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Banks and Credit Unions - Canada - February 2015

“The death of the traditional branch network, widely touted a few years back, appears to be greatly exaggerated.”
– Sanjay Sharma, Senior Financial Services Analyst

This report discusses the following key topics:

  • Traditional branch networks continue to be thrive in the digital era
  • Can credit unions compete successfully against the major banks
  • Initiatives to bolster the cross-selling efforts of FIs
  • Enhancing the value-add of mobile banking

The Canadian consumer banking industry is dominated by the six major banks, but there is strong competition, not only among them, but from smaller virtual banks, regional banks and credit unions. However, in this highly competitive market, banks cannot stand still. The advent of mobile banking and the threat of new entrants into the retail banking market from non-financial services industries require Canadian banks to stay focussed on providing an excellent customer experience. Banks need to meet the basic needs of their customers, but beyond that they need to know their customers, reward their loyalty and enable them to interact in a seamless way with the bank — when, where and how the customers want.

This report provides a consumer research overview of banks & credit unions in Canada, exploring consumer choices of main financial institution (FI), tenure and satisfaction with main FI, information sources used to research financial products, intention to switch and factors that influence the decision to switch or stay with their main FI as well as attitudes towards banks and credit unions.

 

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Table of contents

  1. Introduction

      • Excluded
        • Abbreviations
        • Executive Summary

            • Market factors
              • Overall negative impact of lower oil prices on the Canadian economy
                • Impact of interest rates, inflation and exchange rates
                  • Outlook on the real estate and housing market
                    • British Columbians have the highest net worth
                      • Household debt in Canada
                        • Population count and growth in Canada
                          • Companies, brands and innovation
                            • The consumer
                              • Almost one in five Canadians choose TD as their main FI
                                • Figure 1: Choice of main financial institution, November 2014
                              • Overall satisfaction with main FI is high but fees, deposit rates and mobile banking app receive lower scores
                                • Figure 2: Satisfaction with attributes of main FI, November 2014
                              • Low cost banking, branch locations and customer service at branches are the most important factors when choosing to stay or switch
                                • Figure 3: Importance of factors when choosing/switching main FI (% who ranked factor among top 5), November 2014
                              • Younger Canadians are less concerned about the safety of mobile banking; more concerned about the safety of their personal information
                                • Figure 4: Attitudes towards banks and credit unions, November 2014
                              • What we think
                              • Issues and Insights

                                  • Traditional branch networks continue to be thrive in the digital era
                                    • The facts
                                      • The implications
                                        • Can credit unions compete successfully against the major banks
                                          • The facts
                                            • The implications
                                              • Initiatives to bolster the cross-selling efforts of FIs
                                                • The facts
                                                  • The implications
                                                    • Enhancing the value-add of mobile banking
                                                      • The facts
                                                        • The implications
                                                        • Trend Application

                                                            • Trend: Experience is all
                                                              • Trend: Influentials
                                                                • Trend: Totophobia
                                                                • Market Drivers

                                                                  • Key points
                                                                    • Economic overview
                                                                      • Overall negative impact of lower oil prices on the Canadian economy
                                                                        • Figure 5: Canada’s GDP, by quarter, Q1 2008-Q3 2014
                                                                        • Figure 6: Household disposable incomes and savings in Canada, by quarter, Q1 2008-Q1 2014
                                                                        • Figure 7: Canada’s unemployment rate, by gender, 2008-14
                                                                      • Impact of Interest rates, inflation and exchange rates
                                                                        • Figure 8: Inflation rates in Canada, 2004-14
                                                                      • Outlook on the real estate and housing market
                                                                        • British Columbians have the highest net worth
                                                                          • Figure 9: Canada median net worth, by province, 2012
                                                                        • Household debt in Canada
                                                                          • Demographic overview
                                                                            • Population count and growth in Canada
                                                                              • Figure 10: Share of population of Canada, by territory/province, 2014
                                                                            • Canada’s population is expected to age in the coming years
                                                                              • Figure 11: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                                                              • Figure 12: Projected trends in the age structure of the Canada population, 2014-19
                                                                            • Decumulation and longevity risk
                                                                              • Financial markets performance
                                                                              • Strengths and Weaknesses

                                                                                • Strengths
                                                                                  • Weaknesses
                                                                                  • Who’s Innovating?

