Two of five Canadian consumers want automated recommendations from banks, Accenture survey finds
TORONTO--More than two out of five Canadian bank customers (43 percent) are open to using automated recommendations for banking services – computer-generated advice and services, independent of a human advisor – according to a new report on the banking industry by Accenture.
Canadian consumers welcome robo-advice from banks to determine how to allocate their investments (77 percent), determine the type of bank account to open (76 percent), and plan for retirement (70 percent).
The report, titled "Banking on Value: Rewards, Robo-Advice and Relevance", is based on a survey of more than 4,000 retail bank customers in North America, including 1,210 in Canada, and is the most recent report in Accenture's multi-year research on consumer banking attitudes and behaviours.
"Robo-advice is gaining significant traction in the wealth management industry in Canada, and our research shows that consumers are open to working with robo-advisors for their retail banking needs," said Bob Vokes, managing director of Accenture's Canadian financial services practice. "Consumers are excited about the potential savings and accuracy that robo-advice offers. We are now seeing leading financial services players starting to embrace intelligent automation and robotics to simplify and improve the customer experience."
This year's survey found that speed and convenience (50 percent for Canada vs. 49 percent for US) and lower costs (33 percent for Canada vs. 27 percent for US) were cited by respondents as the primary benefits of robo-advice, with millennials and mass-affluent consumers expressing the most interest in the service. For the purposes of the research, mass-affluent consumers are defined as those earning over $100,000 in annual income.
Non-traditional banks continue to gain momentum
The survey found that Canadian consumers are increasingly willing to bank with non-traditional players, closing the gap with those switching to national banks. Nine percent of Canadian consumers broadened their banking relationship with a new financial services provider in the past year. Among those respondents who have broadened their banking relationship to other providers, 21 percent joined a non-traditional provider (online-only bank, payments providers, retailer or insurer), versus 29 percent who switched to a large regional or national bank. Of those Canadians who switched, 15 percent of consumers ages 55+ joined an online-only bank, up from only five percent who did the same last year. Millennial switchers increased the move to non-traditional providers from 24 percent in 2015 to 27 percent this year. Consumers ages 35-54 had a reverse trend; 30 percent moved to non-traditional providers in 2015, down to 24 percent in 2016.
"Consumers no longer view using multiple financial service providers as a hassle, which now puts pressure on these firms to not only attract new customers, but also to find ways to retain existing customers," continued Vokes. "According to our research, 77 percent of Canadian consumers consider their relationship with their bank to be purely transactional – this is a missed opportunity for banks which now have access to technology that can help them provide more tailored offerings, particularly as more consumers are open to receiving value-added services from their bank. In fact, 41 percent of Canadian consumers said the top reason they would stay loyal to their bank is if it offered discounts on purchases."
Among Canadians, 23 percent would consider switching to a branchless bank, which is up eight percentage points from last year. Across North America, 26 percent of millennials would consider switching to a branchless bank (up three percentage points from last year), and 34 percent of mass affluent consumers would do so, up ten percentage points from 2015.
Online channel dominant, but branches still relevant
Today, 21 percent of Canadian survey respondents use the branch at least weekly, and it remains the second most preferred channel, after online.
By a wide margin, Canadians who use the branch prefer "full service branches," which include extended office hours and full sales support, over all other formats (64 percent). However, 19 percent of millennials prefer "light branches" – highly automated with videoconferencing access to remote specialists.
According to the survey, the vast majority (87 percent) of Canadian consumers say that they will use the branch in the future. Respondents said they anticipate using the branch two years from now because "I trust my bank more when speaking to someone in person" (50 percent vs. 48 percent for US), and "I receive more value from my bank when speaking to someone in person" (49 percent vs.47 percent).
"Today's consumers want it all, and those expectations are equally high when it comes to their bank," Vokes concluded. "Online banking remains the most popular channel; however, Canadian consumers continue to see value in branches for services and they will continue to do so for the foreseeable future. Even as Canadian consumers indicate their interest in artificial intelligence for banking, they demand human interaction at the branch to handle their more complex banking needs. Consumers expect a seamless experience that can blend their digital and physical channels, and the banks that are able to deliver this experience will earn the loyalty of their customers."
Despite security breaches, customers willing to share data
Sixteen percent of Canadian respondents have experienced at least one incident of their financial data being hacked online over the past two years. Consumers remain willing to share their data in order to receive better service from their bank. Nearly two-thirds (62 percent) of Canadian respondents said they would give their banks direct access to personal information, such as mortgage, credit card and student loan data, so their bank can use it to present them with suitable products and services. Respondents want banks to use their data to provide access to lower prices, faster service (such as rapid loan approval), more relevant advice, and personalized offers based on location.
The report is based on an online survey of 4,013 bank customers in North America by Accenture in March 2016. Approximately 70 percent of the respondents (2,803) were based in the United States and 30 percent (1,210) were based in Canada. The survey has a statistical margin of error of 1.55 percent.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world's largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.