More than half of Canadian business owners who have switched banks have done so due to poor customer service, according to a report by the Canadian Federation of Independent Business released March 16.
“If the big banks want to retain their small business clients, their primary focus should be on improving their customer service,” said CFIB senior vice-president, Corinne Pohlmann.
Small business owners often feel like the service they receive from larger banks is “not fully up to the standards they expect,” Pohlmann said, adding that it’s not surprising that they choose to switch their banks.
The report said small business customers were most likely to switch among the Big Five banks because of customer service, while they switched between smaller financial institutions mostly due to issues with accessing financing.
It said another reason they have for switching banks, behind poor customer service at 52 per cent and issues with accessing financing at 44 per cent, was due to fees or pricing (39 per cent).
Nationally, Royal Bank of Canada has the greatest small business market share in 2022 with 19 per cent, although it doesn’t lead in any regional markets, the report said.
Scotiabank was second with 17 per cent of the market, meanwhile TD Canada Trust came in third with 16 per cent and was the only big bank to gain real ground since CFIB’s last banking report in 2019.
Canadian Imperial Bank of Commerce (CIBC), on the other hand, had a declining market share of less than nine per cent in 2022 from more than 20 per cent market share 40 years ago. The Bank of Montreal (BMO) has also generally been on the decline since 1997.
Meanwhile, the report said smaller financial institutions, specifically credit unions, held 13 per cent of the market in 2022 – more than triple their market share since 1982.
“Small business clients often have unique and specialized banking needs,” said the report’s author, Taylor Matchett.
Business owners need products and services like business advice, investments, succession planning and retirement savings, in addition to day-to-day banking, Matchett said.
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“Given how important financial partnerships are to business success and the different banking options in the market, banks across Canada should consider how to best serve small businesses if they want to remain competitive and keep their clients,” she said.
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