Bank loyalty doesn't always pay dividends
The majority of Canadians admit to never switching banks. This loyalty to their existing banks is costing Canadians, as many are paying over $1,400 in bank fees over their lifetime.
Click below to jump to a different section of Ratehub.ca's 2021 Digital Money Trends Report
Canadians’ loyalty to their primary bank is costing them
If there was one clear message we received from our banking and investing survey findings, it was this: Canadians are loyal bank customers. But is that dedication paying off?
Of those surveyed, 70% claimed they have held the same bank account for 11 years or more, and a whopping 80% said they have never switched bank accounts at all.
While the comfort and convenience of staying with the same provider certainly has value, our survey revealed that nearly 1 in 3 Canadians are paying $10.96 or more in bank fees every month. Combined with our knowledge that a large majority of customers are staying with their bank for at least 11 years, this means a majority of people have paid $1,400 or more in bank fees over the course of their lifetime.
With the arrival of new banking innovations such as hybrid and no-fee online accounts, there have never been more alternatives available for customers looking to save on monthly fees. Add to that the 2021 fee-hike announcement from four of Canada’s biggest banks, and it may be time for many Canadians to explore their options.
Brick-and-mortar is no longer a priority, but low fees are.
While brick-and-mortar banks are still valued by some we surveyed (15%), the COVID-19 pandemic and rise of virtual banking has changed Canadians’ perspective on what’s most important when it comes to their chequing and savings needs. With the ability to do almost the entirety of their banking from home, many customers didn’t consider physical locations a must-have in 2021.
When we surveyed Canadians to ask them what they looked for first when shopping for a bank account, the majority (60%) cited low fees as their top priority. Given recent economic instability and the plethora of new banking options available, it’s not surprising that customers are looking for a simpler, cheaper way to store their money.
In addition to these findings, we discovered that security/fraud protection and customer service were also important, with 39% and 32% of those surveyed telling us those benefits were of the most interest to them.
Canadians are hesitant to adopt digital investment brokerages.
As digital investment brokerages, like Wealthsimple, Questrade and BMO SmartFolio, proliferate across the investment world, our survey found that the vast majority of Canadians aren’t ready to take the plunge with digital brokerages just yet.
Out of those queried, 81% told us they don’t currently use a digital brokerage, and 66% said they don’t plan on ever using one. Reluctance was highest among those 55 years and older, 81% of whom said they wouldn’t consider using a digital broker.
Income bracket also seems to play a role. 75% of those making $40,000 or less annually said they are not currently considering using a digital brokerage.
High-interest savings accounts preferred over GICs
In addition to our survey, we also took a look at what visitors to our site were searching for in 2021.
While it seems like little has changed since 2019 when it comes to banking preferences, 2020 saw a steady rise in users looking for savings accounts over GICs, a pattern that continued through 2021. Given the choppy financial waters caused by COVID-19, this may indicate an increased interest in short-term, easily-accessible savings.
Google search trends
We analyzed the top banking-related Google keyword searches from September 2019 through 2021, discovering what options Canadians were looking for when they went online.
Queries for RRSPs have been most popular over the past three years, peaking particularly high in February of 2020 (266,500 searches) and 2021 (314,030), then experiencing a lull during the summer months.
Searches for TFSAs had a nearly similar trajectory, experiencing spikes in January of 2020 (142,000) and 2021 (264,900) before gradually declining as the year progressed.
Mirroring what we found in our survey, interest in online brokerages and robo advisors remained low, with searches in those areas peaking in January 2021 at 13,630 and 11,300, respectively.
Click below to jump to a different section of Ratehub.ca's 2021 Digital Money Trends Report
For more information on Ratehub.ca's 2021 Digital Money Trends Report and survey methodology, click here.