The Perils of Modern Banking

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When I was a kid, banking was pretty basic. I'd grab my passbook, hop in the car with my parents, and head down to the branch. Once there, I'd fill out a withdrawal slip and wait in line. A few minutes later, I’d have enough cash in hand for a few trips to 7-11, and a new entry in my passbook. I could take out as much or as little as I wanted, and in any crazy denomination I requested.

Sometime in my teenage years, ATM’s and debit cards became popular. How convenient! Instead of going into the branch, I could drive through and get my 7-11 money. Unfortunately, it was soon after that the arbitrary restrictions began. Suddenly, there was only one bank left in town that would dispense anything smaller than a $20. Ironically, it seemed like I always had about $17 in my account. If it was late at night, and I really needed $20, I would find myself depositing $5 just so I could get back a full $20.

From those times back in the 90’s until now, a lot has changed. We’ve been told it’s for the better. Some of it I do understand. Cheques became obsolete in personal shopping due to fraud. The other thing that fraud did was limit how much money we could get out of an ATM, especially after making a deposit. Now, I don’t think I really tested the limits of this as a teenager, but I know that anything I deposited into my account at an ATM was immediately available. After x amount of people deposited an empty envelope into the ATM and pulled out $1000, they decided that this needed to be fixed. Now, at the banks that allow it, you can usually get about $200 back from what you deposit. The rest gets held for 7-10 business days.

The reason I’m writing all of this is because the limitations have become very frustrating to me recently.

As you can imagine, a big chunk of my day revolves around the banking system. I am constantly monitoring bank accounts for deposits and cheques clearing. The other thing I need to do a lot of is move money from one account to another. There are many reasons for this. Sometimes I need to move money from a chequing account to a credit card. Sometimes it’s money between accounts at different banks. Other times it’s making direct payments to vendors and staff, usually via email money transfers (or e-transfers as they’re now called). Over the past year this has become more and more difficult to pull off, and it’s taking up far too much of my day, simply because of arbitrary policies.

I’ll give you one example to illustrate my point. I’ve got a credit card at Bank A. I need to get money onto the card to pay a vendor. I’ve got money in a chequing account at Bank B. Let’s say the amount is $3000 that needs to go onto the credit card. Of the banks I’ve ever used, only 1 will let me move $3000 via e-transfer. It’s not Banks A or B. And, the banks that let you money $1000 or $2000 per day usually have a $7000-10000 monthly limit. This is just fine for most personal accounts, but completely useless in most product-reliant small businesses. And, this is a head office, written in stone policy. This isn’t like a credit limit on a Visa. You can’t talk to your branch and have them raise the limit. Trust me, I’ve tried. If Bank A has a limit of $7000 on monthly e-transfers, then that’s what it’s going to be.

Fine.

I’ll go down to the branch, get a draft for $3000 from Bank B, and deposit it into Bank A. A waste of 1 hour of my day, and $6.50. Guess what? Due to recent fraud worries, all banks in Canada treat a bank draft (you know, the guaranteed funds you pay an extra $6.50 to obtain) as a cheque, and now hold those funds for at least 5 business days.

What?

So, guess what my only option is now? Yep. I have to withdraw $3000 in cash…in front of a huge crowd of people, and then walk that money a few blocks away and deposit it into Bank A. I don’t think I have to tell you the risk of doing this, not to mention the looks I get from the bank employees for withdrawing large sums of cash.

Can I take it one step further for you? In some banks that I have to deal with, I can’t transfer money from a biz account to a personal account online. I can’t do it by linking the accounts…not by setting them up as a payee…nothing. So, if I wanted to move money from a chequing account to the credit card…in the same bank…I still have to go down to the branch and do it in person.

Don’t get me wrong, on some level I understand. If someone hacks your account, or some employee you just fired gets down to the bank before you’ve had their name removed, they can do less damage with these restraints in place. But once again, for the 99% of businesses that don’t encounter or cause this type of theft, it’s just a huge pain in the butt.

In another post, I'll explain why these frequent trips to the branch can actually do some good. Until then, I'll leave you with a simple plea to the Canadian banks.

I understand fraud is very real. If my account was cleaned out, I'd be devastated. But...setup a system with 2 simple rules.

1. Make it hard for anyone other than me to alter my account. Give me an electronic token, force me to use 20 character passwords...whatever. I'll live with that.

2. Once you have proven that it's me...let me do whatever I want with my money.

There we go...simple enough, eh?