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Banking Channel Usage and Preferences - Canada - July 2016

“The merging of digital and human channels in the form of chatbots and robo-advisors is the next key development in the world of banking channels.”

Sanjay Sharma, Senior Financial Services Analyst

This report looks at the following areas:

  • Age is a key determinant of payment methods used
  • Around one in four 18-34s has used a payment app with Starbucks being the most popular
  • Channel preference is transaction dependent

As banking channels continue to evolve with technological advances, consumers have more choices, especially for the more routine banking transactions. The Canadian payment landscape is also changing with the advent of new payment systems such as Apple Pay. The line between financial institutions and technology companies continues to blur in the dynamic world of payments. But not all consumers are rushing to embrace mobile banking and payment apps. Older consumers generally prefer the more traditional ways but even they are increasingly adopting digital channels. On the other hand, even younger consumers prefer to deal with humans when purchasing banking products and services, particularly the more complex products.

This Report delves in to this multi-channel world of banking and the emerging FinTech landscape. The use of artificial intelligence and advanced programming is also adding to the dynamism of banking channel choices as they become more transaction dependent. This Report covers the overall Canadian consumer attitudes and behaviours related to banking channels. It explores the preferred channel for different transactions, barriers to adoption of mobile banking, payment methods, mobile payment apps, banking channel usage and general attitudes related to channel preferences.

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Age is a key determinant of payment methods used
                • Figure 1: Payment methods used in the last three months, May 2016
              • Around one in four 18-34s has used a payment app with Starbucks being the most popular
                • Figure 2: Use of mobile payment apps, May 2016
              • Channel preference is transaction dependent
                • Figure 3: Transactions and channels used, May 2016
              • The opportunities
                • Branches are still influential and relevant
                  • Figure 4: Attitudes about bank branches, May 2016
                • Overcoming barriers to mobile banking adoption
                  • Figure 5: Reasons for not using mobile banking, May 2016
                • Increased mobile banking adoption is a matter of time but monetization requires strategizing
                  • What it means
                  • The Market – What You Need to Know

                    • Canada’s population is expected to age in the coming years
                      • The population is growing and becoming more ethnically diverse
                        • Growth of the LGBT community
                          • Canada’s economy disappoints; risk of contraction in the second quarter
                            • Mobile phone ownership in Canada
                            • Market Factors

                              • Canada’s population is expected to age in the coming years
                                • Figure 6: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                • Figure 7: Projected trends in the age structure of the Canada population, 2014-19
                              • Women outnumber men in Canada
                                • The population is growing and becoming ethnically diverse
                                  • Growth of the LGBT community
                                    • Business sentiment improves but remains subdued overall
                                      • Canada’s economy disappoints; risk of contraction in the second quarter
                                        • Mobile phone ownership in Canada
                                        • Key Players – What You Need to Know

                                          • Canada's Big 5 banks sign up for Apple Pay; Samsung to arrive soon
                                            • RBC first to offer free Interac e-transfer payments for all personal chequing accounts
                                              • MasterCard Canada planning to roll out 'selfie pay' in Canada this summer
                                                • PayPal launches peer-to-peer payments in Canada
                                                  • Meridian introduces Sweep
                                                    • Mobile bank marketing creatives
                                                    • Innovations

                                                      • MasterCard Canada planning to roll out 'selfie pay' in Canada
                                                        • MintChip launch brings Canadian-made digital cash to consumers
                                                          • Zenbanx to offer cheap, mobile currency exchange service
                                                            • RBC first to offer free Interac e-transfer payments
                                                              • PayPal launches peer-to-peer payments in Canada
                                                                • Tangerine Bank rebuilds mobile app for biometric authentication
                                                                  • Digital banking upheaval the focus of Ivey’s new lab
                                                                    • Meridian introduces Sweep – A feature that ‘sweeps’ money daily
                                                                      • Tangerine and Ryerson University partner to open FinTech incubator
                                                                        • Suretap and Points partner up to bring loyalty program to mobile wallet
                                                                          • Bank of America and other banks expanding cardless ATMs across the US
                                                                            • Grow announces partnership with First West Credit Union
                                                                              • New mobile payment entrants
                                                                                • Canada's ‘big 5’ banks sign up for Apple Pay
                                                                                  • Samsung Pay coming to Canada in late 2016
                                                                                    • New Walmart Pay app adds to mobile payments fray
                                                                                      • LG moves into the international mobile payments market
                                                                                      • Marketing Campaigns

                                                                                        • Interac’s new advertisement – ‘The Surprise’
                                                                                          • Figure 8: Interac’s new be in the black ad, “the surprise”, May 2016
                                                                                        • Scotiabank’s social contests
                                                                                          • Mobile bank marketing creatives
                                                                                            • Figure 9: Overview of CIBC mobile banking app creatives, May 2016
                                                                                            • Figure 10: Overview of BMO mobile banking app creatives, May 2016
                                                                                            • Figure 11: Overview of Desjardins mobile banking app creatives, May 2016
                                                                                          • RBC promotes its free Interac transfers for personal checking accounts
                                                                                            • Figure 12: RBC print advertising for free e-transfers, May 2016
                                                                                        • The Consumer – What You Need to Know

