Canadian banks falling short in digital and multi-channel offerings

13 June 2017 6 min. read
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With consumers becoming increasingly tech-savvy, Canadian banks have rolled out a number of digital innovations to meet their customers’ changing preferences. However, a new study from Oliver Wyman argues that banks in Canada can do more.

By creating digital channels through which consumers can perform a variety of bank transactions, financial institutions have reduced the need for a range traditional forms of banking. 

The rapid spread of new digital channels through which consumers can easily do their banking has led to considerable changes in the traditional customer banking experience. In a new report from Oliver Wyman, titled 'Point of View: Consumer Banking in Canada: Omnichannel Strategy', the management consulting firm explores current channel uptake trends among Canadian banking customers. The report is based on data from 4,000 Canadian respondents, and focuses on key trends, including digital banking needs, attitudes, and behaviours.

Behavioural segmentation of Canadian consumers

Use of digital channels among Canadian respondents is relatively high: 90% use at least one, with both internet and mobile channels being utilized. Meanwhile, consumers continue to visit branches – at 65% of respondents – while 80% of respondents say they value the convenience of physical branches.

Digging deeper, the survey found that 9% of respondents use physical branches only, with no use of online channels. 16% of respondents said they use both branches and online/mobile channels for simple transactions, while also visiting branches at least twice a month.

The largest proportions of respondents are in what Oliver Wyman deems the ‘digital-centric’ segment, opting to use both branches and online/mobile channels for simple transactions, while visiting branches only once a month (or less). A further 13% of respondents value branches, but don’t actually use them for simple transactions. Finally, 21% of respondents are ‘digital optimizers’ who don’t use branches and value pricing and product features over the ‘convenience’ of branches.

Age distribution by behaviour segment

The research notes the obvious and considerable demographic differences between the makeup of the various digital uptake degree categories. Those using ‘branches only’ tend to be older, with 35% of the category between 55-70 and 31% over 71; unsurprisingly, tech-dependent millennials account for just 10% of the category. Interestingly, however, the research finds that millennials are less likely to be ‘digital optimizers’ than ‘branch in mind only’ consumers (20%), with millennials accounting for a similar proportion of the ‘multi-channel’ and ‘digital-centric’ segments, at 18% and 19% respectively. Those aged 71 and over are less likely to use digital channels, while those between 35-70 have relatively similar distribution profiles across the channels surveyed.

Percent of branch transactions by type

The report also examined the type and frequency of the transactions completed at branch locations. Depositing cash was the most frequently exercised activity at the bank branch, with an average of 6.7 visits per years, with 42% of this type of transaction involving a visit to a branch. Updating passbooks/bank books took second spot, cited by 38% of respondents as a branch activity, with an average of 3.6 visits per year.

Depositing a cheque, withdrawing cash, and reviewing account information were all relatively frequent activities, at 4.6, 4.5 and 4.5 visits per years on average – although each of these activities came in at less than a third of that kind of activity. Bill payment was the lowest branch related activity, at 7% of all such transactions – accounting for 2 visits per years. Clearly, activities such as reviewing account information and paying bills have shifted firmly to the sphere of online banking.

Mystery shopper waterfall of informed functions

To better understand the way in which respondents are made aware of digital options for various transaction types, Oliver Wyman sent mystery shoppers to open accounts at various institutions. The results – the report notes – show that during a key period of attentiveness from a customer, many of the institutions did not inform the mystery shoppers of the digital options available. The bank was keen to inform customers of the debit card (93%) as well as online banking (86%), however, other digital options, such as web bill pay (7%), mobile banking (43%), and e-statements (50%) were less well-advertised.

The mystery shoppers, in addition, explored the kinds of digital channels that they could sign-up for/get in the branch itself. While the ability to get a debit card at a branch when setting up a new account was widespread (79%) the ability to set up digital channels like online banking (57%),  e-statements (43%), and mobile banking (43%) was less likely. In terms of e-statements – which can significantly reduce paper waste – 57% of mystery shoppers were offered it by default, while 36% reported it was not mentioned, and 7% reported an opt-in option for paper statements.

Percent of population and total branch transactions

While digital penetration is relatively high among Canadians in the banking segment, the research points out that more can be done to convert customers to digital channels. Currently, 25% of the population account for 93% of branch transactions, with almost all transactions being done by those in the ‘branch only’ and ‘multi-channel’ category. The availability of better, more-intuitive digital services and apps – as well as their aggressive marketing – can help convert all but the most technophobic demographic groups. The higher uptake of easy-to-use digital services could help banks reduce the amount of branch locations – and their associated high costs.