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Personal Finance Can an insurance company do banking better? Manulife takes a stab at it

A non-factor for years, the banking division of insurance giant Manulife Financial Corp. is upping its game.

Aaron Vincent Elkaim/The Canadian Press

Two words you never thought you’d say in imagining a brighter future for chequing and savings accounts: Manulife Bank.

A non-factor for years, the banking division of insurance giant Manulife Financial Corp. is upping its game. On Monday, Manulife Bank introduced a package of services designed to claim a share of a market for daily banking that is crowded with big banks, alternative banks, credit unions and upstart financial technology companies.

Manulife’s strategy: Appeal to millennials and other digitally savvy people with a four-part bundle of banking services wrapped in an app for smartphones that helps with saving and budgeting. Manulife’s goal: Compete against the country’s banking heavyweights more than the alternative players. “We’re here to be the best alternative to the big banks,” said Rick Lunny, chief executive of Manulife Bank.

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The All-in Banking Package from Manulife Bank is slick enough that it should be studied by other banks looking at how to adapt their accounts for the digital age. The question is whether there’s enough there to offset the so-so economics for customers who believe in paying the least in fees while getting the most interest.

The core of All-in is an unlimited transaction account (e-transfers included) that costs $10 a month, compared to $14 to $16 for similar big bank accounts and zero at an increasing number of alternative online banks. The All-in account goes down to zero in fees in a month where you add $100 or more to a savings account that comes as part of the package.

That savings account pays 1.2 per cent, a disappointment. Several alternative online banks that have savings accounts are paying 2.25 per cent or more to go with their no-fee chequing accounts. Examples: Alterna Bank, Motive Financial and Motusbank, which opened for business in April.

The third part of the All-in package is a no-fee cash-back credit card paying rewards of 2 per cent on groceries and 1 per cent on other expenses. This reward rate is not at all bad, although anyone wanting a no-fee cash-back card should check out the Rogers World Elite MasterCard.

The fourth part of the All-in package is travel interruption insurance offered by Manulife. Finally, as a sweetener, Manulife is offering people who sign up for All-in one year of Amazon Prime, which otherwise costs $79. Amazon Prime offers free delivery of Amazon orders plus access to TV shows and movies.

All-in is most interesting when you look at the way financial technology is deployed to help customers manage their money so they’re able to save more.

Mr. Lunny said the bank partnered with five fintech companies to develop features such as the one that lets you set how much money you want in your chequing account and then sweeps any excess into savings at the end of each day. Other functions show how close you are to saving enough each month to eliminate the $10 account fee and how close you are to your credit-card limit. There’s also what Manulife calls an intelligent virtual assistant, which can answer questions about banking and offer tips on budgeting, saving and such.

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The most obvious big bank competition to All-in comes from the online banks Tangerine, owned by Bank of Nova Scotia, and Simplii Financial, owned by Canadian Imperial Bank of Commerce. Both offer no-fee chequing with unlimited transactions and savings accounts with rates of 1.2 per cent.

On fintech specifically, some of the most noteworthy competition to All-in comes from the budgeting apps at a pair of big banks, Toronto-Dominion Bank and Royal Bank of Canada.

Manulife designed All-in to work most effectively on smartphones and expects the bulk of its customers to access their account that way rather than desktop computers. It’s a sign of how much importance the bank is putting on young adult customers as opposed to an older, wealthier demographic targeted by the bank’s Advantage Account.

Mr. Lunny said the bank hopes to attract millennials with the All-in package, then sell them mortgages and investments as they get older and more established. “We feel millennials are our future,” he said.

For millennials, the All-in package scores well on mobile-friendly technology and convenience – four products in one. But having to save $100 a month to make the $10 account fee vanish? That’s old school, and not in a good way.

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