Choosing the right bank

YOUR bank is a critical partner in your personal finance journey as it is the custodian of your financial resources. How then do we choose a bank? Or how can we determine if our current banks are the right ones for us? There are generic criteria for selecting a good bank but when it comes to determining the perfect fit, the individual’s circumstances must be considered against the services and fees of the banks.

For a generic assessment, the acronym CAMEL [Capital Adequacy (enough owner’s capital unimpaired by bad debts), Asset Quality (few bad loans), Management (qualified, professional and ethical), Earnings (enough real profit – not just paper profit), Liquidity (enough money to meet obligations like customers’ demands for deposit withdrawals, salaries of staff, operating expenses etc.)] is the time-tested way to judge the financial stability of a bank. This information is available in their annual reports, websites and in reports by bank regulators and rating companies.

To determine that a bank fits you personally, you need to consider your money habits, current financial situation and mid-term financial goals. Your money habits include how often you use the ATM, POS or make online payments, how little or much money you leave in your bank account  and so on on. A cashless lifestyle is already our reality, therefore one is better off choosing a bank with a robust IT infrastructure in order to guarantee that our transactions go through close to 100% of the time. A person who draws his account balance close to zero has no business opening an account with a bank that insists on a minimum balance. Your bank’s transaction costs, savings rates, lending rates etc. must match your current financial position and mid-term financial goals.

Consider the bank’s product offering, the corresponding conditions and fees. Start-ups may want current accounts that have zero fees, but these usually come with minimum balance requirements and withdrawal restrictions.

A bank’s offsite service is a major assessment factor. How reliable is it? What are the features of the Mobile App? How easy is it to use? Which transactions can be done via SMS/ Mobile Apps, and which must be done on a PC? Can you pay for groceries, WIFI, cable TV and much more from your bank’s mobile app? Or do you have to resort to transfers using a USSD Code for most payments? That would work if you are in contact with the vendor, it is inconvenient for remote transactions.The number of service providers who trust your bank to allow them to collect their payments, may be an indication of how robust and reliable the IT infrastructure of the bank is.We now have a number of fully online banks, with no brick-and-mortar branches at all; their services are worth exploring by those of us who are comfortable with that level of technology.

It is also important to assess Customer Service quality. Is the bank just paying lip service to it or is customer service excellence in their culture? Is their Call Centre effective and speedy in solving issues?What is the turnaround time for solving problems e.g. how long does it take to reverse double POS debits? Or how quickly is a lost ATM card replaced? What is the attitude of their staff to your issues? Is your relationship officer readily available? Can you print your transaction tellers yourself and/ or mail soft copies to third parties? How many months of your account statements are  available online? How long does it take to obtain statements for Visa purposes and what is the fee?

Nowadays with Artificial Intelligence, KYC is done online, and accounts are open without physical contact. Yet because the bank is a critical partner in personal financial management, it is vital to visit a bank branch and talk to customer service officers before committing to a banking relationship. This is not possible for the fully online banks, however, because many of them are subsidiaries of existing commercial banks, their customer service quality can be judged by that of the main bank.

To change your bank, open the new account before closing the old one, so as to enjoy uninterrupted banking services. When withdrawing/ transferring your money out of the old account remember to leave enough to cover bank charges, otherwise you run the risk of being labelled a bad debtor in the Credit Bureaux.

It is currently a buyers’ world in Nigeria’s banking landscape.Therefore, let’s carefully assess our banking options and choose the banks that would actively support us in achieving our financial goals.

Happy investing.

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