Thank you. I’m delighted to be here today and I’d like to thank Jean-Sébastien Lamoureux and Ivan Roy from the MBA Association for extending the invitation. I really appreciate that all of you came out. It’s also a real pleasure that many of our members from the CBA could join us.
As you know from my biography, I’m based in Toronto but my roots are very much here in Quebec. I grew up in Quebec City and have the privilege of coming to Montreal regularly with the CBA.
For those of you that don’t know the Canadian Bankers Association, we represent 59 banks in Canada including large domestic banks, several regional banks, online banks, foreign banks and foreign bank branches.
We advocate on behalf of our member banks at the provincial level, with the federal government and even internationally – where we are part of an International Federation of banking associations and also of the Francophone Banking Union (Union bancaire francophone)
The CBA is also very involved in financial literacy, delivering seminars to high schools across Canada for over 13 years. We have announced that we are going to provide financial literacy seminars to seniors groups starting later this year.
That’s the CBA, but let me now turn to what I want to talk about today – and that is banks and banking. Not just from the perspective the Canadian Bankers Association, but also from the experience of the customer. And many of you in the audience are customers – either as business people or as individual consumers – and I hope that what I have to say reflects your overall banking experience.
Here are the general themes that you will hear throughout my remarks:
I’m going to talk about competition – there is a great deal of discussion these days about the level
of competition in different sectors of the economy, but what about competition in the banking
I’m also going to talk about choice – and how competition results in an abundance of choice for the customer.
I’ll also talk about security and trust – something that is at the core of banking for our customers.
And, I’m going to talk about innovation – everyone in this room will have an image in their mind when they hear the word “bank”.
But you will all be equally surprised if I suggest to you that banks can also be viewed as technology companies. Actually, banks make huge investments in developing and deploying technology across all aspects of their operations.
But innovation is much more than the latest technology – innovation is a focus on continuous improvement across all fronts of our customer service.
Those are the themes I will be talking about today.
Canada’s strong, sound banks – benefitting customers
Let me start by talking about our banking system compared to those around the world.
Strength and soundness are two main characteristics of our banks, here in Canada but also on the international front. We all know that banks in many other countries didn’t weather the recent global financial crisis very well – many collapsed and others needed government bailouts.
By contrast, our banks have been recognized as the soundest in the world by the World Economic Forum – for six years in a row. This is something that our industry is very proud of, and it’s something that people across the country have recognized.
They know that there have been problems with banks in other jurisdictions, and that those problems were major contributing factors to the economic downturn and lack of growth that those countries have experienced.
Canadians recognize that we have banks that are there when we need them. We have banks that we can depend on – depend on for keeping our deposits safe; depend on for loans to buy a home or grow a business; and depend on for investment advice and for retirement planning.
Let me put some numbers behind this claim.
Here, in Quebec, businesses of all sizes have benefited from this financial stability. Since 2009 (when the global financial crisis was in full swing) to last September, the amount of credit that banks made available to businesses in Quebec increased by $24 billion.
And when we look at small and medium-sized enterprises specifically, banks increased the amount of available credit in Quebec by $8.6 billion between 2007 and the end of September 2013.
These are positive numbers, but they only become meaningful when compared to the situation elsewhere. So let me provide a telling example.
According to recent statistics, close to 90 per cent of small business loan applications in Canada were approved – and let’s remember that it was a time when the economy was still fragile and barely growing.
Compare that to the United States, where the small business loan approval rate by large U.S. banks, for the same period, ranged between 9 to 13 per cent. Our numbers tell a very positive story about bank lending to businesses in Canada.
During the global financial crisis, individuals – and businesses – across the country got a better sense of how their financial service sector operates, as well as a crash course in why having strong, sound banks matters to them directly and to the broader domestic economy
That’s reflected in the feedback from our public opinion research. Here are two examples:
- 92 per cent of Canadians say they believe that sound, profitable banks help protect their deposits and provide them with credit.
- And almost 90 per cent believe that stable banks are better able to compete internationally and to help them – and their businesses – do the same.
Banks are responsive to the needs of customers
However, being strong and sound is only part of how our banks are there for our customers. Banks must also keep pace with the demands of customers. And our banks have been doing just that.
In fact, the banks are adapting to the way their clients live and work.
Whatever the size and scale of your business, it’s always critical to be innovating on all fronts of the customer experience. Whether it’s in the use of new technology or in-person in the familiar retail space, you have to be constantly re-balancing to stay competitive and in-tune with the needs of your clients. Bankers, as it is the case for everyone in this room, are continuously rising to the challenge.
Let me elaborate on this point.
First, to keep pace with the changing needs of their clients and remain competitive, banks invest billions of dollars in renewal initiatives and new technologies every year. In fact, since 2003, they have invested over $56 billion.
Our research shows that just under half of Canadians – 47 per cent – use the internet as their preferred method of banking, up from just eight per cent 12 years ago.
Banks have adapted to this new reality that is Internet and are providing customers with the convenience of banking when and where they want, in a secure environment that customers value so much.
Further, almost 20 per cent of Canadians are already using their smartphones to do their banking. And that’s expected to grow to 35 per cent in the very near future, particularly as we move further into the mobile payments market, where you use your smartphone to pay for things at the checkout.
Banks are continuing to offer leading edge innovations in mobile technology. Technology that is accessible, affordable, and aimed at making life more convenient for customers. And again, I want to stress that this is technology that is secure – Canadians have trust in their banks, and know that they are protected if and when something goes wrong.
But meeting our customers’ changing needs isn’t just a question of the mobile or on-line environment. Banks are also constantly innovating in places where banking is more familiar.
