Digital banking on the rise in Canada, but customer satisfaction levels declining: study

Almost half of Canadian retail bank customers are now embracing digital banking channels but at the expense of lower levels of customer satisfaction.

According to the J.D. Power 2018 Canadian Retail Banking Satisfaction Study, 47 per cent of retail bank customers identified themselves as “digital-centric” clients while 32 per cent are “digital-only” customers who opt to do their banking solely online or with a mobile device without visiting a branch.

Digital-centric includes digital-only clients in addition to those customers who have visited a branch at least once in the last three months.

But while the increase in technology-savvy clients is a testament to the banks’ commitment to enhancing digital platforms, the shift is also resulting in customer satisfaction levels dropping. Overall customer satisfaction is lowest among customers in the digital-only segment, with those customers scoring 22 points lower than the broader digital-centric category.

“Digital channels give banks an enormous opportunity to reduce costs, but the risk is that those cost savings come with lower levels of customer engagement,” said Bob Neuhaus, financial services consultant at J.D. Power.

Among the Big Five banks, Royal Bank of Canada has the highest percentage of digital users with 49 per cent plugging in, while Toronto-Dominion Bank stands on the other end of the spectrum with only 36 per cent digital-centric customers.

Online-focused banks Tangerine (owned by Bank of Nova Scotia) and CIBC’s Simplii platform have the largest portion of digital-centric customers with 93 and 84 per cent, respectively.

The study, which was based on responses from nearly 14,000 retail banking clients, measures customers’ satisfaction in six areas: channel activities (such as online and mobile banking); communication and advice; convenience; new account opening; problem resolution; and products and fees.

Tangerine ranked the highest in overall customer satisfaction with a score of 829, while RBC was the highest among the big banks with 788.

A common complaint among survey respondents centres on communication. Banks still rely heavily on phone calls to proactively communicate, while both digital-centric and branch-dependent customers show a clear preference for other forms of communication, says J.D. Power. E-mail is considered the most preferred channel of communication by digital-centric and branch-dependent customers (42 per cent and 33 per cent, respectively), yet only about one in five customers indicate their most recent bank communication was delivered via e-mail.

Not only do the banks have to improve their game in this area, they’ll have to ensure they are keeping up with rapid advancement in the various methods of communication now emerging.

“As banks push further into digital transformation, they need to move in lockstep with their customers beyond the e-mail era and incorporate a full range of digital communication options such as mobile texting, in-app messaging and social media,” said J.D. Power in its key findings.

Overall Customer Satisfaction Index Rating

(Based on a 1,000-point scale)

Big 5 Banks

Royal Bank of Canada 788

TD Canada Trust 787

Bank of Montreal 781

CIBC 766

Scotiabank 762

Mid-sized banks

Tangerine 829

ATB Financial 805

Simplii 801

National Bank of Canada 794

Manulife Bank 774

HSBC Bank Canada 758

Laurentian Bank of Canada 735

Source: J.D. Power