                                                                                          • Age is a key determinant of payment methods used
                                                                                            • Around one in four 18-34s has used a payment app
                                                                                              • Channel preference is transaction dependent
                                                                                                • Perception of no value-add, security concerns and lack of comfort are key reasons for non-adoption of mobile banking
                                                                                                  • Branches are still influential and relevant
                                                                                                  • Payment Methods

                                                                                                    • Age is a key determinant of payment methods used
                                                                                                      • Figure 13: Payment methods used in the last three months, May 2016
                                                                                                    • Women have a higher usage of debit cards
                                                                                                      • Figure 14: significant differences in payment methods used, by gender, May 2016
                                                                                                    • French speakers more likely to use debit and secured credit cards…
                                                                                                      • Figure 15: significant differences in payment methods used, by language spoken at home, May 2016
                                                                                                    • …while Chinese Canadians strongly favour credit over debit cards
                                                                                                      • Figure 16: significant differences in payment methods used, Chinese Canadians vs overall population, May 2016
                                                                                                    • LGBTs have distinct payment preferences
                                                                                                      • Figure 17: significant differences, payment methods used; Overall population vs LGBTs, May 2016
                                                                                                  • Usage of Mobile Payment Apps

                                                                                                    • Around one in four 18-34s have used a payment app
                                                                                                      • Figure 18: Use of mobile payment apps, May 2016
                                                                                                    • Starbucks is the most popular app
                                                                                                      • Figure 19: Usage of payment apps, by age, May 2016
                                                                                                    • Young males and Asian Canadians are most enthused about mobile payment apps and offers
                                                                                                      • Figure 20: Attitudes about mobile shopping and payments, May 2016
                                                                                                  • Channels and Transactions

                                                                                                    • Channel preference is transaction dependent
                                                                                                      • Figure 21: Transactions and channels used, May 2016
                                                                                                    • Online and ATMs have the highest overall usage
                                                                                                      • Figure 22: Channel usage in the past three months (% who have used), May 2016
                                                                                                    • Buying investments/financial planning, loan applications, customer service and account opening more likely to be done in a branch…
                                                                                                      • Figure 23: Branch activities performed in the past three months, May 2016
                                                                                                    • …while online is the most used channel overall
                                                                                                      • Figure 24: Online banking activities performed in the past three months, May 2016
                                                                                                    • Call centres are the top choice for customer service enquiries
                                                                                                      • Correspondence analysis for channels and transactions
                                                                                                        • Methodology
                                                                                                          • Withdrawing money, bill payments and checking account balances are the most common transactions: Digital, human and ATM channels have distinct transactional functions
                                                                                                            • Figure 25: Correspondence analysis – Channel usage for each transaction, May 2016
                                                                                                        • Mobile Banking

                                                                                                          • Perception of no value-add, security concerns and lack of comfort are the top three reasons for non-adoption
                                                                                                            • Figure 26: Reasons for not using mobile banking, May 2016
                                                                                                          • Older consumers more likely to cite lack of benefits, lack of comfort
                                                                                                            • Security and data collection issues are a common concern
                                                                                                              • Customer satisfaction with mobile banking apps
                                                                                                                • Figure 27: Screenshots of the Desjardins mobile banking app, May 2016
                                                                                                              • Increased adoption is a matter of time but monetization requires strategizing
                                                                                                                • Most consumers are open to or neutral about fingerprint recognition
                                                                                                                  • Figure 28: Attitudes about mobile banking, May 2016
                                                                                                                • Checking account balance and bill payments are the most common mobile banking activities
                                                                                                                  • Figure 29: Mobile banking transactions, May 2016
                                                                                                                  • Figure 30: CIBC mobile cheque deposit advertisement, July 2015
                                                                                                              • Channel Preferences and Attitudes

                                                                                                                • Branches are still influential and relevant
                                                                                                                  • Figure 31: Attitudes about bank branches, May 2016
                                                                                                                • Two in three consumers have visited a branch in the past three months
                                                                                                                  • Figure 32: Branch activities performed in the past three months, May 2016
                                                                                                                • Younger consumers more likely to be influenced by branch staff
                                                                                                                  • Around half of consumers agree that online banks cannot meet all their banking needs
                                                                                                                    • Figure 33: Attitudes about online banks, May 2016
                                                                                                                  • Younger consumers more impatient with call centre wait times
                                                                                                                    • Figure 34: Agreement with statements on banking, May 2016
                                                                                                                  • Consumers generally neutral about online financial advice and credit union technology
                                                                                                                  • Appendix – Data Sources and Abbreviations

                                                                                                                    • Data sources
                                                                                                                      • Consumer survey data
                                                                                                                        • Consumer qualitative research
                                                                                                                          • Abbreviations and terms

                                                                                                                          Companies Covered

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                                                                                                                          Banking Channel Usage and Preferences - Canada - July 2016

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