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 abank? 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.

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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 abank. This information is available in their annual reports, websites and in reports by bank regulators and rating companies.

To determine that abank 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 your ATM Card for payments, how often you use an ATM, how little or much money you leave in yourbank account, how reliant are you on mobile transactions etc. A person who travels often and uses ATMs  frequently should use one of the big banks with many branches/ATMs so as to minimise/eliminate the payment of the N65 ATM fee. A person who wants a cashless lifestyle is better choosing abank with a robust IT infrastructure in order to guarantee that his 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 abank that insists on a minimum balance. yourbank’s transaction costs, savings rates, lending rates etc. must match your current financial position and mid-term financial goals.

Also consider their product offering e.g. savings accounts with cheques, accounts for minors, investment products, automatic bills payments and standing orders, business advisory services, zero-fee current accounts, consumer/ business loans and overdrafts etc. And carefully consider 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.

In these days of online banking, abank’s offsite service is a major assessment factor. Is it just online or has it transited to mobile platforms? 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? In Nigeria today, we have a fully online bank with no brick-and-mortar branches at all – the ‘Jumia’ of banking. That is 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? 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 account statement yourself? How many month is available online? How long does it take to obtain statements for Visa purposes and what’s 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 abank branch and talk to customer service officers before committing to abanking relationship, even an online one.

To change yourbank, 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.

Dear readers, 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.