                                                                                    • Key points
                                                                                      • New RBC location replaces cashier's counter with work stations and touch screens
                                                                                        • TD’s #MakeTodayMatter Campaign
                                                                                          • Barclay’s digital eagles help customers with technology
                                                                                            • TD’s new concept “Green Branch”
                                                                                            • Companies and Products

                                                                                                • TD Financial Group
                                                                                                  • Overview and company information
                                                                                                    • Recent activity
                                                                                                      • RBC
                                                                                                        • Overview and company information
                                                                                                          • Recent activity
                                                                                                            • Bank of Montreal (BMO)
                                                                                                              • Overview and company information
                                                                                                                • Recent activity
                                                                                                                  • Scotiabank
                                                                                                                    • Overview and company information
                                                                                                                      • Recent activity
                                                                                                                        • Meridian Credit Union
                                                                                                                          • Company overview
                                                                                                                            • Recent activity
                                                                                                                              • Vancity
                                                                                                                                • Company overview
                                                                                                                                  • Recent activity
                                                                                                                                  • Brand Communication and Promotion

                                                                                                                                    • Key points
                                                                                                                                      • Ontario credit unions seek to boost awareness with a high profile joint marketing campaign
                                                                                                                                        • Select campaigns from Mintel Comperemedia
                                                                                                                                          • Tangerine’s “Refer 3 Friends and earn $250” campaign
                                                                                                                                            • RBC’s $50 banking statement challenge to prove not all banks are the same
                                                                                                                                              • Meridian Credit Union
                                                                                                                                              • The Consumer – Choice of Main Financial Institution

                                                                                                                                                • Key points
                                                                                                                                                  • Almost one in five Canadians choose TD as their main FI
                                                                                                                                                    • Figure 13: Choice of main financial institution, November 2014
                                                                                                                                                • The Consumer – Tenure with Main Financial Institution

                                                                                                                                                  • Key points
                                                                                                                                                    • About half of Canadians have banked with their main financial institution for 15 or more years
                                                                                                                                                      • Figure 14: Tenure with main financial institution, November 2014
                                                                                                                                                    • Desjardins customers have the longest tenure and PC Financial the shortest
                                                                                                                                                      • Figure 15: Length of time with main FI, by FI, November 2014
                                                                                                                                                  • The Consumer – Satisfaction with Main Financial Institution

                                                                                                                                                    • Key points
                                                                                                                                                      • Summary of satisfaction with main financial institution attributes
                                                                                                                                                        • Figure 16: Satisfaction with attributes of main FI, November 2014
                                                                                                                                                      • Older Canadians are most satisfied with their main institution
                                                                                                                                                        • Figure 17: Overall satisfaction by age, November 2014
                                                                                                                                                      • TD and PC Financial have the most satisfied customers
                                                                                                                                                        • Figure 18: Overall satisfaction by main FI customers of selected FIs, November 2014
                                                                                                                                                      • Satisfaction on attributes by FI
                                                                                                                                                        • Figure 19: Satisfaction rank by attribute, November 2014
                                                                                                                                                      • Key driver analysis
                                                                                                                                                        • Methodology
                                                                                                                                                          • Problem resolution is one of the key attribute that FIs need to promote in order to drive satisfaction
                                                                                                                                                            • Figure 20: Key drivers of overall satisfaction with primary financial institution, November 2014
                                                                                                                                                          • Customer service and problem resolution are the strongest drivers of choosing to stay or switch main FI
                                                                                                                                                            • Figure 21: Key drivers of intention to switch financial institutions, November 2014
                                                                                                                                                        • The Consumer – Information Sources Used for Researching Financial Products and Services

                                                                                                                                                          • Key points
                                                                                                                                                            • Bank websites are the main source of financial information
                                                                                                                                                              • Figure 22: Information sources used when researching financial institutions/products/services, November 2014
                                                                                                                                                            • Friends/family are used for by females, while internet research is more popular with males
                                                                                                                                                              • Figure 23: Information sources by gender (significant differences), November 2014
                                                                                                                                                          • The Consumer – Switching Intention

