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Canadian Consumer Banking Behaviour – December 2020

The latest Canadian customer banking behavioural data to the end of November show some very interesting results. These are partly due to new restrictions in many provinces but may also reflect longer term trends for which the COVID-19-induced social distancing has acted as a catalyst.

The most obvious change is the drop in branch usage between October and November, declining from 30% to 27% as represented by the percentage of the banking population that has used a branch in the last month. This is likely a result of new geographic restrictions even as more banks are staying open amid them. The obverse trend is the uplift in mobile app usage, rising from 43% to 45% over the same period.

In fact, branch and mobile app usage are becoming increasingly inversely correlated whereas other channels’ usage is remaining remarkably stable. This implies that consumers are using mobile apps as a substitute for visiting branches. Banks that most successfully replicate branch banking functions on their apps are those most likely to retain and deepen customer relationships.

For the first time, we have included live chat in the channel usage analysis. This is still used by a relatively small percentage of customers (around 3% per month), but it is worth keeping an eye on as a more convenient source of human interaction for customers using online and mobile channels.

Channel Usage – Any Purpose

Branch
ABM
Mobile App
Online
Phone
Live Chat

Source: Novantas’ DemandScape, Ipsos CFM Survey
Note: Point estimates represent two-month rolling averages of modeled response data

 

The rather consistent picture of usage hides much more volatile underlying dynamics when the delta in channel usage between February and November is broken down by specific purposes and activities. The biggest change between branch and mobile/online usage is in the area of investments. Branch usage for this purpose has fallen by 27% and mobile/online has increased by 14% during the period from the month before the start of the pandemic through the end of November. Similar dynamics are evident for the activities of paying bills and customer service. The percentage of people using branch and digital channels to access account information, arrange money transfers and lodge complaints has fallen, but the decline is less in digital than in branch.

Channel Usage Delta – Percentage Change in Channel Usage Feb to Nov 2020 by Activity

Branch
Mobile + Online

Source: Novantas’ DemandScape, Ipsos CFM Survey

The drop in branch usage is even more dramatic when analyzing customers who use the channel specifically for the purpose of purchasing a new product. Here, the release of pent-up demand for visiting branches for this purpose that we noted last month seems to have been met, with only 2.4% consumers reporting that they had visited a branch for this purpose in November compared with 3.6% in October and 4.5% in September. This means the percentage of customers reporting product purchase through branches is now even lower than in the first lockdown in May (3.0%). Interestingly, product purchasing via mobile app has also suffered a slight decline to 2.5% in November (from 3.4% in September). Mobile app product purchase usage is back to being on par with branch, a position it has occupied for most of the year with the exception of September/October. Online remains the dominant channel for new product purchase at 4.4%, while phone ticked up from 1.4% in September to 1.8% in November.

Channel Usage – New Product

Branch
Mobile App
Online
Phone

Source: Novantas’ DemandScape, Ipsos CFM Survey
Note: Point estimates represent two-month rolling averages of modeled response data

An examination of branch usage for new product by province shows an unlikely pairing in BC and Quebec which have had very different cultural and political responses to the pandemic and previously diverged in their branch visiting behavior. Now, however, they show a similar pattern of maintaining levels of branch visits at 3.2% and 3.5%, respectively, in complete counterpoint to the rest of the country. All other provinces show a continuation of the sharp decline in branch usage for new product from the highs of 4.8% – 5.1% in September to 1.5% in 2.0% in November. The continuation of branch visits in BC and Quebec is quite surprising, given that these provinces haven’t been exempt from the restrictions observed elsewhere. It may reflect the incremental penetration of branches owned by FIs other than the Big 5 banks in these provinces and the concomitant strength of their neighborhood relationships.

Branch Channel Usage – Any Purpose | By Province

AB
BC
ON
QC
All Other

Source: Novantas’ DemandScape, Ipsos CFM Survey
Note: Point estimates represent two-month rolling averages of modeled response data

Following on from the observation that usage of mobile apps is becoming interchangeable with the usage of branches, it is clearly increasingly valuable for banks to invest in optimizing the customer experience of their banking apps. The average rating score from engaged customer feedback is a useful way of doing this because the score is directly relevant to specific issues or advantages that customers are experiencing with their banks’ apps.

By the end of November, TD (at 3.8) had overtaken Scotiabank (at 3.5) as the app with the highest engaged customer score. This was a result of Scotiabank Android customers continuing to experience log-in issues while TD fixed its earlier Android authentication issues. CIBC, BMO, Tangerine and RBC cluster at a 3.3 – 3.1 average customer rating, while NBC is still the bottom of the pack with a score of 2.3 due to a continuing problem its customers are encountering with e-transfers.

Interestingly CIBC (at 3.5) is second only to TD (3.6) for banking app users on the iOS (Apple) platform. This suggests that iOS users (mean score 3.3) are generally more critical than Android (3.5) and that certain banks have chosen to invest more heavily in the user experience for a specific operating system. CIBC isn’t higher in the overall ratings because iOS represents only about 20% engaged users.

Engaged Customer Ratings – Mobile Banking Apps

Overall Rating (Average)
Scotiabank
TD Bank
BMO
CIBC
RBC
Tangerine
NBC

Source: Apple/Google Appstore data via Ipiphany/Touchpoint Group (Engaged Customers = NPS Ratings with verbal feedback.)

We will continue to track these and other trends in each update of this monthly report. Please email Nick Young at nyoung@novantas.com if you would like to be automatically subscribed.

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