RBC Overtakes TD; More Customers Are Valuing Mobile Banking: J.D. Power Report

RBC, Canada’s largest bank recently took the title for having the highest customer satisfaction – a title that TD held for 10 consecutive years.

TD is known as the bank that has a high focus on customer experience, with extended hours, and 7 day branch services. The extended hours aspect was a big differentiator for TD. Nowadays, more and more customers are turning to other forms of banking channels, such as mobile banking, and ATMs.

According to the J.D. Power Report, 34% of the Big 5 Bank customers used mobile banking channels, up from 27% and 20% in 2015 and 2014 respectively. The report also stated that customers who use mobile banking are 10% more satisfied than those who do not use this banking channel.

Each year, customers are placing more value towards mobile banking, instead of the traditional in-branch banking channel. This could be one aspect why TD’s extended hours aspect does not directly result in higher satisfaction scores.

In terms of financial technology – the Big 5 Banks are relatively on the same page, with similar features such as envelope free ATMs, and e-transfers. Over the years, the gap between the first and last ranking banks have been shrinking. In the  J.D. Power 2016 Canadian Retail Banking Satisfaction Study, the gap between RBC (first place) and ScotiaBank is only 12 points. In 2012, the gap was 47 points (between TD and CIBC).





It’s commonly known that more recent generations, such as Generation Z, and Millennials, tend to be more adaptive to different financial technology channels, such as mobile banking, and online banking. The higher focus technology could be a contributor to the declining satisfaction score gaps among the Big 5 Banks – since financial technology is relatively consistent across the Canadian Banking Industry.

The (Big 5) Canadian Banks had an average increase of 23 points, as customers are becoming less resilient to increasing fees – a major contribution to the declining satisfaction rates in the past.

“The improvements indicate that customers are becoming less sensitive to new pricing structures, which caused satisfaction to tumble in 2015” – Paul McAdam, senior director of banking services at J.D. Power.

In the 2016 Canadian Retail Banking Satisfaction Study, BMO was the biggest gainer, jumping from fifth place to third place, with a 33 point surge. TD gained 15 points, the smallest gain among the Big 5 Banks.

J.D. Power measures Retail Banking Satisfaction using the following factors (in order of importance):

  1. Product
  2. Self-service
  3. Personal service
  4. Facilities
  5. Communication
  6. Financial Advisor
  7. Problem resolution

J.D. Power 2016 Canadian Retail Banking Satisfaction Study (Big 5) Rankings:

  1. RBC: 765
  2. TD Canada Trust: 761
  3. BMO Bank of Montreal: 760
  4. Canadian Banking Industry Average (Big 5): 760
  5. CIBC: 754
  6. Scotiabank: 753

The Banking Industry is going through a huge digital shift, especially after the rise of FinTechs. This is also a global trend – in 2014, there was $6.8 billion invested in the FinTech sector (MaRs). Recently, banks have been partnering with FinTech firms – such as the partnership of CIBC and Thinking Capital.

In the past, customers valued extended hours for the in-branch banking channels. However, times have changed. Customers (such as Millennials) are valuing mobile options for their banking needs. Will this have a huge impact on how satisfied customers are in the near future?

Stocks Mentioned: RYTD, BNS, BMO, CM


Writer: Jelani Smith 

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