Royal Bank: the wrong choice for business

I own a business that handles a couple of fairly lucrative contracts a year. My banking needs set the bar fairly low for what I expect from a bank — mostly it’s taking in payments, paying a couple of bills every month, and filing payment for the taxes I owe. This should be pretty straightforward and shouldn’t cost much… unless you bank at RBC.

Their ad for the $6 business checking account is all over the radio these days (so much so that even I heard it, and I don’t listen to the radio). On the onset, that seems remarkably cheap, but it is actually a ripoff. Because to achieve that low figure RBC has cut a lot of features that the “banking advisors” don’t seem too keen to tell you about until you’re signed up and on the hook. Crucially, the big feature that’s been cut is government remittances, which frankly is the killer app for a business banking account.

Yes, you have to pay the Royal Bank a signup fee to be able to pay your taxes online. And frankly you’ll have to pay out the ass for any means to settle an account that you can’t pay in cash, really, because if you don’t pay your taxes online you’ll have to buy cheques (starting at $65 for an order, another Madoff-scale ripoff as far as I’m concerned) or have a money order made, which will cost you $6 or so.

The fee just to sign up to be able to pay your taxes through the RBC web site is $25 a year. Now you’ll think, this is not so bad, if you divide this into 12 that’s just over $2/month… but you’re not done paying yet. At RBC you’re never done paying endless fees for every little thing. For each tax bill that you want to pay you will have to shell out another $2. So if your business has to file sales tax payments every month that’s almost $50 a year for sales tax payments alone, let alone your federal and (if applicable) provincial income tax filings. And if you have a really successful business you’ll also have to make installment payments, either every 3 months or every month. And each time, it’s $2 practically stolen from your business. Kaching, kaching, kaching.

Not that the “external” (i.e. RBC subsidiary) web site is worth shelling out $25 a year for. Admittedly I don’t have huge experiences with business checking accounts and the online services connected to them, having had only two, but RBC’s remittal portal is… well, it’s shit. There’s just no other way of putting it. Your average 12 year old could come up with much better. Not a single hour of contract work was spent trying to make sure that the web app is visually appealing in any way at all, or in performing any sort of usability testing. For example, there is no option to add a payment for your corporate income tax in Quebec. What you must do is register an installment payment, then when you use that item specify the year for which the payment should apply. At the opposite end of the scale when it comes to federal corporate tax payments there is no way to register an operation for installment payments only — you register the operation to pay for your corporate tax, and when you use this item you can then earmark your payment as an installment. No effort whatsoever has been made to make things intelligible or easy to use. It’s just awful,  and hands-down the worst business banking experience I’ve had so far. Had I known, I would have stayed at Desjardins.

My “favorite” feature of it, though, is that it’s only a fake online payment system. It does not actually process your payment online.  Apparently the only thing that shitty “payment” system does is to output a list of tasks which are manually done by a person. This means, among other things, that you cannot use this system to pay for your taxes on the due date, like I could with Desjardins. Instead you can only post transactions to the next working day. And if the next working day is a holiday or legal holiday, that can be up to 4 or 5 days later. I registered a (late) corporate income tax payment today (april 5th) and was informed that it could not be posted before Monday april 9th.

Nor is there any sort of guarantee that the system will even be available at all. Yesterday the system was completely unusable, for instance. It prompted users for a user id and password that they had not created. I was logging in to pay my corporate tax, was unable to do so because of the bank’s incredibly awful, overpriced and badly-designed application wasn’t even available, and as a result my payment will be made 4 days later than it should, incurring me additional penalties. And all because I made the mistake of banking at the Royal Bank.

Nor is RBC any better when it comes to personal banking. Having your account “at the Royal” means an endless litany of fees, long queues at your local branch, and delays which are very difficult to understand. For example, did you know that if you deposit items at an ATM that’s physically connected to your branch, they fall into a black hole for 5 business days? I had this experience recently when I made the mistake of depositing my federal tax refund at the ATM connected to my local branch. I was surprised to find that there was a hold on that deposit that the branch couldn’t remove because in their words they couldn’t know that it was a tax return check. One would expect deposits at a branch’s own ATM to be processed there, but clearly it makes no difference whether you deposit an item at your local branch’s ATM or at one located across the country.

But what really gets my goat about RBC is that they see their customers as nothing but money cows to be milked continuously. Sign up for an account with them and you will find yourself constantly beset by telemarketing upsell calls and endless so-called “free” offers that are designed to suck more and more dollars out of your pockets. I guess they figure that if you’ve had a look at their rates sheet and still bank with them you must be a first-class charlie who exists simply to be exploited and devoured by the parasites of big banking.

So, fuck that. I’m taking my business over to ING. I’ve had a more positive experience with them so far than I’ve had at RBC.

A reflection on Canadian banks

When I was a younger man in the IT industry there was one thing that always stood out for me — when I worked for a Canadian company, the graphics software that was pretty much always used was the Corel suite; when I worked for larger international companies we had the industry standards that people ask for by name, like Illustrator and Photoshop. I sometimes jokingly referred to that phenomenon as “using what will do” when your paycheck comes from Toronto and “using what you want” if it comes from south of the border. Corel wasn’t the worse thing out there, but there was always a sense of “making do” about it.

