Are we getting less but paying more?

Branch closings, rising fees, and now banks have launched revamped banking apps that can offer fewer services than before.

Yes, the advent of new smartphone apps is the latest move towards digitalization among Irish retail banks. But is this just another example of people paying more for less banking service?

Service reduction

There is no doubt that many of us are both leading and embracing the increasing digitization of retail banking. Figures from the Bank of Ireland’s recent annual report, for example, show that last year six of its 10 everyday banking products, such as current accounts or personal loans, were delivered entirely digitally. And he predicts that number will rise to more than eight out of 10 this year.

But there is also no doubt that we are being pushed in this direction. One example is the increase in branch closures which recently increased a notch, with the Bank of Ireland’s announcement that it will close more than 100 branches this year. And even in branches that remain open, there may be a decrease in available services: Permanent TSB, for example, is preparing to withdraw cash services from 44 of its outlets this month.

Fewer branches, or reduced services, mean more online transactions.

Or consider the experience of the humble check. Around 2014, banks began to impose significant fees on their use. The Bank of Ireland, for example, charged € 0.20 per check / € 5 for a book of 25 checks. Unsurprisingly, their use then plummeted, with figures from the Banking & Payments Federation showing those payments halved in the four years leading up to the end of 2020.

Part of this was due to changing habits, but bank customers were also “pushed” in this direction by the high fees.

Applications for smartphones

Today, the latest innovation in banking is the arrival of new “mobile” banking applications. Unlike the old online banking apps, the two main pillar banks, AIB and BOI, are now heavily focused on smartphones.

However, if they can offer greater security – and in some cases better services – coming, as they do, from European regulation known as the Payment Services Directive (PSD2) – which obliges providers to of payment services to improve customer authentication processes – they have also created an additional layer of complexity for bank customers.

First, the new apps can only be used on certain devices. AIB, for example, requires you to have an Android phone, at least version eight or higher, or an iPhone on iOS 11 or higher.

Bank of Ireland’s app needs Android version 6+, but an iPhone running iOS 12 or higher, with similarly modern tablets supported later this year. And since the new Huawei phones don’t come with Google apps like the Play Store, you won’t be able to use the BOI app if you have this phone.

Second, you can only access the apps with your smartphone, even if you want to use your PC or laptop for banking. Indeed, to access banking services in this way, you must activate a push button on your phone. Once done, you can then access your account on your computer.

But what if you don’t have a smartphone or it’s outdated? Well, you can still access your bank account online, but first you’ll have to ask the bank to send you a little digital security device, much like a mini calculator. Bank of Ireland calls this a physical security key (PSK), while at AIB it is a “card reader”.

So, a person who willingly accessed their information on a laptop computer now has to apply a new tool to the process. Yes, the rising tides of digitization do not lift all boats. As a spokesperson for the Age Action advocacy group put it, the issue of digital exclusion in the banking sector is raised repeatedly with their members.

But while there is a risk that people will be left behind in the digital world, there are also dangers for those who embrace it.

Smartphones are lost or stolen, broken and damaged, every day of the week. Previously, if this happened to you, you had the security of knowing that you could still access your online banking account on another device if you lost your phone.

Now if you don’t have your phone you have also lost your account ‘key’ so you will either need to get a new phone and reinstall the app or get a security device to access your online banking. , or if you are at AIB, you should be able to access “limited” online services. While the security of your account will hopefully not be compromised by such a mishap given the added security, its accessibility will be.

Yes, with AIB and BOI, you also have access to an agency or a bank by phone; but you also had easy access to online banking.

Cost increase

Perhaps the real problem is that customers are now paying more, not less, for these services. Bank of Ireland, for example, has a standard monthly fee of € 6, which is € 72 per year, while AIB charges € 4.50 per quarter, plus additional fees. As a result, estimates that an account with the bank will now amount to around € 87 per year – one of the most expensive in Ireland.

Not only that, but the bank has indicated that if its card readers are free at the moment, they will be chargeable thereafter (5.50 € for a replacement reader). Maybe better order one now just in case then.

Now, even in the days of “free banking,” whether or not you got a bill at the end of the month or not, banking is still costing you – you might not realize it. But nonetheless, charges have risen sharply in recent months.

And with competition not only scarce, but actively declining, the only expectation is that Irish bank customers may have to get used to paying more for less.

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