In an earlier post, The Complete Guide to Canada’s Best Online Banks, we went into great length on what Disruption has meant to the banking and financial industry in Canada. Generally speaking, online banks have been good for the Canadian consumer (more choices = better competition). We’ve seen lower fees, expansion of services, and an enhancement in the use of technology to deliver innovative banking.
At the time of writing that post, PC Financial (PCF) had announced plans to disassociate itself from President’s Choice, and evolve into Simplii Financial under the CIBC umbrella. In the sections below, we’ll take a more in-depth look at what the new kid on Canada’s financial block has to offer.
President’s Choice Financial Transforms Into Simplii Financial
For nearly 20 years, President’s Choice (PC) has been offering online banking and other financial services through its PC Financial (PCF) arm. While the PC brand was the face of this organization, CIBC served as the back-end financial processing and clearing engine. Now, after more than two-decades of working together, the partnership has ended. In August this year CIBC announced that PC would no longer be offering consumer banking under it’s (PCF) umbrella, and all of those products and services would be transitioned back to the bank under the Simplii Financial brand.
According to details of the great divide, once the split is finalized, PCF will still retain it’s MasterCard credit card service, as well as its PC Plus loyalty program. Post-separation, ex-PCF customers (who will seamlessly transition over to Simplii) will enjoy all the same savings, checking and other personal banking services with Simplii (courtesy of CIBC), that they had access to with PCF.
Speculations are rife as to why this separation has occurred, as well as to the timing? While we can’t really say with 100% certainty what the motivation is, we tend to agree with experts who state that the decision has a lot to with the changing retail landscape that Loblaws Companies LTD (the ultimate parent of PCF) is facing today. Already a diversified business entity, Loblaws is involved in many businesses including food, fashion apparel, pharmacies, and specialty discount goods.
Given the tremendous challenges it is facing in its current lines of businesses, it is likely that PC management thought it prudent to rededicate focus towards its core lines of businesses – groceries and retail sales. By retaining control of it’s MasterCard business however, PC still controls one of its higher-margin financial businesses.
On the other hand, CIBC has long been looking to take more direct control of its low-fee banking and financial products and services. By agreeing to this great divide, CIBC now positions itself on the same footing as some of its other rivals – notably Scotiabank with its Tangerine online banking service (see our Tangerine Review for more details).
The split does come at a cost to CIBC – in the form of a $100-million pre-tax price tag in administrative and legal charges. CIBC will also be giving up the ability to leverage tiered selling of some of its mortgage and lending services and products through PCF.
Simplii Financial Review: What’s Changing?
So, what’s really changing? On the face of it, at least until November 1, nothing! PC Financial customers will still have access to:
- No-fee online banking
- PC mortgage and loan products
- Access to the CIBC network of ATMs
- Continuity in preauthorized payments and automatic deposits
- Accumulation of PC points
According to the Simplii Financial website, once the bank “goes live” on November 1, 2017, it will continue to offer:
- No-fee daily banking – without a minimum balance requirement
- Higher and competitive interest rates on savings accounts and mortgages
- FREE access to more than 3,400 ATMs within the CIBC network
One visible change that current PCF customers are likely to see, post-November 1, is that they will receive new Simplii Financial debit cards. Even the card numbers and PINs from the old PCF-era won’t change. They all remain the same. From a personal banking perspective, this is one less headache.
There’s also more good news for mobile banking clients of PCF. A new Simplii mobile banking site will replace the existing PCF site. The existing banking app will be updated to automatically redirect users to a new login page. Best of all – existing login credentials will be honoured at the new site, enabling online and mobile banking clients to continue “business as usual”.
The other area of significance that will change has to do with PC loyalty points. Since PC will continue to retain control of its loyalty points program, PCF customers who transition to Simplii and use their new debit cards to make pension or payroll direct deposits into Simplii, will no longer earn PC points. Holders of PCF MasterCards will continue to redeem existing PC points and collect new ones when using their PCF credit cards. PC MasterCard holders will also continue to receive the same types of statements (either paper or electronically) as they currently receive. Simplii banking clients will however receive a new set of statements under the rebranded entity. What will also likely vanish post the Nov 1 transition will be CIBC ATMs, kiosks and other visible CIBC signage at Loblaws stores.
Should I Use Simplii?
According to a report by the Canadian Bankers Association (CBA), over 68% of Canadians now bank online, with 90% of those surveyed concurring that Canadian banks have dealt with digital transformation exceptionally well. In the case of Simplii however, it’s not a true case of “transformation”, rather a case of transference of ownership. After more than two decades of acting as the financial arm of President’s Choice, Simplii now returns to the fold of bricks-and-mortar banking giant CIBC – it’s ultimate parent.
Let’s hope that better sense will prevail with the new kid on the block. Let’s hope that Simplii continues to retain the best of it’s PC offerings (including lower fees and higher rates), while also moving forward with better and newer innovative products and services. The President’s Choice Financial Brand still had a lot of value going for it, but aesthetically speaking, its usability was getting a bit stale. We’d love to see Simplii Financial come charging out of the gates on a shiny new platform, while retaining the value proposition that made PCF such a longtime favourite of cost-conscious Canadians. We’ll keep this Simplii Financial Review current as the brand and products continue to evolve going forward into 2018.