Another week, another Banking 365 outage. What better time to consider the online offerings of banks that spend so much of their time telling us how customer-focused they are.
Summer holiday season is one of those times when the value of a good online banking service shines through. But is it one on which Irish consumers can bank?
Retail banking is a fairly straightforward business – at least from the consumer’s side. Most people want to be able to keep track of their balances, set up regular payments to manage bills and make irregular payments for one-off outgoings. And they want an easy, clearly structured process for setting things up in the first place plus a proper support service should they run into the unexpected.
As banking is correctly a highly regulated business – given the need for customers to be sure there money will be properly looked after and available to them when required – things are necessarily a bit more complicated from the bank’s perspective. They need to ensure that the system is secure and that it is not being abused for criminal purposes, such as money laundering in the same way that they have to apply such standards to physical branch banking.
Having said that, one of the big advantages of online banking from the point of view of the banks is that it is considerably cheaper to operate than physical branch banking. Hiring, training and employing staff are costly for banks, hence the focus in recent years on reducing staff numbers and staff-intensive services in physical branches.
Handling cash is also a significant cost issue for banks. This is why the industry as a whole is the most enthusiastic of cheerleaders for a move towards an increasingly cashless society. You only have to look at the trend line on contactless payments to see how well banks can invest in technology when it suits them.
So why is the online banking experience so clunky so often?
It is easy, if somewhat cynical, to suggest that it could be down to the banks’ oft professed but less often delivered commitment to customer service. Customer service in bank speak generally means “the best service we can offer at the lowest cost to us and our shareholders”. But, as online banking helps deliver on banks’ broader cost-saving strategy in so many ways, you would have thought they would do more to get people to use it more widely.
The problem is likely twofold. First investment in technology upgrades can be a significant cost in itself for the banks. And, second, the current offerings of Irish online banks have evolved from such poorly designed beginnings that sought to replicate too closely the physical banking experience at the time. Put simply, in many cases, the banks would be better simply starting from scratch but that’s a big ask – both in terms of investment and also marketing to customers familiar with the way things currently operate.
Let’s look at the process for setting things up.
All of the three main “legacy” banks operate in a broadly similar manner. You will need to contact them by phone or in person, providing certain personal details, including a phone number. The banks will then give you a password to active your online banking and a PIN. You will then generally get an activation code to let you get up and running with those details once you download the app.
Thereafter, with Bank of Ireland and PTSB, you should be able to access your online banking by using three random digits from your six-figure PIN. AIB seems to require you to enter in the full five-digit PIN they provide.
Issues that can arise include that the app will not work on older phones, or phones where the operating system has not been kept updated. Partly this is for security but also for the bank’s convenience in not having to support users on a broader range of operating systems. Different banks accept different operating systems.
And if you have a Huawei and try to download the app from the Huawei store, you’ll find that it is not possible at Bank of Ireland.
At Bank of Ireland, if you don’t have a smartphone or tablet at all and use online banking solely on a laptop or PC, you will need to order a physical security key from your bank – essentially a device that churns out an eight-digit code to set up payments or transfer funds.
Once you are up and running, the banks have different approaches to using the service.
Making payments
AIB clearly likes the idea of Bank of Ireland’s physical security key as it requires a card reader to set up any new payees even on its smartphone app.
Unfortunately, in the case of at least one less tech savvy customer who got in touch with us recently after visiting their branch to set up online banking on their phone, the bank staff forgot to mention this essential detail, leaving them with a spanking new app and no way to use it to pay anyone.
AIB does allow you make one off payments of up to €1,000 without setting up a payee on your app which can be handy for occasional spending.
But that €1,000 limit can also apply the first time you do set up a payee, another thing a separate AIB customer tells us the bank forgot to mention when talking them through the process.
