Skip to main content

The Globe and Mail

Survey finds 41% of businesses would leave their primary lender

Canadian bank headquarters on Bay Street in Toronto.

Brent Lewin/Bloomberg

More than 40 per cent of businesses are likely to ditch their main financial institution, according to the results from a recent survey by Modus Research, highlighting a vulnerability for banks as they adjust to a new competitive environment.

The survey found that just 59 per cent of respondents said they were likely to continue using their main financial institution for their banking needs, leaving 41 per cent who were prepared to bolt.

"This is pretty shocking data," said Charlie Graves, chief executive officer of Modus Research. "When you have people who aren't in the 'very likely to continue' box, they're recognized as at-risk clients. They could flip out of the bank at any time."

Story continues below advertisement

The survey, the first of its kind by Modus, comes at a time when traditional banks are dealing with competitive pressures from new financial technology, or fintech, firms that are striving to undercut incumbent players with simple online services and transparent fees.

Some institutions scored considerably better than others in the survey, though Modus did not release any corporate names.

Credit unions enjoyed the best results, with just 22 per cent of their customers likely to leave. Among the biggest banks, though, the results ranged from a high of 48 per cent who are at risk of leaving to a low of 31 per cent.

"There are banks here that have almost half of their clients at risk," Mr. Graves said, adding the industry is already prone to churn. A third of business banking clients have been with their bank for fewer than five years.

While new fintech firms have yet to tap into the needs of large and sophisticated businesses, they have begun to offer short-term loans to small businesses, and some banks appear keen to strike partnerships with them. Canadian Imperial Bank of Commerce has partnered with Thinking Capital, while Bank of Nova Scotia recently began to offer Kabbage to its customers.

However, according to the Modus survey, the main source of frustration with business banking customers is that their banks do not understand their businesses. Just 49 per cent said their current financial institution had a good understanding, even though 77 per cent said the overall quality of service was good.

"Competence of staff appears to be a significant driver of whether or not they intend to stay with the bank," Mr. Graves said. "Things like the bank's online banking interface also seems to be a significant driver of intention to stay or leave."

Story continues below advertisement

The survey, conducted in July, drew from the responses of 868 panel members, drawn from a cross-section of managers and executives from a range of businesses, not-for-profit organizations and governments. The survey is considered accurate within 3.3 percentage points, 19 times out of 20.

Report an error Licensing Options
About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