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Launching of a New Internet Bank - My Interview with a Bank5 Connect Manager

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Bank5 Connect

Last month I first reported on Bank5 Connect. It’s a new internet bank that was recently launched by the Massachusetts-based BankFive. Since the time of my first post, I’ve been in contact with John A. Cooke, Assistant Vice President and Online Marketing Manager at BankFive. Mr. Cooke agreed to an interview so that we can learn more about Bank5 Connect and their plans for the future. I emailed him a few questions and then followed up with a phone call.

I’m always happy to see new internet banks. They increase competition and give savers more choices. The internet makes it easy for banks to offer their products nationwide. However, it can be difficult for a new internet bank to stand out from the established internet banks. How will Bank5 Connect stand out? That was one of my questions for Mr. Cooke.

For those who missed my first overview of Bank5 Connect, the internet bank offers a savings account, a checking account and various CDs. Accounts can be opened by residents of any state except Massachusetts and Rhode Island. Residents of those two states can open accounts at BankFive.

The numbered questions and the immediate answers are from our email exchange. I also included additional information from my follow-up call with Mr. Cooke.

1) What was the official date when Bank5 Connect accounts were made available to the public?

We began with a soft launch on July 1, 2013 to ensure all systems were functioning properly and began advertising to the public on July 15, 2013

2) What was the goal of BankFive in launching an internet bank?

The goal of BankFive in launching Bank5 Connect was to grow the Bank’s deposit base and offer competitive products to customers outside of our immediate geographic footprint.

3) How are you differentiating Bank5 Connect from the other online banks?

Besides Bank5 Connect being one of the only online banks to offer 100% deposit insurance, meaning all deposits are insured in full with both FDIC and DIF coverage, we also have top-of-market rates and industry leading technology. We incorporated the latest in mobile and online banking technology, and made it easy for customers to connect with their finances.

For those who are not familiar with DIF, it’s a private deposit insurance fund for Massachusetts-chartered savings banks that insures deposits over the FDIC limits. Since DIF is private, it’s not considered as rock solid as FDIC or NCUA insurance. However, Mr. Cooke pointed out the fact that only one Massachusetts bank has failed since the start of the financial crisis.

In the follow-up call, Mr. Cooke also mentioned another differentiating feature. BankFive has a long community-bank history with all customer support provided by employees from their Massachusetts office. Press zero when you call, and you’ll immediately be connected to a Massachusetts-based customer service representative. BankFive is a mutual savings bank that was established in 1855.

4) Bank5 Connect is currently offering some very competitive rates. Is there a long-term plan to remain competitive?

Yes, we recognize that we are a new internet-only bank and that in order for a consumer to consider us for their banking needs, when up against well-known, established internet banks, rate is an important factor. We plan to maintain competitive rate pricing going forward and hope that consumers will see that our competitive rates coupled with the latest technology, Bank5 Connect is competitive with any bank, nationally or locally.

5) Bank5 Connect offers some unique CDs with special features. How can these benefit savers?

With many savings options available to consumers, we recognized that adding flexibility into our CD offerings was a way to help consumers save, but also not feel trapped by their long-term CD. The RollUp CD allows consumers to lock in a great 3-year rate, but also have the flexibility at certain points to be able to access their money. At the end of the first and second years, the customer may choose to either withdraw their deposit plus accrued interest, or leave it in the account to earn a higher interest rate the following year. This allows them to have a 3-year CD without feeling stuck, should rates increase or they need to use the funds for any reason.

In my follow-up call, Mr. Cooke also discussed Bank5 Connect’s 24-month Investment CD. This is another unique CD. It allows additional deposits of any amount at anytime during the term of the CD. You can also set up automatic deposits from your Bank5 Connect’s checking or savings account into this 24-month Investment CD.

6) With DIF being highlighted, Bank5 Connect appears to be wanting to appeal to large depositors. Are there any features that have been implemented or are planned to help large depositors open and manage their accounts?

Yes, through our website, 5Online (online banking system) and our mobile apps, we make it easy for all our customers, both large and small, to keep connected to their finances. On our website, we have added calculators for customers to be able to see how their deposits will grow with our specific products. Within 5Online, we offer External Transfers and Pay People to help depositors, manage their accounts. External Transfers allows customers to move money into their Bank5 Connect accounts from other bank or financial institution accounts they may have. Pay People is a great service where with just a cell phone # or email address, funds can be sent quickly, easily, and free, to anyone they choose. Our mobile banking app makes it simple to make mobile check deposits from anywhere. Mobile bill pay is a popular service, where bills can be paid on-the-go. Of course eStatements and all of the aforementioned services are included for free for Bank5 Connect customers.

