Now that customers have had a chance to take a bite of out Tangerine for a few years, we thought we’d revisit our initial review of the online bank and see if they’ve lived up to their promises.  The best place to see how Tangerine stacks up against its online-only competitors is our Ultimate Guide to Canada’s Online Banks.

If you want to check out some of the original thoughts we had when ING Direct first morphed into Tangerine, simply scroll down.

Overall, while you can tell by some of the comments at the end of this article that Tangerine has had some trouble spots over the last couple of years, I think it’s fair to say that Scotia has maintained a fairly high quality product.

Tangerine’s Report Card

PROMISE: A shiny new credit card option that would blow away the competiton

Check out our full review of Tangerine’s no-fee money-back credit card here.  This credit card stacks up really well against Canada’s other no-fee cards and it is routinely ranked highly by the experts.  I like the idea that it can be customized to suit your needs, and there is no need to worry about how rewards such as air miles are used.  Just sweet, simple, cash back into your account.  There are some especially good 3-month introductory offers available right now.

PROMISE: Deposit a cheque by taking a picture & other cool tech stuff

Tangerine was one of the first Canadian companies to embrace this method of banking.  It makes sense given the fact that they don’t have any brick-and-mortar branches to worry about.  Now of course everyone has adapted to this new reality, but it was Tangerine that forced everyone else to come to the table.  Their mobile app is also excellent, and has challenged everyone else to catch up over the last couple of years.

PROMISE: Great customer service

Tangerine promised that ING’s reputation for excellent customer service would not change.  It’s fairly difficult to determine if this is actually the case.  I’m a pretty vanilla bank user and my Tangerine account has been just fine.  Yet, I’ve read dozens of negative reviews pertaining to Tangerine’s customer service on personal finance blogs over the last couple of years.  I’m not sure if this is primarily due to the phenomenon of online reviewers being much more motivated to leave a negative review than a positive one, or what the mitigating factors are.  I do know that Tangerine continues to give customers a variety of ways to get in touch with them and ranked quite highly in this third-party survey a couple of years ago (couldn’t find anything more recent).  Perhaps it’s simply a case of Canadians not having a ton of options that they’re familiar with, and the entire sector just dropping the customer service ball?

PROMISE: A continuation of ING’s excellent high interest rates on deposits

While we have been stuck in all-time interest rate lows, Scotia has to take a bit of the blame when it comes to not quite living up to expectations in this area.  ING was nearly always at the top of the list when it came to high-interest savings account rates. (Which you could then “put inside” of a TFSA – BUT are not the same as a TFSA – a common misconception for many Canadians.)  This simply isn’t the case anymore.  New online competitors such as Zag Bank and EQ Bank are setting a pretty high bar, with EQ currently offering interest rates in their high interest savings account of 2.25% – this is almost 3x what Tangerine’s current offer of .8% is!  Now, to be fair, Tangerine often throws out promotional offers of 2.4% for someone’s first six months – but this is usually only on new deposits.  I get why these teaser rates are good for business, but in terms of long-term value, Tangerine has really suffered here.  Now, it’s important to remember that value doesn’t begin and end with interest rates on high interest savings accounts.  Tangerine offers a slate of services that very few of their competitors can match – and obviously there are costs associated with providing those services, so it’s important to take this into consideration as well.

PROMISE: No new fees

With the introduction of various transfer fees, and the cancellation of the really cool “whoops” overdraft protection, Tangerine has steadily chipped away at some of their user-friendly advantages.  The truth is however, that their fees are generally still much lower than those of major Canadian banks, and similar to their online competitors.

Teacher Comment:

Overall Tangerine is often a pleasure to work with, but there is room for improvement if they chose to fully apply themselves.  While Tangerine has done a very good job meeting the outcomes related to credit cards and online innovation, they should focus on resolving customer service issues going forward.  If Tangerine wants to fulfill their full potential, I recommend paying attention to pesky fees and long-term interest rates relative to the current one-off promotional rates.  Keep working hard Tangerine!

