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Canadian Consumer Banking Behaviour | March 2021

After a month’s break from analyzing Canadian financial consumer channel behaviour, we now have a 12-month view of COVID-19’s impact. This shows a secular, arguably permanent, shift in the way Canadians are using branches, ATMs and digital channels for specific purposes to fulfill their financial-services needs.

Starting with the long view for consumers using branches for any purpose, the percentage of individuals visiting a branch in the average month has fallen from 40.4% between March 2019 and February 2020 to 27.9% between March 2020 and February 2021. (See Figure 1.) This represents a year-over-year drop of 31% and signifies a step-change in Canadian financial consumer behaviour. It also has wide-ranging repercussions for the network-based business model that has served Canadian banks for two centuries.

Figure 1: Branch Channel Usage – Any Purpose

Average Mar 19 – Feb 20
Average Mar 20 – Feb 21
% Customers Visiting Branch in Last Month

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

Focusing next on the use case for consumers purchasing a new financial product, there was a similar 31% year-over-year drop in in those who used branches for this purpose. Online (+8%) now represents the most commonly channel for this purpose followed by mobile app (+10%) and phone (+25%). The interplay between branch and mobile app for new product is particularly remarkable because the branch channel was well ahead in the first half of 2019, although the mobile app caught up in the second half of the year. The two channels rapidly converged when COVID-19 first struck in March 2020; mobile app edged ahead in the last few months to roughly the same position branch occupied two years ago. This symbiotic relationship suggests branch and mobile app are the most obviously interchangeable channels for consumers in selecting and purchasing a new product.

Figure 2: Channel Usage – New Product

Branch
Mobile Apps
Online
Phone
% Change in Channel (March ’20 to February ’21)
Branch -31%
Mobile App +10%
Online +8%
Phone +25%

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

Looking at the provincial breakdown for new product purchase in branches, the data confirm our hypothesis that there are specifically local conditions that apply to the general trend. (See Figure 3.) BC, Ontario and Alberta experienced recent reductions in branch traffic as further lockdown conditions prevailed, while Quebec and other provinces rebounded slightly.

Figure 3: 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

Finally, there are several points of interest in looking at the use case for customer service. (See Figure 4.) Firstly, branch is down year-over-year by almost as much as for new product purchase (-28% vs – 31%). Secondly although some of the slack has been taken up by mobile app (+20%) and phone (+15%), the most dynamic channel is chat where usage has more than doubled from below 2% of consumers per month to more than 4% in the last six months. This suggests that customer service costs can be substantially reduced as new channels requiring less direct human involvement finally come into serious play.

Figure 4: Channel Usage – Customer Service | New Product

Branch
Mobile Apps
Online
Phone
Live Chart
% Change in Channel (March ’20 to February ’21)
Branch -28%
Mobile App +20%
Online -20%
Phone +15%

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

Turning now to our tracking of Canadian banks’ mobile app feedback from engaged customer ratings via Android and iOS Appstore data, we see that TD and Scotiabank’s apps are now neck and neck in with an identical rating of 3.9 (out of 5) in February. (See Figure 5.)  That compares with a market average of 3.5, which includes BMO and CIBC, while RBC and NBC track below the average at 2.7 and 2.5, respectively. Of note is that Tangerine’s average rating has dropped from 3.7 to 2.5 over the past six months, a decline that must be of concern to a digital bank. This appears primarily due to issues in key functionality such as balance transfers as a result of upgrades following operating system updates, particularly on iOS.

Figure 5: 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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