Report suggests that partnerships may help banks retain savers
Canada’s traditional banks continue to enjoy enviable market share, but disruptors are not chipping away at their dominance in core activities such as saving.
Older consumers are often reluctant to change when it comes to financial providers but younger Canadians are likely to be the customers that seek out technology-first firms that appear to offer something better, meaning traditional FIs are set to see market share decline over time.
The newly released GFT Canadian Banking Disruption Index reveals that 57% of respondents still prefer a traditional bank for their savings, but 24% opt for challengers such as neobanks.
Near-term churn is likely to be low though with three quarters of respondents indicating that they are not actively looking to switch from their current bank, but interest in AI and other tech-driven banking experiences is a key factor that could see customers switching their banks.
“If banks want to maintain the loyal customers they’ve held for so long, they need to adapt the technologies they demand,” said Mauricio Deutsch, banking and capital markets leader of GFT Canada. “In some cases, this may even require partnering with digital competition to give consumers the best options.”
Saving priority
The research found that saving is a priority for 90% of respondents, especially building their emergency fund (47%) and retirement (41%). Four in ten said that swift access to savings is a priority, perhaps with technology powering automations.
However, for some other financial activities, Canadian consumers appear more open to using third party technology such as budgeting apps, especially among 56% of Gen Z and Millennials participants. The over 55s are less likely to be using these apps with just 3% expressing an interest.
While interest in fintechs is rising among some demographics, a recent McKinsey & Company’s report noted that uptake of digital financial services in Canada lags those of other G-7 nations due to several factors including the current regulatory framework.
