National Post (National Edition)

Bank poll’s advice is sobering

- Off the Record BARRY CRITCHLEY

In preparing their reports, analysts cast their net far and wide to get a better picture of the sectors and the companies they cover.

We saw an example this week when Sohrab Movahedi, BMO Capital Markets’ bank analyst, released an 11-page report on a survey he conducted on bank customers and the habits and expectatio­ns they have about those relationsh­ips.

The online survey, which attracted 573 responses, was conducted in the first week of November. About half the respondent­s were younger than 45, while 73 per cent had annual household income of less than $100,000 and 77 per cent identified one of the Big Six as their primary banker. Movahedi organized a similar survey about 18 months ago.

‘The evolution is happening. And we can see what’s happening by taking snapshots through the surveys,” Movahedi said Tuesday.

The 2017 results contain some good news for banks — but also some warning signs, which could be ominous given the large role they play in the daily financial life of Canadians.

For instance, about 60 per cent of respondent­s had “complete trust” in the banks’ ability to keep their money and personal informatio­n safe, but only about 41 per cent had complete trust when it came offering sound personal and financial advice. A mere 35 per cent had complete trust when it came to being charged a fair price for products and services.

“Incumbent banks cannot rely on inertia alone as a long-term customer retention strategy when more than 50% of respondent­s bank in multiple places,” said the report, noting “the lack of customer trust when it comes to advice.”

But despite those lessthan-glowing results, 78 per cent of respondent­s said they had not changed their primary banker in the past five years. As to how respondent­s chose their primary banker, about 70 per cent said it was largely on the basis of where their paycheck was deposited.

“Our intention is to gain insight into the ways in which Canadians characteri­ze their relationsh­ip to their primary financial institutio­n,” said the report, noting respondent­s could check more than one of the six identifier­s they were given.

Given that the banks have made wealth-management a priority, the results are positive as 31 per cent identified their primary financial institutio­n on the basis of wealth/ advice products. In April 2016, it was 20 per cent.

But when respondent­s thought about their mortgage provider the results were negative: Only about 25 per cent chose their primary banker on the basis. “Wealth/ advice products have displaced mortgage,” as anchor products, said the report.

The other positive for the banks was where customers interacted: 59 per cent said they visited the branch at least once a month. (It was 61 per cent in April 2016.) But 34 per cent — vs. 24 per cent in 2016 — use a mobile banking app once a week.

Those numbers pose a challenge in the decision between not changing too much vs. meeting evolving customer expectatio­ns, a goal made more difficult because of a “continuous­ly challengin­g revenue growth environmen­t.” Get it right and the prize is substantia­l. Get it wrong and the bank runs the risk of “being reduced to undifferen­tiated, low margin, indirect financial delivery conduits in mass market banking.”

The other challenge: a growing percentage of respondent­s are “not concerned” about either Facebook/Google/Apple/Amazon having access to respondent­s’ personal financial informatio­n.

"The level of comfort is increasing to 14 per cent to 15 per cent from four to five per cent,” said Movahedi.

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