Quite why, I don’t know, as these initial limits are common across banking apps – a reasonable security element to limit potential losses in the event you are hit by scammers. Making the customer pause to consider before sending substantial sums to an unknown service provider or online store makes sense. Bank of Ireland imposes a €2,000 limit for the first 48 hours after you set up a new payee.
In addition, all the apps have daily limits even once you get past the initial window. At Bank of Ireland, this is €20,000 a day (subject to funds obviously) while it is a more modest €10,000 at AIB and PTSB for transfers to another account. PTSB is even more strict on bill payment where the limit is €5,000 a day. Ironically, they are happy to permit an altogether more liberal €25,000 a day if you are trying to pay down a credit card bill (presumably, for most customers, to PTSB itself).
All are getting better at putting in strong customer authentication, which essentially requires people to confirm on their banking app that it is really them making a particular online purchase, which is commendable, although, as it requires inputting of PIN characters, you generally should not be doing so in public areas where you can be hacked.
Tracking spending
When it comes to keeping track of your spending, things can get more difficult. We have all looked at statements and wondered just what that collection of letters and numbers might mean and to what specific payment they relate.
Online banking should make this easier. They generally allow space for a message that will appear for the payee and also a separate one that will appear on your statement.
But both AIB and Bank of Ireland have extremely limited character count in boxes set aside for the user to define the transaction in a way that will make sense to them on a statement and to the other party when they see it come through to them. Why? Seriously.
I’m not suggesting you allow a novel, but is it too much to have space for, say, 30 characters so that when the item crops up on our statement, you actually have some understanding of how our money was spent?
Bank of Ireland appears to allow just 18, although it does offer a 22-character limit for a keyword to allow you recognise the payee; over at AIB, the limit is a derisory 12.
When it comes to the reference that will be visible to the recipient of your payment, Bank of Ireland allows 25 keyboard strokes to indicate who you are and what the payment relates to; over at AIB, it is a more miserly 18 characters.
And PTSB? I don’t know. We couldn’t find any PTSB online bank users and had to rely instead on information provided by the bank – which did not cover that.
Part of the issue with such tight limits is that it limits the ability to search through statements online. Search, you ask? Indeed. How often do you need to check back on whether a particular payment was completed or to remind yourself how much it was for?
One of the biggest pluses of the online world, as any one familiar with a computer knows, is the almost limitless capacity for easy searching. But not with bank apps. For some reason, this obvious function is not available. Instead customers are still forced to trawl line by line through statements, deciphering an often meaningless jumble of letters and numbers in exactly the same way as they have had to do for generations with old style paper statements. Why?
Or is it really the intention to ensure the customer can have no real chance to monitor their spending at all?
And finally there is access. Services go down regularly for upgrades, maintenance and updates. Yes, in my experience, this is largely in the dead hours of night. But 3am in Dublin is still 10pm in New York and making the system unavailable so regularly can be less than helpful for users.
But then you can always get it touch with the lender, right? Not really. They do have emergency numbers but for more routine queries that you may have you are effectively restricted to something depressingly close to regular branch opening hours.
And that’s the real problem. The banks are creating online services that, all too often, just seek to replicate the dated traditional banking service and structures which were never particularly customer friendly in the first place. There is no real effort to harness the potential of the internet to fundamentally improve the customer experience.
Fintechs
That, of course, opens the door to the fintechs – operators such as N26, Monzo and Revolut. These tend to be far more nimble, tech savvy and customer focused in the services they offer. Where they can fall down, however, is when things do go wrong. Revolut which is busy trying to persuade Irish users to operate it as their main current account has a less than convincing history on customer service.
For the most part you cannot talk to a physical person and, all too often, people who have been scammed find the bank turning a very deaf ear as in a case we reported recently in Pricewatch. At least with the legacy banks, when something does go wrong, there are people on hand that you can physically meet or talk to.
So, for all their commendable flexibility and technical innovation, the fintechs have some way to go to provide genuine competition to banks. Whether the banks use that time to up their game on online banking offerings and app functionality remains to be seen.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
