September 24, 2007, 7:00 am

The Bank of Nonsense

by: The Financial Blogger    Category: Banks and You
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The idea of writing about how sometimes banks do not make sense came from a comment left on my blog from Four Pillars. Here was his question:

“yesterday I went down to my local TD branch and paid off my unsecured line of credit which I used very briefly a couple of months ago. The total owing (and due) was nine cents. I didn’t want to waste the stamp so I just went down in person.
Is this something all banks do? I think it’s ridiculous. It must cost them a lot more than 9 cents to process the payment.”

bank of non sense

I must admit that I had a good laugh when I first read his comment. Which kind of company would leave a nine cents owing balance account opened? Banks! At first glance, they might not make sense at all. However, there are some reasons hidden behind these ridiculous situations.

Banks do not make sense at all

I have a few of other examples for you. Depending on the product and the financial institutions, they might have rules in regards to the date of the payment. In fact, some of them won’t allow you to pick any dates of the calendar for your payments. Worst than that, they will think about freezing a bank draft signed by a notary (don’t laugh; it happened to me with several banks!). A bank draft is as good as money; there are absolutely no reasons why you would not trust this document. And finally; customer service in general. In one of my recent financial ramblings, I explained how I had to wait 8 minutes to change my Smith Manoeuvre contribution. Why do you have to speak with so many people and they take so much time? Believe it or not, there are rational explanations for most frustrations we live through banks.

The system is king

One of the biggest problems we face when we deal with a bank is their enormous size. Since they are huge companies, they mainly rely on their computer systems; which means that nobody is closely following up your accounts. They run program that look at all your accounts and will flag an advisor if there is anything abnormal happening in one of them. The problem is that leaving a owing balance of 9 cents is nothing weird for the system. Therefore, if you don’t speak with your banker, you will not be able to close your line of credit without paying this minimal amount. Unfortunately, customer representatives have strict rules to follow and they are not allowed to take such decision. It might seems funky, but the structure in place is there to avoid fraud and to centralized the decision power.

The system is an OLD king

Another problem linked to the enormity of banks is that it cost a fortune to update their computer system. This is why some banks are running with old (but highly reliable) system that will not allow to change the payment dates for any other time of the month. This problem is being gradually resolved as most banks are updating their computer system for the past 10 years. However, there is a lot of work to do on that part.

Preventing fraud and tracking all transactions

Most frustrating issues we have with banks’ customer service is related to fraud prevention and transactions recording. Unfortunately, we have seen in the past people forging documents such as bank draft. So if you never have dealt with a specific bank in the past and you want to cash in a 200K bank draft, even if it is signed by the President, they will be sceptic. Therefore, they will take additional time to verify your identity, your accounts and they will sometimes make you wait on purpose to analyse your reaction.

Why are customers representatives have to put you on hold so many times and for so long? There are two reasons for that. The first one is that most call center (not only for banks) will not permit that the client remains on the line with an agent that is not talking to him and typing into his system to find the information. They prefer leaving us with this depressing music background. The second reason is that they have to keep track of all transactions they do. Therefore, it requires a fair amount of time to key in all the information and process your requests. And believe me, most of them are really fast!

It is obvious that there are a lot of improvements to be done on that side. However, I can say that most banks are working on it. Unfortunately, as I like to call them big mammoths, they might be powerful but they are a huge machine to move. So in the future, you will still be waiting but at least, you will know why!

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Nonsense indeed – I have a joint account with my wife. If I deposit a cheque they put a hold on it for a few days – if my wife deposits the same cheque, we have access to the money right away.

by: The Financial Blogger | September 24th, 2007 (9:35 pm)

Joel, this is another great example of something that does not make sense at first. However, even if you have a joint account, you have 2 separate client cards. The fact that your bank puts a hold on your deposit is related to your client cards level of access. This level of access is determined by your beacon score. Which means that your wife has a better one than you 😉

Having said that, you can request your bank to have the same deposit (and withdrawal) privileges than your wife. As I mentioned in my post, the system determine your level, it is up to you to bring it to the attention to a human being.

I hope this helps!

Thanks for the explanation! It’s still pretty funny though…