A recent survey from EY has suggested that banks are becoming less and less important for Canadians. More specifically, the survey shows that many Canadians are becoming less dependent on banks to be their primary provider of various different financial services.
Banks have been an extremely important parts of people’s lives for decades, but we are finally starting to see things shift. Various different tech-savvy startups have popped up over the last few years. Whether you need to get a loan, get financial advice, or do anything in between, there is likely an option available for you.
The survey found that 30% of respondents are less reliant on banks than they were in the past, due to other options being available. In contrast, about 25% report they are just as reliant, 40% decided they didn’t agree with either side, and the final 5% or so didn’t know. While these numbers aren’t extremely overwhelming to the eye, they are a far cry from the results you would have likely found if you did this survey even 5 or 10 years ago.
So why is this the case? Well, according to the study, there are a few different reasons. The first comes down to trust. While nearly everyone surveyed trusts their bank to keep their money safe, almost a quarter of respondents don’t trust their banks to provide unbiased advice. Another reason for this decrease in dependency comes down to financial understanding and education. Many people don’t understand a lot about finance, and prefer to go online to do research to better their knowledge than to go to an advisor at the bank and not know what they’re talking about.
The third reason comes down to engagement. Most people want and expect different types and kinds of engagements out of their financial institution. Problem is, many banks don’t offer much in that department. And last but not least, people expect a good customer experience. People want to have access to more products, have a better online experience, and want things to be simpler and streamlined. Fintech startups, such as robo-advisors (Wealthsimple, Wealthbar, etc.) and online lenders (Mogo, Borrowell, etc.) often have great customer experience, which is a big reason for their popularity.
The survey, completed by the business consultancy firm, surveyed over 2,000 different Canadians between January and April of 2016. The results of the survey are tough to ignore, and definitely, shows that banks have to do more if they want to retain the trust and business of the public. If they don’t, they will continue to lose relevancy and market share to various different fin-tech startups.
Nearly 4 out of 10 respondents already use non-bank providers, while another 2 in 10 planning to use them in the near future. These numbers have to be frightening and threatening for the banks, and these fin-tech startups are only going to become more and more popular in the future if banks do nothing to change.