Most Canadians prefer online banking yet still value local branches
Canadians rarely visit bank or credit union branches for their daily banking needs but still value their presence in their communities, according to a recent survey by KPMG in Canada.
This poses a challenge for financial institutions as they navigate the changing landscape of customer preferences.
The survey of 2,058 Canadians revealed that 75% rarely use physical branches, with 48% visiting once or twice a year or not at all. Only 32% believe there are too many branches in Canada, while 68% believe the current number is necessary.
According to the Canadian Bankers Association, there are 5,656 bank branches across Canada. The majority of the respondents (86%) like the security of knowing their branch is there, even though they primarily use online or mobile banking.
“What’s striking is how much value Canadians place on their bank branches, even though they rarely step inside them,” said Geoff Rush, partner and national industry leader for financial services at KPMG Canada. “This tells me that branches still play an important role in the future of Canadian financial services, but in order for them to serve a higher purpose for both consumers and banks, they need to take on a whole new look, feel, and purpose for consumers – or else they’ll become costly real estate safety nets.”
The top reason for branch visits was depositing or withdrawing cash (53%). Opening an account was second at 12%.
If simple transactions remain the key use, Rush warned that it “could become difficult to justify large networks,” given that Canada has 20.7 branches per 100,000 adults versus 11.2 globally.
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“Over-the-counter transactions such as cash withdrawals and deposits might have been good enough reasons to establish and maintain large branch networks at one time, but the world has changed, and consumers have changed the way they bank,” he said.
Despite the rarity of visits, 87% were happy with branch services, and 73% would stay with their institution even if their branch closed, though 59% said a closure would impact them minimally or not at all. Rush suggested that financial institutions need to innovate their branch usage.
“Other jurisdictions around the world have experimented with a variety of approaches, including co-shared banking hubs, sales pods, roving branches, and hybrid service models,” Rush added. “Some of these approaches could serve as inspiration – or even be adapted for – the Canadian market where it makes sense.”
Dan Resnick, a KPMG customer practice partner, said two-thirds dislike converting branches to ‘advice centres’.
“We heard they don’t want their branch only providing advice, as it eliminates primary reasons they go,” Resnick said. “But it’s time to decouple advice from being delivered in-branch.”
The survey highlighted demand for rural branches, with 90% calling them “essential” in areas with poor broadband and 89% seeing them as vital community economic players.
“The wants and expectations of Canadians in 2024 clearly show a need for a new vision, incentivising banks and credit unions to do a critical assessment of what their customers want, how they want it and when they want it,” Resnick said. “Only then can they determine the best mix of customer touchpoints, including digital channels, physical branches and third-party locations (such as grocery stores, coffee shops or airport terminals).
“The perfect mix will vary depending on the region or city as well, so it’s not a one-size-fits-all formula.”
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