Saturday, 16 February 2008

I love competition - watching Slovak ING and mBank fight it out in savings accounts

Although we have quite a few banks in Slovakia (12 retail banks according to a list on the National Bank's website) I believe competition in some segments is quite weak. Even the best among them can sometimes cause its clients quite a bit of frustration. (also see my column in SME about banks not being nice).

It was therefore with high expectations that I and many people I know watched the entry of mBank, an internet bank based in Poland that entered the Slovak market late in 2007 based on EU legislation allowing banks to offer services in other EU member states without needing to obtain a national licence.

In a (Slovak retail banking) world with fees for the wildest things (such as receiving money in your account or closing the account) mBank introduced a current account and savings account without any fees.

I opted for their savings account eMax - it's an account without any fees or major limitations even allowing a debit card. It launched last year with a very competitive 3.4% gross interest. I don't actually have the account because mBank procedure worked through a courier which never actually reached me with the account contract (called on a weekend and then once during the week and never called again).

Luckily for me mBank's offer obviously attracted a lot of clients away from ING Konto, ING's product very similar in scope (unlimited savings account, which however only allows sending money to your designated transaction account at another bank). ING once offered very attractive interest rate but in late 2007 they were running at a not-so-appealing 2.7% (less our 19% flat tax, of course).

So mBank launched and a few months later suddenly the long stuck ING Konto rate moved to -- you guessed it - 3.5% (compared to mBank's 3.4%).

That was a while ago and it was a relief for me - it meant I did not have to go chasing after the courier to actually sign that mBank contract.

Today I was driving through the New Bridge and saw a new mBank billboard: they have now raised eMax's interest to 3.7%. Obviously not worth it for me to chase after the additional 0.2% (works out as 0.162% net after taxes or 162 crowns p.a. on a 100,000) but nonetheless: I love competition...


lidija said...

Marketses work after all, huh?

Anonymous said...

Hello...I love competition too!
I was dreaming to open a retail account as foreigner customer.
I'd like to do it because I belive in a strong revaluation of Slovakian currency.
I'd like to ask what you suggest as best product. I'd like to opena a saving account or other long term deposit.
Of course I rather prefer don't pay fees.
As european citizen is possible to open accounts abroad and I'd like to receive some information about taxes on interests on Slovakian bank accounts. As I can get from what you posted the tax rate for slovakian's citizens should be 19%, but do your bank ask the same for foreigners??
I would be grateful for any help. Thanx