Non-bank financial products making gains, EY survey finds

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, signalling 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 — includ- ing brand, trust and community presence,” said Paul Battista, financial services advisory leader at EY, the global consultancy formerly known as Ernst & Young, which surveyed 2,000 Canadians for the poll.

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, he 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.

“As the number of digitally-savvy consumers grows in Canada, we expect the interest in (these) techenabled, non-bank providers to increase as well,” he said.