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Canadian Consumer Banking Behaviour | April 2021

The latest channel usage date through March repeats the year-over-year significant 31% drop in branch visits, suggesting there is little likelihood of reversion to the higher levels experienced last fall – and that this change is likely permanent. As usual, the provincial branch usage trends reflect their respective lockdown status with Quebec and Alberta trending below average usage and BC and the rest (apart from Ontario) tracking above average usage.

Figure 1: Branch Channel Usage – Any Purpose

AB
BC
ON
QC
All Other
Overall

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

The all-purpose channel behaviour trends also are reflected in trends for the specific purpose of purchasing a new product. Against a baseline of the first month of last year to be impacted by COVID-19, online and mobile app are up 5% and 3% year on year, suggesting use of digital channels is growing as consumers embrace more complex interactions, such as the seasonal purchase of tax sheltered savings and investment products.

Figure 2: Channel Usage – New Product

Branch
Mobile Apps
Online
Phone
% Change in Channel (March ’20 to February ’21)
Branch -27%
Mobile App +3%
Online +5%
Phone +24%

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

On this theme, Novantas research shows that Canadian banking consumers are segmenting into six distinct groups that are distinguished by their financial comfort and sentiment towards non-traditional banking. Higher-value customers are split across the financially-confident segments. Aside from that, there is no significant correlation with demographic profile except that Independent Innovators tend to be younger.

Figure 3: 2020 Six Cluster Analysis

Confident Traditionalists

0
17
%

Confident Traditionalists are in control over their financial futures,. Unworried about saving for big goals or day-to-day expenses. Won’t consider non-branch banking, but believe a well-designed app is universally important.

Insecure Traditionalists

0
11
%

Insecure Traditionalists can’t always pay their bills, aren’t confident about having money for retirement and aren’t prepared for unexpected expenses. Prefer traditional methods of banking and value branches.

Financially Disengaged

0
26
%

Financially Disengaged aren’t bothered by their finances. Don’t define the legitimacy of a bank by the features, functions or channels provided. Aren’t interested in experimenting with branchless banks.

Insecure
Innovators

0
13
%

Insecure Innovators are worried about saving for big goals and feel financially worse off than others. Believe banks don’t have their best interest at heart and are very open to using mobile and online banking resources.

Independent Innovators

0
17
%

Independent Innovators believe that banks are helpful on their path to success, but dread dealing with banks. Use Interac e-transfer more than cash and prefer to bank on an app, but most still find branches necessary for legitimacy.

Confident
Innovators

0
16
%

Confident Innovators are highly comfortable with the unexpected and aren’t worried about saving amidst short-term and long-term expenses. Very willing to bank with online-only banks and are on board with a zero-branch model.

Source: Novantas Customer Knowledge | 2020 CA Shopper Survey

Certain Canadian FIs appear to have different strengths and weaknesses across the customer segments. For example, RBC is strongest among Independent Innovators (who prefer to bank on an app), while Tangerine’s strength lies with Confident Innovators (with a strong willingness to bank with online-only banks).

Figure 4: Bank Distinctiveness – By Cluster

Source: Novantas Customer Knowledge | 2020 CA Shopper Survey
*Indicates low base aware

RBC’s relative distinctiveness in Independent Innovators and Tangerine’s in Confident Innovators translates directly to incremental purchase rates (i.e. for primary chequing acquisition) for the same segments, implying that there is profit in focusing brand differentiation on the known needs of specific segments.

Figure 5: Purchase Rate – By Cluster

Source: Novantas Customer Knowledge | 2020 CA Shopper Survey
*Indicates low base aware

The digital channel preferences of RBC’s and Tangerine’s key customer segments aren’t necessarily being met by their actual experiences with their banks’ mobile apps,  as evidenced by the fact that RBC and Tangerine rank only fifth and seventh, respectively, in the latest engaged customer ratings from iOS and Android Appstore feedback. This suggests there is a disconnect between a bank’s understanding of the importance of specific segments and the need to prioritize investment in channels that customers value most. Banks don’t have equal penetration of each segment and customers don’t value each channel equally, so it makes sense to focus investment on channels that are used by the most profitable segments.

Figure 6: 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 subscribed.

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