Canadians seem to be happy with their primary financial services provider.
In fact, 91% of consumers trust banks and other financial institutions more than other types of companies when it comes to securely managing their data, finds an Accenture survey. This includes payment companies (selected by only 4% of Canadian respondents), mobile phone providers (2%) and consumer technology companies (1%). None of the Canadian consumers surveyed say they trust social media providers to manage their data.
“The survey findings are leading indicators that represent a call to action for the banking industry to focus more on improving customer perceptions of their relationship and appealing to millennials with enhanced digital offerings and loyalty programs,” says Jodie Wallis, managing director of Accenture’s Banking practice in Canada.
But there are emerging threats in the Canadian marketplace that could entice consumers to switch providers.
1. The dominance of online banking and the declining importance of local branches for consumers.
2. Customers moving away from large national and regional banks.
3. The willingness of consumers to shop around for advice-driven financial products.
In fact, 64% of Canadians went to a competitor to purchase auto loans; 38% went to a competitor for brokerage accounts; and 31% went to a competitor when considering registered retirement accounts. Two-thirds went to a competitor for financial advice and home mortgage loans.
Local bank branch less important
The survey found that consumer relationships with local bank branches are less important as the demand for digital channels is on the rise. Four out of five Canadians (82%) say they wouldn’t switch banks if their local branch closed. At the same time, almost half prefer banking online to banking at branches.
With online becoming the dominant banking channel in Canada, 37% say that online is the most important channel for banks to invest in over the next five years, followed by branch (17%) and mobile (15%).
Millennials switch banks twice as often
Though the vast majority of millennials (92%) are satisfied with their online banking experience at their primary bank, they also change banks more often than any other generation. In the past 12 months, nearly one in five millennials have switched from their primary bank, compared with 10% of customers aged 35-54 and only 3% of people 55 and older.
Millennials also have distinct preferences for how banking services should be delivered. Two-thirds want their banks to provide tools and services to help them create and monitor their budgets. Nearly half would like their banks to offer video chat on their website or mobile/tablet application.
“As millennials overtake baby boomers as the largest living generation in North America, they are becoming one of the most influential – and challenging – groups of customers for the banking industry,” says Robert Mulhall, managing director and North America Lead for Accenture Distribution and Marketing Services, Banking. “Not only are they more likely to switch banks, but they are also dissatisfied with the experience they’re getting at their existing banks. This poses a significant risk for banks in the coming years.”