While you can certainly read evidence that Tangerine has some unhappy customers, I think it’s only fair to point out that they are a massive player in Canada’s free online banking world.  They continue to offer a good value for very few fees, and have really pushed everyone else in the market to up their aesthetic presentation in regards to an online platform that looks good and functions well.  I’d keep my eye on the old rival over at PC Financial, and the new upstarts over at EQ Bank if you’re looking for alternatives going forward, but for now, I don’t think it gets much better than Tangerine.  I think Scotia deserves some dap for not simply phasing the Orange Crush out of existence like RBC did to Ally back in the day.  If rates have come down a bit in order to grab some more profit margin, that seems about par for the course.  Overall it’s tough to deny their consistency when it comes to online banking innovation over the last few years.  Once again, if you want to check out how Tangerine fares against their competition, check out our Complete Guide to Canada’s Online Banks.

Our Thoughts on Tangerine Circa 2014

Now that the former ING Direct has completed its change from Dutch online banking pioneer, to a platform controlled by Scotiabank, we figured that we should take a look and see what – if anything – has changed.  We’ll keep updating this thread as the “Tangerine” brand starts to evolve over 2014, so make sure and keep checking back for updated comparisons to some of the other online options out there.

ING Direct and their main competitor – Ally – were two fashionable choices for financially-conscious Canadians a couple of years ago.  These online banks were able to give great rates on high-interest savings accounts, term deposits, and even mortgages.  The idea was to cut retail costs to the bone by using an online model (bricks and mortar storefronts in prime locations aren’t cheap) and then pass those savings on to customers.

Canadians were immediately attracted to the authoritative/vaguely foreign voice encouraging them to, “Save your money”.  Since 1997 the bank behind the orange website was able to attract almost two million clients.

One Small Step for a Huge Bank, One Huge Loss for Consumers?

If you’re like me, you were sad to see ING bought out by one of Canada’s major banking hegemons.  My skepticism comes from seeing what RBC did to Ally once it bought the former online powerhouse (basically just burned it down after lowering rates in order to synchronize with RBC’s offerings) and the incentives that Scotiabank has to do something similar.  That being said, Scotiabank has been very clear is stating that “Tangerine” will be a stand-alone brand and that it has no plans to shut anything down. 

The CEO of ING Direct, Peter Aceto stated:

“I want to be clear, what we are sharing with you today, is a new name and a new logo. That’s it. Nothing has changed about our core values and what we stand for. We’re keeping everything you love about ING DIRECT. Great interest rates. No fees, and award-winning customer service.”

I really hope this is the case.  I can tell you this much.  Right after signing on the dotted line (for $3.13 billion) Scotiabank immediately shut down residential mortgage broker operations.  While clients can still get a mortgage through the soon-to-be Tangerine, the online bank will no longer aggressively compete for mortgages through mortgage brokers as was the previous norm.  This is a major loss for anyone with a mortgage, since ING was able to bring a significant amount of competition to a Canadian market that often lacks for true competition.  This is supposed to be the only major change that I can see.

It’s an Apples to Oranges Tangerine Comparison

Hopefully they still keep that Dutch dude on as the spokesperson – I kinda liked him.  Gave the whole orange thing a classy feel.  I’m not sure if the company is trying to play off of the whole, “Apple is really popular with young people right now” angle with the Tangerine name, but frankly, I don’t really care what they call it as long as they keep offering great rates and competition in the market.

The guys from Scotia did say that there would be two major initiatives involved with the rollout of Tangerine in 2014:

  1. Access to the Bank of Nova Scotia’s ATM network across Canada.
  2.  A no-fee credit card for Tangerine clients.

Of the two, I consider the first one to be of much more importance to existing ING customers.  There is no doubt that going from almost no ATM presence of any kind, to being able to stop in at over 3,500 machines across Canada, and another 4,500 or so around the rest of the world is a really nice additional feature.  The credit card won’t make much difference to me as I’m quite certain there will be better options out there.

Initial quarterly earnings were bolstered by the deal, as Scotiabank’s Canadian operations made a 13% leap to $590 million for the quarter that finished in November.

Is Tangerine Worth It?

If you are looking to maximize your high-interest savings account options, it may be worth checking out the less well-known options on the Canadian market such as People Trust, Canadian Direct Financial, AcceleRate Financial, Outlook Financial, Achieva Financial, Canadian Tire Financial, Implicitly Financial, and Hubert Financial.  Most of these are credit unions and subsequently are not likely to get bought out by a major banking arm any time soon.

Stay tuned to see if, “We have no plans to make changes” is actually banker-speak for: “We’re just biding our time before we subtly start to shift customers over to our higher-profit-margin model.”

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