Nearly one-third of Canadians have gone outside their banks in the past year for a financial services product or service, according to a new survey from EY.
Add those who plan to “in the near future” and the figure climbs to more than 50 per cent, signaling the potential threat of rivals including upstart financial technology firms to key business lines within Canada’s banks.
“To stay relevant, especially as financial technology companies, or fintechs, are taking a piece of the market, traditional banks need to build on their strengths — including brand, trust and community presence,” said Paul Battista, financial services advisory leader at EY, the global consultancy formerly known as Ernst & Young.
He also urged Canada’s big banks to make investments that will allow them to offer “a superior customer experience,” an attribute the research suggests is a key driver in the move to alternative providers.
A combination of new technology and readily available electronic data allows rivals to do things faster and more efficiently than banks, which are bogged down by legacy systems.
“The results of our survey show a changing attitude towards traditional banks, as people look for an enhanced customer experience, simpler products, and high-quality advice,” Battista said.
EY’s research found that banks remain largely trusted to keep money safe, but there are areas where there’s less trust. For example, 19 per cent of those surveyed said they had little or no trust that banks will provide unbiased advice.
“The fact that (nearly) 40 cent of Canadians have used a non-bank provider recently speaks to the fact that consumers are increasingly comfortable exploring other options outside of traditional banks… They’re open to trying something new,” said Battista.
He added that the search for simpler products, and more customized financial services, could open the door for fintechs.
“As the number of digitally-savvy consumers grows in Canada, we expect the interest in (these) tech-enabled, non-bank providers to increase as well,” he said.
In a recent study, EY pegged Canadian adoption of fintech at 8.2 per cent, compared to 15.5 per cent globally.
Postmedia Network Inc., owner of the Financial Post, has a marketing and revenue sharing agreement with a Vancouver-based fintech lender, Mogo Financial Technology.