Rob Carrick