VOL. 129 | NO. 133 | Thursday, July 10, 2014
Rays of Wisdom
Dana and Ray Brandon
Alternative Banking – Is It For You?
By Ray and Dana Brandon
Ray's take: The world of banking is evolving. Over the past decade we’ve seen an increase in the number of online only, or alternative banks. Whether or not this is a good thing depends on whom you talk to about it.
I think everyone can agree it’s great to be able to deposit checks online, pay bills online, and see all of your transactions immediately. Those things are offered by both traditional brick and mortar banks as well as the newer online alternative banks.
So, what ‘s so wonderful about the alternative banks, and why are people interested in them? A big draw is that they usually offer a higher interest rate than traditional banks. Another factor to consider, the alternative bank is never closed. You can reach someone on an 800 number any time.
Interestingly, a study by Accenture found openness to alternative banking varies by age range with the millennials being the most open to alternative banks. The survey found 39 percent of consumers 18 to 34 years old would consider switching to a non-brick-and-mortar bank, compared to 29 percent of customers 35 to 55, and 16 percent of customers over 55.
It really depends on your own comfort level handling your banking needs in today’s digital age. Do you prefer the personal touch of dealing with someone face-to-face? Or does working with someone over the phone satisfy your needs? It’s true, most things CAN be done online, but when the chips are down, an in-person relationship with a banker can save your neck.
Dana's take: With all the local full-service banking options, I have dismissed the idea of using a faceless online banker. Recently, however, I read some popular online retailers including Amazon, Apple and Walmart are inching into the banking business.
I have an Amazon VISA card, so I’ve already moved in that direction. Purchases on the card give me dollars to spend on Amazon.com. What if an Amazon checking account balance earned us dollars to spend on Amazon, too? That might get my attention.
What if my favorite online retailer, Zappos, offered reward dollars for holding a balance with the Bank of Zappos? Their service has been so impressive that I would consider putting my money where my shoes are.
Will financial service customers be willing to give up lollipops in the drive-thru to earn online shopping dollars? I’m banking on it.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.