The data may be a year old, but the newly released Survey of Deposit-accepting Intermediaries from Statistics Canada highlights the continuing shift from a reliance on interest income to fee-based services.

According to the 1999 survey released this morning, Canada’s deposit-accepting intermediaries — chartered banks, trust companies, caisses populaires and credit unions — produced services worth a combined $44.5 billion in 1999, up 5% from $42.4 billion in 1998. StatsCan attributes the growth to a rebound in world economic activity and improved market conditions.

Non-interest income grew more rapidly in 1999 than traditional net interest income. Non-interest income was up 7.8% to $19.9 billion, compared with a 2.9% gain in net interest income to $24.6 billion. The growth of non-interest income was attributed to more favourable market conditions, a broader range of fee- and commission-based activities offered outside traditional retail banking services and the increased securitization of assets.

Retail banking services remained the dominant activity, generating $27.7 billion of the total value of services produced, up 3% from 1998. “The value of retail banking services has grown for the past several years. However, the rate of growth has remained slower compared with that of other business lines, particularly the emerging segments such as electronic financial services and fiduciary services,” noted StatsCan.

Electronic financial services continued their strong expansion in 1999, increasing 6.6% to $3.4 billion. StatsCan said “consumer demand for highly flexible and convenient channels of distribution, such as automated teller machines, debit and credit cards, telephone and computer banking services, fuelled the expansion in electronic financial services.”

Since the services and products offered through electronic financial services are mainly fee-based, 87.1% of the value of services produced by deposit-accepting Intermediaries came from non-interest income in 1999, up from 84.8% in 1998.

Fiduciary services are the fastest growing segment, totalling $1.7 billion, up 41.6%. They accounted for 3.9% of the value of all services produced in 1999, up from 2.9% in 1998. “Over the last few years, deposit-accepting intermediaries have expanded their fiduciary services, particularly in estate management and financial planning. The sector has taken advantage of an evolving demographic trend that continues to boost demand for these services,” noted StatsCan. Treasury and investment banking remained relatively flat.