Customer Retention and Cross-sell in Banking - Canada - October 2016

OVERVIEW
Regional classifications
Income
EXECUTIVE SUMMARY 
The issues
Nearly seven in ten Canadians have a ‘big five’ as their main bank
Figure 1: Choice of main FI, August 2016
While TD is still on top, Tangerine emerges as a strong alternative choice
Figure 2: Switching choice of main FI, August 2016
Value for money, branches, product selection and ABMs are dominant influencers
Figure 3: Switching influencers (top five), August 2016
Preferred rates, discounts, rewards and cash incentives appeal to nearly half of consumers
Figure 4: Interest in cross-sell incentives, August 2016
Younger consumers and Asian Canadians are more inclined to switch their main FI
Figure 5: Attitudes related to satisfaction, August 2016
The opportunities
Influencing switching decisions by harnessing the power of recommendations
Building loyalty through branch relationships
Understanding factor preferences that influence customer switching
Figure 6: Top-five rank of factors influencing switching, by age, August 2016
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
Women outnumber men in Canada
Growth of the LGBT community
MARKET FACTORS 
Canada’s population is expected to age in the coming years
Figure 7: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
Figure 8: Projected trends in the age structure of the Canada population, 2014-19
The population is growing and becoming ethnically diverse
Women outnumber men in Canada and live longer
Wage gap declines but women still earn less than men
Growth of the LGBT community
KEY PLAYERS – WHAT YOU NEED TO KNOW
Meridian credit union seeking license for national online bank
BMO launches a service that allows people to open accounts through smartphones
Scotiabank branches out with two new branch formats, Express and Solutions
Goldman Sachs – Online lender for the masses
INDUSTRY DEVELOPMENTS
Meridian credit union seeking license for national online bank
RBC first to offer free Interac e-transfer payments
Meridian introduces Sweep: A feature that ‘sweeps’ money daily
Scotiabank branches out with two new branch formats, Express and Solutions
BMO launches a service that allows people to open accounts through smartphones
Grow and Celero partner for digital banking solutions
Goldman Sachs – Online lender for the masses
MARKETING CAMPAIGNS
Selected campaigns from Mintel Comperemedia
Tangerine aims to eliminate the hassle-factor in switching banks
Figure 9: Tangerine’s switch assistant print advertisement, September 2015
TD’s new MySpend App
Figure 10: TD’s Myspend app customer email, August 2016
TD’s switch offer
Figure 11: TD free gift inducement offer, June 2016
Tangerine releases follow-up to “Hard Work” Brand Anthem
THE CONSUMER – WHAT YOU NEED TO KNOW
Nearly seven in ten Canadians have a ‘big five’ as their main bank
While TD is still on top, Tangerine emerges as a strong switching choice
Lower fees are the top factor that influences switching
Younger, Asian Canadians and LGBT consumers more inclined to switch
Young males and Asian Canadians more likely to prefer banking with multiple financial institutions
CHOICE OF MAIN FINANCIAL INSTITUTION
Nearly seven in ten Canadians have a ‘big five’ as their main bank
Figure 12: Choice of main FI, August 2016
Scotiabank and RBC top choices in Atlantic Canada, while Desjardins is the clear market leader in Quebec
Figure 13: Top main fi choices in Atlantic Canada and Quebec, August 2016
Tangerine appeals to a younger clientele
Figure 14: Choice of PC financial and Tangerine, by age, August 2016
One in three Chinese Canadians considers TD as their main FI
Figure 15: Choice of main FI (main five), Chinese Canadians vs overall population, August 2016
SWITCHING CHOICE OF MAIN FI
While TD is still on top, Tangerine emerges as a strong alternative choice
Figure 16: Switching choice of main FI, August 2016
Leveraging brand image to cement a distinctive brand personality
Influencing switching decisions by harnessing the power of recommendations
Among 18-24s, Scotiabank is the leading switching choice
Figure 17: Leading switching choice of FIs (select FIs), by age, August 2016
Likelihood of switching to Tangerine increases with age
SWITCHING INFLUENCERS
Lower fees, value for money and proximity are the switching influencers
Figure 18: Switching influencers (top five), August 2016
Branches matter to both young and old
Higher interest rates on savings is the top factor for over-65s
Figure 19: Top-five rank of factors influencing switching, by age, August 2016
Online banks use different strategies
CROSS-SELL INCENTIVES
Preferred rates, discounts, rewards and cash incentives appeal to nearly half of consumers
Figure 20: Interest in cross-sell incentives, August 2016
Higher income customers more interested in an exclusive member program
Figure 21: Interest in select incentives, by income, August 2016
Younger consumers are more motivated by rewards and cash incentives
Figure 22: Interest in select incentives, 18-44s vs over-45s, August 2016
Women relatively more interested in preffered rates and rewards
Figure 23: Interest in select incentives, men vs women, August 2016
SATISFACTION AND LOYALTY
Younger consumers and Asian Canadians are more inclined to switch their main FI
Figure 24: Attitudes related to satisfaction, August 2016
Men are more inclined to agree that credit unions conduct business more fairly than banks
Majority of customers agree that a strong local branch relationship builds loyalty
Figure 25: Attitudes related to loyalty, August 2016
Younger consumers more likely to expect referral rewards
PC Financial customers more likely to recommend their bank
Figure 26: Select attitudinal statements (any agree), PC financial vs overall, August 2016
Desjardins customers least inclined to switch
Figure 27: Select attitudinal statements (any agree), Desjardins vs overall, August 2016
PREFERENCES AND TRUST
Young, middle-aged men and Asian Canadians more likely to prefer banking with multiple financial institutions
Figure 28: Attitudes related to customer preferences, August 2016
Young and middle-aged males more likely to prefer banking with multiple institutions
Men more likely to agree that credit unions have a more welcoming feel
Banks and credit unions enjoy high levels of trust
Figure 29: Attitudes related to trust, August 2016
Men and Asian Canadians are relatively more likely to trust independent financial advisors
Desjardins customers less inclined to bank with multiple institutions
Figure 30: Attitudinal statements about trust (any agree), by main FI, August 2016
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Consumer qualitative research
Abbreviations and terms