In my follow-up call, I asked Mr. Cooke additional questions about external transfers after the account is opened. An important issue for those with large balances is the transfer size limitations. Mr. Cooke confirmed that there is a $2,000 per transaction and per day limit for incoming and outgoing transfers. However, he stressed that if you need to make larger transfers, you should call customer support and they can provide other options. For those with other online bank accounts, an easy option is to initiate the transfer from your other online bank.

Another important issue for those with large balances is the capability to add beneficiaries to accounts. In the follow-up call I asked about this. The online application currently doesn’t allow you to designate beneficiaries. However, they do have a process for adding a beneficiary for existing accounts. After the account is opened, you can call Bank5 Connect, and they can walk you through the process.

Regarding trust accounts, at this time Bank5 Connect accounts cannot be opened as a Trust, only individual or joint personal accounts.

7) Does Bank5 Connect have any plans for future enhancements or new products?

Yes, we are always looking at trends in consumer behavior, market needs, and emerging technology. As new products and services are needed, we will enhance or add to our product offering. We feel that banking should be a partnership, and welcome any ideas and suggestions from customers and noncustomers alike. If we can improve in any way, we will. As you can tell by our name, we enjoy connecting with our customers and make their banking easier and more rewarding.

In the follow-up call I asked about IRA CDs. Currently, Bank5 Connect does not offer IRA CDs. It’s something they may consider in the future. I also asked about longer-term CDs like 5-year CDs. According to Mr. Cooke, they decided to first offer shorter-term CDs since they felt these were much more in demand in this interest rate environment. They may decide to add longer-term CDs in the future.

Summary

I would like to thank Mr. Cooke for the interview. It was informative and insightful. I look forward to watching Bank5 Connect compete with the other internet banks, and I wish them success.

To learn more about Bank5 Connect, please refer to our Bank5 Connect hub page where we list all of its products and rates. In addition to rates, we also include links to related blog posts and forum threads and provide a financial health summary. If you have opened an account at Bank5 Connect, please consider writing a review of your experience. This can be done in the reviews tab of the Bank5 Connect hub page.


  Tags: Bank5 Connect, CD rates, savings account, checking account

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Comments
10 comments.
Comment #1 by Anonymous posted on
Anonymous
Since Bank5 Connect is a "newbbie on the block" they need to offer better rates to attract customers.

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Comment #2 by Anonymous posted on
Anonymous
 $2,000 per transaction and per day limit for incoming and outgoing transfers.

 

Im not going to bother with banks with such low limitations for a nominally better rate.

8
Comment #3 by Anonymous posted on
Anonymous
#2

Try to read and understand paragraph 6

2
Comment #4 by Anonymous posted on
Anonymous
 For those with other online bank accounts, an easy option is to initiate the transfer from your other online bank.

2
Comment #5 by RichReg posted on
RichReg
0.90% ??

That's the best we can get from a brand spankin' new bank? What happened to the new "rising interest rate environment"? Getting worse for us savers.

5
Comment #6 by Anonymous posted on
Anonymous
Pass..... The transfer limits and the LOW rates put them out of any consideration.

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Comment #7 by Anonymous posted on
Anonymous
I agree--very low APY rate for a checking account compared to the other big online banks. Plus, they do not disclose how much the fee is for Outgoing and Incoming domestic wire transfers? What is it? Also, they never updated their website; is the maximum daily purchase on debit card as credit $1000 or $2500 or what?

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Comment #8 by John Cooke - Bank5 Connect Online Marketing Manage (anonymous) posted on
John Cooke - Bank5 Connect Online Marketing Manage
We appreciate the feedback and are going to meet internally to discuss how to improve our product offerings. Regarding the external transfers that we offer through online banking, these transfers are intended for use with transactional accounts once the account is opened. For initial deposits, we do not limit incoming deposits. I hope this clarifies the concerns posted here about the daily limits. The daily purchase limit on debit cards is $1,000.

Please contact us if you have any other questions!

Thanks,
-John 

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Comment #10 by Anonymous posted on
Anonymous
Opened an account.  Got a confirmation number and my money was withdrawn from my other bank.  Then I received a letter saying they regret to inform me that they can not open  my account.  But they have my money.  After two calls I am told I will need to wait 5 days for the money to clear and then they will request a check to be sent to me.  So in other words, they take your money, when you call them on it, they will let you wait another week or two before you will get it bak, but your account never gets set up.  These practices are suspect to say the least.

 

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