I find myself in much the same position now when it comes to banking. I had to close two accounts at CIBC this morning because of horrid customer service that left me stranded cashless for a long weekend; apparently someone at Risk Management saw some suspicious activity on my account and decided to lock things down. Of course this needed to happen on a Friday afternoon before a three-day weekend, and despite my indicating my mobile number on the forms when I opened the account the RM guy was unaware of it, so I didn’t get wind of this until the next day, when, at the market to buy some food, my card stubbornly refused to work. What saved me was that I had decided not to move my business account to CIBC because I really did not feel that the commercial banking rep I talked to knew what she was doing. My instinct at that point was to walk away, and it’s very fortunate that I did. At least I was able to get a couple of hundred bucks out.

Now obviously sometimes a security lockdown has to take place. However the way it was handled is really what led me to walk into my branch and shut down my accounts earlier today. When I called telephone banking I was told I needed to call risk management, so I did, but the office was closed since it was Saturday. I called telephone banking again, but was informed that there was nothing they could do about the block. I was never told that the bank had certain branches open on the weekend, for instance. I talked to 3 different people on Saturday and no one had the presence of mind to inform me of this pretty important piece of information, even though I specifically complained about being left cashless for the weekend.

As to what activity led to the lockdown, I was given a vague description which is consistent with logging on while I was using my company’s VPN. Which would probably explain why the “intruder” just logged in and logged out. CIBC’s online offerings are pretty poor TBH. I wasn’t able to renew my car’s license plates through bill payment for instance, and when I tried to use the link to order cheques I was informed that I couldn’t do that and had to go to the branch. Perhaps I should have paid attention to what’s being said on the internet about CIBC customer service, it seems to leave a bad impression with a lot of people.

The people at the branch were very apologetic and did what they could to try and keep me as a customer, but here’s a hint to anyone in a banking process position: when a customer is left stranded (and stewing) for 3 days before the bank even deigns to inform him as to why he can’t access the ample amount of money in his account, it’s really too late. He won’t be staying. He’ll march up to the counter, close his accounts, and take the bank draft with his balance over to an institution he feels he can trust.

[Oh, and something else. If you are an East Indian person, don’t try to pretend that you’re not when you’re on the phone. You’ll never quite get rid of the “South Asia” accent, and the irony of talking with someone about risk management and identity theft issues when you’re aware that they just gave you an obviously false name is rather unsettling.]

To come back to the earlier theme, however — I spent some time considering the alternatives and found that every bank that has branches in my city is pretty much equally bad when it comes to fees and interest. Why would I bother getting a separate savings account, for example, when the best I can earn is a fraction of a percent annually and am also charged fees that would make a blackmailer feel bad? On those terms, I might as well leave my money in a checking account that earns no interest but also does not charge $5/withdrawal PLUS a monthly fee. I would actually come out ahead in that situation, unless I had $10k to leave in the account. Which I wouldn’t, I would invest it properly instead. In a nutshell, the Canadian savings account is something that’s very much pointless. Even the tax-free savings account, which are theoretically a good idea, have practically zero yield in any of the Canadian banks and at Desjardins. What’s the point of a savings account being tax-free if the best you can get in terms of revenue is $50/year? That’s capital gains and only taxed at 50%, so you’re saving yourself income tax on $25/year. Whoop-dee-doo.

ING Direct is supposed to be a different kind of bank, but as I’ve mentioned before I’m not sure they know what they’re doing on the IT side, which isn’t encouraging for an online-only bank. Ultimately because the banking choices are so limited (and, let’s face it, the banks work together to make sure that high fees and low return are not something the customer can get around) it’s a lose-lose situation for the customer. But the banks are doing great! I certainly hope so; they’re mining the customer to exhaustion at this point. Of course you always have the option of getting into self-directed investments (stocks and bond purchases), and when you start scratching the surface of online brokerages you quickly come to realize that they’re practically all owned by — you guessed it — the big banks. Which goes a long way to explain why we as Canadians pay twice as much per stock transaction as people in the USA. That’s what my experiences at Etrade and Itrade have taught me, anyway.

So in the end there really are no good options for the Canadian banking customer. None. Forget about credit unions too; their investment products have yields that I would consider “pathetic” and their fees are pretty much the same as consumer banks. Why? Because they can charge that much. What’s the customer going to do, hide his cash under the mattress? What Desjardins offers is a rebate on your mortgage payments, funded no doubt by the arbitrage between the amount they get investing customer deposits and the (significantly smaller) amount they pay customers for those deposits. That’s nice if you have a mortgage. I don’t. I suspect that most Canadians have some idea on what they want from a bank, but it’s quite impossible to get what you want. Instead, you get what’ll do, and settle for a low-yield, high-fees account because there just aren’t any ways to get around that. Then again, unlike with software, with the FDIC’s at-risk bank list growing to record levels, things aren’t much rosier States-side.