Poor service is driving companies towards alternative banking options.
According to a report published by Ernst and Young (EY) on April 9, 28% of Canadian commercial banking customers said their primary bank has made an error in the past 12 to 24 months and 45% were less than highly satisfied with the resolution. What's more, a quarter of them say they considered switching their primary banking provider. Overall, however, the survey found that 70% of Canadian companies still said they were satisfied their primary bank.
They EY report also revealed that dissatisfied companies are considering alternative banking options, and points out that credit card issuers, insurance companies, and other non-bank organizations are now competing with traditional institutions for lending and trade finance, foreign exchange, and merchant services. In fact, 48% of the Canadian companies surveyed indicated that they are already using non-banks in some capacity to meet their needs, and another 53% said they would consider moving their business to a non-bank.
"Operational issues and underwhelming experiences are eroding customer satisfaction. Relationship history is no longer a sufficient reason for Canadian commercial banking customers to remain loyal," comments EY's Canadian Financial Services Advisory leader Paul Battista, who notes that it has been easier for non-banks to expand their financial services offerings because they have a lighter regulatory burden. "These providers can't replace traditional banks, but executives are increasingly turning to them for a wide range of products and services."