Canadian Retail Banks Face Untapped Opportunity in Financial Advice, J.D. Power Finds

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Financial adviceparticularly the type that can be delivered digitallyis the great untapped frontier of the Canadian retail banking industry. According to the J.D. Power 2019 Canada Retail Banking Advice Study,SM 85% of bank customers in Canada are interested in receiving financial advice from their primary bank and 72% of those who receive advice act on it, but customer satisfaction with the advice provided has declined slightly this year.

The study, now in its second year, measures retail banking customer satisfaction with the retail bank-provided advice and account opening processes of five major Canadian banks.

There is clear demand for financial advice among Canadian bank retail customers, and when banks get the formula right, that advice drives significant customer loyalty and advocacy, but many banks are still missing the mark, said Paul McAdam, Senior Director of the Banking Practice at J.D. Power. Increasingly, all signs are pointing to digital advice offerings as the channel where retail banks can drive the most significant improvement. Nearly 60% of customers indicate theyd like to receive advice via digital channels, but just 10% of them actually receive advice that way.

Following are key findings of the 2019 study:

  • Customer satisfaction with retail bank advice declines year over year: Overall customer satisfaction with the advice provided by a primary retail bank decreases 2 points to 789 (on a 1,000-point scale) in 2019 vs. 2018, and younger customers (under age 40) are slightly less-satisfied with bank-derived advice than their older counterparts. This stands in stark contrast to the results of the J.D. Power 2019 U.S. Retail Banking Advice StudySM which saw overall satisfaction scores increase by 15 points, driven largely by younger customers.
  • Digital advice in focus: A majority of bank customers (57%) say their preferred means of receiving advice is digital content (interactive tools, articles, videos) delivered through a bank website or mobile app. However, just 10% of bank customers say they have received their most recent advice in this manner.
  • Investment-related advice resonates most: Among the most common types of advice retail bank customers seek are investment-related advice (49%); quick tips to help improve their financial situation (44%); retirement-related advice (44%); advice to help keep track of spending and household budgets (34%); and in-depth view of personal financial situation (32%).
  • Advice satisfaction directly linked to trust, retention and advocacy: Among retail bank customers who are highly satisfied with the advice provided by their institution, (overall advice satisfaction score of 850 or higher), 86% say they definitely will reuse their bank for another product; 76% are identified as Net Promoters1; and 49% say they have opened a new account based on the advice received.
  • Advice often delivered during new account opening, and transparency is critical: When new accounts are opened, transparency about customer benefits and fees is critical. Overall satisfaction with the account opening process increases 155 points when benefits and features are explained completely and 126 points when fees are clearly explained. Approximately one-third of the time, consumers in Canada leave the account-opening experience with less than a complete understanding of product features, benefits and fees.

Study Rankings Scotiabank ranks highest in customer satisfaction with retail banking advice with a score of 806. RBC Royal Bank ranks second with a score of 803 and BMO Bank of Montreal ranks third with a score of 792.

Study Rankings
Overall Canadian Retail Banking Advice Satisfaction
(Based on a 1,000-point scale)
Scotiabank 806
RBC Royal Bank 803
BMO Bank of Montreal 792
Industry Average 789
TD Canada Trust 780
CIBC 762

Source: J.D. Power 2019 Canada Retail Banking Advice Satisfaction Study, SM Charts and graphs extracted from this press release for use by the media must be accompanied by a statement identifying J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores, and not necessarily on statistical significance. No advertising or other promotional use can be made of the information in this release or J.D. Power survey results without the express prior written consent of J.D. Power.

The 2019 Canada Retail Banking Advice Study surveyed 1,451 retail bank customers in Canada who received any advice/guidance from their primary bank regarding relevant products and services or other financial needs in the past 12 months. The study also surveyed 1,291 retail bank customers in the Canada who opened a new account within the past 12 months. It was fielded in October 2018.

For more information about the Canada Retail Banking Advice Study, visit https://www.jdpower.com/business/resource/canada-banking-advice-satisfaction-study.

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.

About J.D. Power and Advertising/Promotional Rules: https://www.jdpower.com/business/about-us/press-release-info

1 Net Promoter, Net Promoter System, Net Promoter Score, NPS, and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

Gal Wilder, Cohn & Wolfe; 647-259-3261; [email protected]
Caetano, Cohn & Wolfe; 647-259-3317: [email protected]
Effler, J.D. Power; Costa Mesa, Calif.; 714-621-6224; [email protected]