Poor service is pushing companies to look for alternative banking options, according to an EY report.

Nearly a third (28%) of Canadian commercial banking customers experienced an error with their primary bank in the past 12 to 24 months and 45% were less than highly satisfied with the resolution. Not surprisingly, 25% considered switching their primary banking provider. Still, Canadian companies reported a higher overall satisfaction level (70%) with their primary bank compared to 64% globally.

“Operational issues and underwhelming experiences are eroding customer satisfaction,” says Paul Battista, EY’s Canadian Financial Services Advisory leader. “Relationship history is no longer a sufficient reason for Canadian commercial banking customers to remain loyal.”

But with increasingly rigorous compliance requirements, switching to another bank isn’t entirely pain free. Respondents identified the following areas for improvement: reducing paper work/documentation (33%), reducing the duration of onboarding (22%) and improving the accuracy of transitions (33%).

Dissatisfied companies are also turning to alternative banking options to fulfill their financial service needs. Credit card issuers and insurance companies are just two examples of non-banks competing with traditional institutions for lending and trade finance, foreign exchange and merchant services.

“While banks are heavily regulated in Canada, non-banks are taking advantage of their lighter regulatory burden to expand their financial service offerings,” says Battista. “These providers can’t replace traditional banks, but executives are increasingly turning to them for a wide range of products and services.”

Forty-eight percent of Canadian companies are already using non-banks in some capacity to meet their needs, and 53% (compared to 33% in the US) would consider transitioning their business.

Another area of concern for Canadian commercial banking customers is online security, with 38% listing security as a top concern. The survey found just 43% percent of respondents are using online banking weekly and even fewer (30%) are using mobile banking weekly due to security concerns.

According to survey results, Canadian companies would increase their use of online and mobile options if the following features were added: enhanced security (42% for online and 46% for mobile); ability to electronically submit required documents (42% for online) and ability to track progress of transactions (38% for online and 26% for mobile).

Increasing customer satisfaction — while remaining profitable — requires banks to leverage data and analysis to develop a deeper understanding of the customer. Adopting cutting-edge technologies will also enable banks to strengthen security measures and support company relationships more effectively and efficiently.

“The digitization of the commercial banking sector will create both significant threats and opportunities for banks in Canada” says Battista. “In our view, the banks that succeed will utilize advanced analytics to both reduce the risk of customer errors in their processes as well as enhance the personalization of commercial banking products and advice”.