Canadian Financial Institutions Solid amid Challenges with Online and Mobile Consumer Adoption

Almost all Canadians use a bank or a credit union with Canada having one of the highest banking penetrations in the world. According to the recently released Banks and Credit Unions – Canada 2015 report from global market intelligence agency, Mintel, and Senior Financial Services Analyst, Sanjay Sharma, “The death of the traditional branch network, widely touted a few years back, appears to be greatly exaggerated.” Some 83 percent of financial consumers are satisfied with their main financial institution, or FI, and 80 percent have been with their main FI for five or more years. The majority of Canadian financial consumers (69 percent) are unlikely to switch from their main FI in the coming year, but younger customers (under-35s) and Asian Canadians are relatively more likely to do so (about 19 percent and 25 percent). However, concerns regarding online and mobile platforms are a barrier for many consumers as some 22 percent of Canadian financial consumers find banking on a smartphone or tablet to be complicated.

The graying Canadian population and the influence of the immigrant population
From its current level of just over 35 million, Canada’s population is expected to reach 37.5 million by 2019. Reflecting a trend Mintel is seeing in many countries, the Canadian population is ageing. In 2011, an estimated 5 million Canadians were 65 years of age or older, a number that is expected to double in the next 25 years to reach 10.4 million by 2036. By 2051, about one in four Canadians are expected to be aged 65 or over. According to Sharma, Canada’s ageing population should ensure a strong demand for asset management, insurance and investment advice.

“Banks and credit unions have been focused in recent years on making inroads into the new Canadian market place and have invested heavily in targeting particular segments, including Chinese Canadians and South Asian Canadians,” said Sharma. These groups make up the largest immigrant populations in the country, with an estimated total of 2.9 million.

Low cost banking, branch locations and customer service top the list when considering staying or switching banks
Low cost banking options is the most important factor among customers when choosing to stay or switch from their current institution (67 percent). Around three in five financial consumers (59 percent) list the availability of brand locations close to their home or work as the second most important factor in their decision to stay with or switch companies. Younger females (18-34s) are most likely to prioritize low cost (28 percent), while over-55 females are most satisfied with resolving queries/problems (86 percent). Chinese Canadians (68 percent) are more satisfied with the community involvement initiatives made by Canadian FIs than other consumer groups. For older consumers, those 65 years and over, branch customer service ranks number one, followed by the availability of branches close to their residence.

Traditional branch networks thrive in Canadian financial services
Mintel research shows that four in five Canadian financial consumers have banked with their main FI for five or more years (80 percent), with about half of them having been with their main FI for 15 or more years (49 percent). As can be expected, older customers have longer tenures with their main FI. For instance, 84 percent of over-65s have been with their main FI for 15 or more years.

An overwhelming 83 percent of Canadians who use banking or credit unions are overall satisfied with their experience. Branch locations (83 percent), security procedures and features (82 percent), as well as customer service (82 percent) rank high among top attributes. “Overall satisfaction is high, particularly among older Canadians,” said Sharma. “Although many strategists have postulated the death of physical branches in the online era, branches continue to thrive. Human connection is still extremely important in the world of consumer banking.” Sharma continues, “This is especially so in the case of older customers who value customer service and are largely influenced by the strength of their relationship with the local branch personnel.”

Consumers warm to online banking experience but remain cautious with mobile banking apps
According to the Banks and Credit Unions – Canada 2015 report, websites are the most popular overall source of information (45 percent), while over-65s over-index on information from bank employees at branch locations including financial advisors (33 percent). Younger Canadians (47 percent of 18-24s) and Chinese Canadians (54 percent) tend to turn to friends and family for recommendations and advice regarding financial services.

One factor that isn’t a priority for Canadian consumers when considering switching their main FI is the ability to bank via a mobile app, as just 27 percent of financial consumers consider it a factor. In fact, 54 percent of Canadians are concerned about the safety aspects of mobile banking. That number increases to 74 percent for Chinese Canadians. As seen in Mintel’s Digital Trends – Canada 2014 report, 83 percent of Chinese Canadians participate in online shopping compared to 71 percent of the population overall. This indicates their tech savvy and willingness to use technology in everyday life. However, mobile banking is one area where Chinese Canadians, like many Canadians, are still unsure of the perceived benefits.

54% of Canadians are concerned about the safety of mobile banking.

“While about one-fifth of financial consumers find mobile banking complicated, the high proportion of consumers who are neither satisfied nor dissatisfied (53 percent) suggests that many have not yet adopted this technology,” said Sharma. “While safety is a concern, the greatest barrier to adoption of mobile banking appears to be a perception of limited value-add. Many consumers are satisfied with current non-mobile banking options and do not see a clear benefit to switching.”

Younger Canadians (18-24s) are less concerned about the safety of mobile banking (51 percent). Canadian financial consumers aged 18-24 are also more likely to prefer banking with a virtual no-fee bank (49 percent), and young males are more willing than other Canadian consumers to pay an annual fee for better rewards (40 Percent). On the other hand, Asian Canadians are more likely to deal with multiple FIs (51 percent). Overall, satisfied customers exhibit a much higher level of trust regarding the safety of their personal information with their bank and/or credit union relative to unsatisfied customers (90 percent vs. 54 percent for unsatisfied customers).

Press review copies of the Banks and Credit Unions – Canada 2015 report and interviews with Senior Financial Services Analyst, Sanjay Sharma, are available on request from the press office.

Learn more about Chinese Canadians and Canadian Seniors by downloading a free copy of Mintel’s 5 Key Canadian Consumer Groups You Need to Know.