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Canadian Consumer Banking Behaviour – November 2020

In this latest monthly bulletin, we continue to look at the pandemic’s impact on Canadian financial consumer behaviour, particularly branch usage compared with digital channels. Last month’s report hazarded that there may be a future reversal of the resurgence of branch usage as some provinces reinstated restrictions in October. This has indeed taken place – some of the provinces that were hardest-hit by new COVID-19 cases show a sharp decline in branch usage for new product purchase. The correlation between new cases and branch usage isn’t exact, however, suggesting other factors are also at play. These may include regional branch opening policies and customer concerns about the risk of infection.

At a national level October data show a continuation in the trends in consumer behaviour that were observed in September. This resulted in a significant uplift in overall branch usage, rebounding from 25% of all consumers who said they used a branch for any purpose in August to 30% in September and rising further to 32% in October. This, despite a new tightening of provincial restrictions, may represent a positive consumer response to banks’ learning from the previous lockdown that it is important to maintain service continuity. Otherwise there has been little change in overall channel usage, which includes bill payments, cash transactions, service enquiries, investments and new product purchases.

Channel Usage – Any Purpose

Branch
ABM
In-App
Online
Phone

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

 

The most notable change in channel usage is for the purpose of purchasing a new product. Branch has now overtaken online as the most frequently used channel for this purpose by dint of the latter’s monthly usage dropping from 4.5% to 3.8%. This means that the proportion of the population using branch for new product purchase is now 1.2 percentage points above its pre-COVID-19 position (4.6% v 3.4%) and is ahead of online for the first time this year. Meanwhile, the proportion using in-app for the purchase of new products has dropped from 3.4% in September to 3.0% in October and is now below its pre-COVID-19 level. Potential explanations for this may be the continued release of pent-up demand for purchasing new products from branches and/or a falling off in digital channel transactional usage as consumers find additional functionality may detract from usability.

Channel Usage – New Product

Branch
In-App
Online
Phone

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

There are very interesting variations in overall branch usage for product purchase by geography, however. Alberta and Quebec are seeing the abrupt fall-off in branch usage we were anticipating in response to the spike in new cases and further restrictions imposed from October. BC has also seen a longer-term decline in branch usage but has remained relatively free of new restrictions. But branch usage for new product purchase has continued to increase through October in Ontario and other provinces. These regional variances don’t seem wholly explicable by the path of the pandemic. For example, Quebec had the highest rate of COVID-19 cases at the end of October (1.23%) and Alberta ranked second (0.63%). BC had among the lowest rates (0.28%), but all three provinces showed a fall-off in branch visits for new products. Conversely, Ontario had the third-highest rate (0.51%), but branch visits for new products continued to increase.

Branch Channel Usage – New Product | 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

This indicates that provincial branch visiting trends may be related to other factors, such as regional and local bank opening policies or the attitude of the population, rather than purely reflecting epidemiological statistics. An additional explanation may be the relative level of digital adoption. For example, BC customers, who have a higher-than-average propensity to digital readiness, may find it more convenient to continue to buy new products online regardless of the accessibility of branches.

Incidence of COVID-19 Case by Province

AB
BC
ON
QC
All Other

Source: Public Health Agency of Canada

The trade-off between functionality and usability may be manifesting itself in banking app customer experience as revealed in customer ratings and comments available from daily Appstore feedback data. The average Canadian banking app rating from engaged customers who left feedback was 3.6 (out of 5) in October, down from 3.8 in February.

Scotiabank remains the highest-rated app, improving to 4.1 average rating in October from 3.9 in September after fixing account transfer issues. TD has jumped back into second place, increasing from 3.3 in September to 3.9 in October due to improved login/authentication functionality. CIBC is now in third place improving from 3.3 to 3.7 through improvements in usability and reliability.

The biggest loser is the NBC app, which saw its average rating tumble from 4.0 in July to 2.8 in September and 2.6 in October. This seems primarily down to a series of issues relating to transactional functionality. Tangerine and BMO continue to improve to 3.4 and 3.3, respectively, while RBC has suffered a slight decline to 3.0 from 3.2 due to various reliability and usability issues

One interesting aspect is that banks’ apps have specific strengths and weaknesses in each operating system. For example, Scotiabank is strongest in Android, while TD and CIBC are more highly rated in iOS. Since Google represents 80% of the user volume, a single basis point advantage in Android ratings is equivalent to around five basis points in iOS, partly explaining Scotiabank’s overall advantage.

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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