                                                                                                                                                            • Key points
                                                                                                                                                              • Majority of Canadians are unlikely to switch their main FI
                                                                                                                                                                • Figure 24: Intention to switch main fi in the next 12 months, November 2014
                                                                                                                                                              • Strong relationship between satisfaction and switching intention
                                                                                                                                                                • Figure 25: Relationship between level of satisfaction and intention to switch main FI, November 2014
                                                                                                                                                              • BMO customers relatively more likely to want to switch their main FI
                                                                                                                                                                • Figure 26: Switching intention by FI^, November 2014
                                                                                                                                                            • The Consumer – Importance of Factors When Choosing/Switching From Main Financial Institution

                                                                                                                                                              • Key points
                                                                                                                                                                • Summary of importance of factors when choosing/switching main FI
                                                                                                                                                                  • Figure 27: Importance of factors when choosing/switching main FI (% who ranked factor among top 5), November 2014
                                                                                                                                                                • Low cost banking options is the most important factor among customers
                                                                                                                                                                  • Figure 28: Most important choice factors (Ranked #1), November 2014
                                                                                                                                                              • The Consumer – Attitudes towards Banks and Credit Unions

                                                                                                                                                                • Key points
                                                                                                                                                                  • Summary of attitudes
                                                                                                                                                                    • Figure 29: Attitudes towards banks & credit unions, November 2014
                                                                                                                                                                  • Younger Canadians are less concerned about the safety of mobile banking, but more concerned about their personal information
                                                                                                                                                                    • Figure 30: Attitudes related to trust, November 2014
                                                                                                                                                                  • Asian Canadians more likely to prefer banking with multiple FIs
                                                                                                                                                                    • Figure 31: Attitudes related to levels of interaction & service, November 2014
                                                                                                                                                                  • Young males more willing to pay an annual fee for better rewards
                                                                                                                                                                    • Figure 32: Attitudes related to other decision factors, November 2014
                                                                                                                                                                  • Trust levels of satisfied customers are significantly higher
                                                                                                                                                                    • Figure 33: Significant differences in attitudes between satisfied and unsatisfied customers, November 2014
                                                                                                                                                                • The Consumer – Chinese Canadians and Banks and Credit Unions

                                                                                                                                                                  • Key points
                                                                                                                                                                    • TD is the clear favourite choice for main FI among Chinese Canadians
                                                                                                                                                                      • Figure 34: Choice of main FI, Chinese Canadians vs Whites/Caucasians, November 2014
                                                                                                                                                                    • Chinese Canadians strongly over-index on the use on online resources for information gathering
                                                                                                                                                                      • Figure 35: Information sources used for researching financial products & services, Chinese Canadians versus Whites/Caucasians, November 2014
                                                                                                                                                                    • Chinese Canadians more willing to pay a fee for rewards
                                                                                                                                                                      • Figure 36: Attitudes towards banks and credit unions, Chinese Canadians versus Whites/Caucasians, November 2014
                                                                                                                                                                  • The Consumer – Target Groups

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Four target groups
                                                                                                                                                                        • Figure 37: Target groups, November 2014
                                                                                                                                                                      • Tech-lovers (25%)
                                                                                                                                                                        • Skeptics (31%)
                                                                                                                                                                          • Traditionalists (24%)
                                                                                                                                                                            • Distributors (20%)
                                                                                                                                                                            • Appendix – Key Driver Analysis

                                                                                                                                                                                • Interpretation of results
                                                                                                                                                                                  • Figure 38: Overall satisfaction with banks and credit unions - key driver output, November 2014
                                                                                                                                                                                  • Figure 39: Satisfaction (any satisfied) with main financial institution, November 2014
                                                                                                                                                                                  • Figure 40: Intention to switch financial institutions - key driver output, November 2014
                                                                                                                                                                                  • Figure 41: Intention to switch financial institutions - key driver output, November 2014

                                                                                                                                                                              Companies Covered

                                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                                              Banks and Credit Unions - Canada - February 2015

                                                                                                                                                                              US $3,995.00 (Excl.Tax)