Simon-Kucher & Partners Survey Reveals Pivotal Roles of the Bank Branch and Digital Capabilities after COVID-19 Lockdowns in Canada
TORONTO, June 16, 2020 – Simon-Kucher & Partners, a global strategy and marketing consulting firm today released results from its survey, Branch vs Digital Banking Behaviors Reshaped by COVID-19 Lockdowns. The survey examines the coronavirus pandemic’s impact on Canadian bank customer preferences in account opening, bank switching and primary banking relationships.
“Branch traffic declined sharply in the immediate aftermath of COVID-19, a behavior that will likely stick to some extent until we have mass vaccinations,” said Wei Ke, Ph.D., managing partner at Simon-Kucher & Partners. “Banks are at an important crossroad as the bank branch has historically played a critical role in customer acquisitions, brand building and customer relationships.”
In the survey, 47 percent of respondents said they will reduce branch visits after the lockdowns end. However, the survey also found that when it comes to decisions about who-to-bank-with, the physical bank branch will continue to play a pivotal role. Meanwhile, the retail bank customer will be willing to travel greater distances to a branch, suggesting an opportunity to reduce branch density; and rising expectations for best-in-class digital capabilities will create new pressure for banks.
Banks must begin to build a resilient, agile bank distribution and servicing model to ensure that the effects of social distancing, evolving banking behaviors and a lingering pandemic do not inhibit their ability to grow deposits, service customers and expand wallet share over the next 18-24 months.
Highlights of the survey include:
Bank Branches will Continue to Play a Pivotal Role
- When considering where to open an account after the lockdown, a majority (57 percent) of respondents said they would only consider a bank with physical branches, compared to just three percent who said they would only consider a digital-only bank
- A large number (62 percent) of respondents said they would move at least some of their business to a new bank if their primary bank’s local branch were to permanently close
Customers Prefer to Open Accounts In-Person
- After the lockdown is lifted, a substantial number of respondents said they would get a mortgage (71 percent), open a business banking account (62 percent), open a savings account (60 percent) or dispute an unexpected fee (47 percent), in-person versus digitally
- With the exception of an increase use of digital services to get a mortgage, digital behaviors for other common activities including opening a savings account, resolving a fee dispute and making a bill payment stayed unchanged during the lockdown and is expected to stay that way post-lockdown
Expect Fewer Branch Visits, Willingness to Travel Further
- Older respondents are less likely to reduce branch visits after the lockdown: 59 percent of respondents between 25-44 said they would reduce branch visits, compared to 43 percent for respondents aged 45-54, 34 percent for respondents aged 55-64 and 30 percent for those older than 65
- Post-lockdown, respondents said they are willing to travel longer distances to their nearest branch provided their bank offered best-in-class digital capabilities. Travel time tolerance increased from a 26-minute walk to a 37-minute walk on average in urban settings; and from a 15-minute drive to a 28-minute drive on average for suburban/rural settings
Customers Raise-the-Bar on Digital Capabilities
- A majority of respondents (55 percent) said they would never consider opening an account at a bank that did not have best-in-class digital capabilities
- When asked if they are completely satisfied with their primary bank’s digital offerings, only a moderate percentage of respondents agreed at the big five banks (28 percent) and second tier banks (31 percent), while a larger percentage of respondents agreed at credit unions (41 percent). Even digital-only banks have room for improvement: only 47 percent of respondents who banked at a digital-only or neobank said they were completely satisfied
Simon-Kucher will be hosting a Creating a Resilient Distribution Strategy in Banking webinar inspired by these findings. Contact the firm to sign-up.
Full-survey results are available on request.
About the Survey
The Simon-Kucher & Partners survey was conducted in June 2020 and included 485 participants in Canada. Survey results are derived from a good distribution across the population with representation for significant variables including employment, age and marital status.
Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with more than 1,400 professionals in 39 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.