April 23, 2015

The Best Internet Bank is a Credit Union

Comment November 5, 2013 by Triangle Credit Union 

I have long been a fan of internet banks. As an early adopter of ING’s Electric Orange checking account, I found that I didn’t need a physical branch for my day to day needs. Direct deposit put the money in and my cool-looking debit card took it back out.

Over time my confidence in the branch-less internet bank grew. I started an IRA with ING, opened an account to purchase stocks, and even considered taking out a mortgage. All the while, I was working for a massive multinational bank whose strategy seemed to be to open flashy new branches and pass on the costs to its consumers. For the benefit of face-to-face interaction, my customers had to pay monthly service charges, massive overdraft fees, and face the burden of unnecessary extended holds on deposits. Of the two types of financial institutions that I was aware of, the branch-less internet bank and the super-branch multinational bank, the internet bank was the clear winner.

However, the moment I needed something from my internet bank beyond swiping my debit card, customer service disappeared and cracks in the model began to show. When I joined my credit union last year as an employee and a member, I wished to move some of my over some of my accounts, but it was not an easy task. I called and wrote letters, but was passed around in what seemed like an effort to bamboozle me in to keeping my accounts. Though I had had no issues to that point, I wondered how I would have been treated if ever I needed to fix an encoding error, update my address, or deal with a fraudulent charge? Without being able to speak to anyone face-to-face, I began to feel that my money wasn’t mine anymore. I finally got through and managed to move most of my accounts. Now, after being fully banked with my credit union for over a year, I have experience with a third type of financial institution, one that combines the best elements of the other two.

At my credit union, I have all of the on-the-go access that I had at my internet bank, online banking,mobile banking, a debit card, and even rewards. This convenience comes with branch access too. Though we only have a small number of branches when compared to the super-branch model, we have partnered with other credit unions to offer shared branching and counter this advantage. Shared branching allows members of partnered credit unions to perform transactions at nearly 6,700 locations across the nation. So, my credit union has the services of an internet bank and the access to face-to-face interactions of a super-branch bank, but more importantly and uniquely, we also have history.

The credit union model of member-owned financial cooperation can trace its roots back to the financial cooperatives formed in the early 19th century in England. It was further developed by Herman Schulze-Delitzsch and Friedrich Raiffeisen in Germany in the 1850s. Then in 1908, Alphonse Desjardins brought the model to the United States. As it has grown from there, the consistent current through the credit union movement has been to place members first above profit. Unlike internet banks or super-branch banks, we don’t roll out new products or services because they offer opportunity for profit. We roll them out because they will meet the needs of our members. In 1939, our members could not afford bank loans, so we offered affordable general purpose loans. In 1984, our members needed check writing access on their funds, so we offered checking accounts. Likewise, in 1997, our members needed on-demand access to their finances, so we offered internet banking.

It is clear that the near future of banking is toward mobile on-the-go access to your finances. We recognize this trend and the need of our members to have advanced electronic services. Our mobile banking app, for example, is available on multiple devices and systems. We have been operating in this manner for three-quarters of a century now, and on the strength of the principles of the credit union movement that guide us, I can say, as certainly as I can say anything, that we will continue to do so for another 75. Internet banks come and go, see Perk St and ING. Super-branch banks can wreak havoc on the economy, see the Great Recession. The only banking model that can balance sustainability with economic viability is the tried and true, credit union model. That is why the best internet bank is and will continue to be, your credit union.


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