Hsbc Turns Up Heat On The Net
Sun Herald
Sunday May 16, 2004
OLD fashioned bank accounts that pay high interest and offer regular banking services are making a comeback on the internet.
ING Direct has set the pace with its no fees 5.25 per cent interest rate, snatching 600,000 customers in five years.
Citibank is paying 5.4 per cent, although a fee kicks in after a minimum number of withdrawals.
But a disadvantage of the phone/internet only accounts was that they did not offer traditional bank services such as cheque books and credit cards.
HSBC Bank , which has signed on 100,000 customers, who have deposited $1.4 billion, is offering 4.5 per cent interest plus a range of banking services.
These include a card for ATM and Eftpos; cheque, over-the-counter and Post Office Giro facilities; a 24-hour call centre; and the standard phone and internet banking that underpin e-savings accounts.
These services are not all fee free cheques cost $1 each and there's a $5 transaction fee for over-the-counter banking, although this does not cover signing up fee or queries.
ING Direct's Savings Maximiser account needs to be linked to a separate bank account for withdrawals which charges fees.
HSBC has launched an advertising blitz ``Missing something?" to underline the suite of services available in its Online Savings Account. Customers save $136.50 in fees charged for standard bank savings accounts.
In total, investors are $450 better off if they add on the interest difference from the near zero rate paid by a bank account, and from the average $7500 deposit with HSBC earning $313 interest.
``We can offer these rates and services because we do not have a 1000-branch infrastructure we have 12 outlets in Sydney which most people go to once a month or once a year," said Rahn Wood, HSBC's head of direct financial services.
ING, HSBC and the online savings accounts have eaten into savings deposits from the big four banks, but, with 1 million accounts, they still have 28.4 million to go.
Since most investors leave major banks for the interest rates on savings, but leave the rest of their business with the banks, HSBC's strategy is to offer a full banking package so investors will migrate completely.
This saves moving money between accounts or providing notice to withdraw or transfer funds.
One question is whether investors want that. Some just want to put the money ``away" at the best interest rate, occasionally topping it up or dipping in at an emergency.
ING Direct last month announced a pre-tax profit of $111 million and signed up 200,000 new customers last year, pushing total deposits up by 50 per cent to $11.4 billion.
© 2004 Sun Herald