Although more and more Canadian retail banks and their customers are adopting a “digital-centric” approach to banking, satisfaction among digital-only customers is considerably lower than customers who still occasionally use branches, according to the recent J.D. Power 2018 Canadian Retail Banking Satisfaction Study.
Specifically, 47% of retail bank customers are categorized as digital-centric, a term describing customers who have used online or mobile banking at least once in the past three months. Thirty-two per cent of those customers were described as “digital-only” meaning they chose to do their banking solely online or with a mobile device.
While the study demonstrated that digital tools create a positive experience for customers who use branches, satisfaction with the banking relationship dropped by 22 points (on a 1,000 point scale) for digital-only customers.
“Canadian banks have made significant commitments to technological investments by digitizing their services and channels in recent years,” says Bob Neuhaus, financial services consultant at J.D. Power, in a statement.
“Digital channels give banks an enormous opportunity to reduce costs, but the risk is that those cost savings come with lower levels of customer engagement,” he adds. “Once banks address the growing digital divide within customer segments, customer satisfaction can improve.”
Among the Big Five banks, Toronto-based Royal Bank of Canada is the most technology forward firm with 49% of its customers in the digital-centric segment. Toronto-Dominion Bank of Canada sits on the other side of the spectrum with only 36% digital-centric customers.
Between mid-size banks, Tangerine (93%) and Simplii (85%) — both based in Toronto — carry the largest portion of digital-centric customers, with Edmonton-based ATB Financial having the least.
While banks still make phone calls to communicate with their customers, digital-centric and branch-dependent customers say they’d prefer email instead (42% and 33%, respectively). Despite the growing appetite for email communication, only about one in five customers say their most recent bank interaction was delivered via email.
The J.D. Power study recommends that banks keep up with customers by not only offering email communication, but also including methods such as mobile texting, in-app messaging and social media.
It may come as no surprise that millennials embrace mobile banking more than any other demographic. In fact, 77% of millennial retail bank customers have used mobile banking over the past three months, particularly balance checking and bill payment functions.
The study concludes that banks could enhance their mobile offerings by including special promotions, biometric log-ins and balance displays prior to logging in.
“In comparison to their U.S. counterparts, customers in Canada are more self-service oriented, which presents even greater opportunities for retail banks to push further on the digital transformation front,” Neuhaus says.
“But to be successful, banks should put emphases on best practices for highly personalized digital interactions along with branch transformation efforts that serve the needs of both digital-centre and branch-dependent customers.”
The J.D. Power study measures customer satisfaction with Canada’s large and mid-size banks. The scores reflect satisfaction of the entire retail banking customer bases of these banks, representing a broader group of customers than just the branch dependant and digital-centric segments.
Based on a 1,000 point scale, satisfaction ranking for the Big Five banks are:
- RBC Royal Bank, 778
- TD Canada Trust, 787
- BMO Bank of Montreal, 781
- CIBC, 766
- Scotiabank, 762
Satisfaction rankings for mid-sized banks are:
- Tangerine, 829
- ATB Financial, 805
- Simplii, 801
- National Bank of Canada, 794
- Manulife Bank, 774
- HSBC Bank of Canada, 758
- Laurentian Bank of Canada, 735