Banks are also innovating in the services they offer in branches and other physical environments. The idea is to provide a flexible, consumer-friendly environment that is welcoming and accommodates different needs of customers, and to do this on extended hours and weekends.
As you can see, the personal aspect remains paramount at bank branches.
For some products and services – whether it’s for a home mortgage or a business line of credit or investing for retirement – there still is a highly personal component to financial transactions. Those “hopes and dreams” conversations are the connective tissue of commerce and many people prefer to have those discussions face-to-face.
And here again, there is a constant evolution in how we are serving the customer. The range of services and options available at a branch has expanded considerably to meet a much broader range of customer needs.
Nowadays, customers do not only go to the bank to execute transactions; they are looking for expertise and advice. And that’s why there are approximately 240 branches here in Montreal and 1,095 across the province of Quebec.
Let me underline one important element here. This relationship goes both ways: the customer comes to the branch, but in some cases, the branch will go to the customer. You will find financial advisers meeting customers at their home or at a local coffee shop, agriculture lenders meeting farmers on the farm, and business bankers providing advice and services on the shop floor. With over 45,000 bank employees in Quebec, there is no shortage of staff for that face-to-face conversation.
Our clear sense is that Canadians recognize that they are getting value for their money. They understand and appreciate the convenience and the accessibility they have to bank services.
Again, statistics from our public opinion research bear this out:
- 91 per cent of Canadians appreciate being able to bank at a time that’s convenient;
- 81 per cent value access to their accounts from virtually anywhere; and,
- 77 per cent are happy to avoid the time it takes to travel to their branch on a regular basis.
Competition in banking means choice for customers
Looking at the bigger picture, we note that this strategy is two folds. First, it allows for leading-edge technology to be implemented. Second, it makes it possible to obtain face-to-face services if desired. As a whole, it is at the heart of an exceedingly competitive banking sector in Canada.
There’s intense competition to attract and to retain customers over the long-term. At the same time, consumers are more informed and empowered than they have ever been. They have unprecedented choice and they know how to use it to their advantage. So let me talk a bit about choice.
When it comes to financial services, Canada has over 80 banks, 43 of which provide services to retail customers. And that’s not including credit unions, like Desjardins here in Quebec, trust companies and other financial services players, all of whom are vying for a share of the same market.
Frankly, you’d be very hard pressed to think of any other sector where there is as much real competition and where consumers have such clout – as well as the means to use it.
Let’s pause for a minute and think about all the national brand names in other industries that market to consumers – be it groceries, hardware, telecom or pharmacies – and compare the level of competition in those sectors to the amount of competition we have in banking. Our customers have incredible choice.
Sometimes, it only takes a mouse click to access the site of another bank than yours! The banks
are all aware of that.
As a result, four million Canadians have switched primary banks over the past five years and 70 per cent of those who did so said it was easy. That data was included in a study released last year by EY.
It’s a figure that shows how high the banks have set the bar for customer experience and satisfaction.
It means that however cost-effective it may be to implement a simple, one-size-fits-all approach, it’s not a strategy that will succeed. At least not in the face of such fierce competition.
What that means is that customers can find products, services, and packages according to their needs.
Currently, almost 33 per cent of Canadians pay no monthly service fees, 33 per cent pay less than $15, and youth, students, seniors and new Canadians have access to discounted or free accounts. The major banks all offer low fee accounts. You can pay a little and just get the basics or you can pay a bit more and get more value-added services. It’s all about what you want as a consumer. And that story is replicated throughout the range of banking products and services on offer to customers.
With so much competition in the marketplace, what have Canadians been telling us about their impressions of banks?
Today, 81 per cent have a favorable impression of banks – up from just 59 percent in 2001. That’s a huge leap.
And when asked about their own bank, 90 per cent have a favorable impression, something that carries a lot of weight in a competitive business.
One international survey – the 2013 World Retail Banking Report – found that Canadian customers exhibited the highest Customer Experience Index scores. And Canadian customers had the highest proportion of positive customer experiences of the 35 countries surveyed.
Taking care of customer complaints
I’ve focused on the innovation, competition, choice and security in banking today – all of which is customer driven. There is something else that banks do well when it comes to their customers: providing them with a clear, fair, simple, and free process for resolving complaints.
Think about it: More than four billion customer transactions flow through the largest banks each year, that’s more than eight thousand every minute of every day. The vast majority of these transactions are completed without incident and to the satisfaction of the customer. That’s quite an accomplishment when you think about it and it reflects a very high standard of performance and execution.
Nevertheless, whenever there’s that kind of volume, there will occasionally be complaints. When these arise, there’s a transparent, simple process available free of charge to customers to help resolve those issues. It starts internally and if the banks can’t resolve it, the final step is with an independent third party.
It’s easy to find where to turn to get this help – it’s all online and the contacts and criteria are clearly
spelled-out. Again, can you think of other service industries that can match this commitment to customer complaint resolution?
I know we all have jobs to get back to this afternoon, so I’ll conclude my remarks.
I’ve presented to you the banking experience from the customer point of view. I know that occasionally there will be situations that don’t fit with what I’ve said. But overall, it is clear that bank customers in Canada have a very different, and very positive, experience from bank customers in many countries around the world.
Bank customers in this country want ample choice provided by trusted providers in a competitive marketplace. They want innovation as well as confidence and security in their relationship with banks. And they want a fair and simple process to take care of problems should they occur. My comments today have been about how our banks deliver on all these.
With the intense competition among Canada’s banks, they are listening to their customers. They are also in fighting form – wanting to keep their customers by keeping them satisfied.
In short, banks want your business. And they strive to remain strong and sound in order to maintain the high standard of services they provide to individuals and to business leaders.