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Digital Trends – What Canada Can Learn From The U.K.

This Quarter in Canadian Banking

Accelerated by the COVID outbreak when much of the branch network was closed and staffing was thin, migration to digital delivery continues to be a major trend among Canadian financial institutions. Branch transactions have rebounded slightly in recent months, but they remain 20 to 30% lower than they were before the pandemic, and interactions have swung to more complex sales and advice. Simpler sales, such as everyday banking and account openings, have continued to shift toward digital channels, presenting significant implications for the future.  

In assessing its digital future, Canada may be able to learn from the U.K., which also has a few large institutions controlling most of the market. Having thinned its branch network considerably, the U.K. has gone largely digital, with almost 80% of its chequing accounts now being opened through digital channels. Driving much of the change is mobile banking as mobile devices have become virtually ubiquitous. (See Figure 1.)  

Figure 1: Digital Account Opening – U.K.

Canadians are exhibiting similar behaviors, albeit at a slower rate. In recent years the mobile channel, for example, has captured 22 to 24% of applications. (See Figure 2. 

Figure 2: Channel Mix: Applied for a New Product - Canada

Notes: Date – Jan 2018 – Sept 2022 | ABM and Live Channel exclude due to no usage across any years | All Digital includes Mobile and Online Banking​
Source: Curinos Analysis, Canadian Financial Monitor (CFM)

To win in the coming digital-forward environment, banks will need to reconsider their strategies and investments and be sure they include:  

  • Personalized Experiences: Distinctive experiences for each digital subchannel, such as desktop (large screen) and mobile (smaller screen), will be essential. To meet users’ functional preferences and to build trust, experiences will also need to address life stage, current financial profile and attitudes.
  • End-to-End Account Opening: Opening a bank account digitally from start to finish with sufficient identity verification will soon be table stakes. To differentiate, banks will need to make this process as frictionless as possible by incorporating on-demand help in each medium, easing and assisting in funding the account and creating immediate access to funds.
  • Branch Network Planning: Although branch networks continue to exhibit few net closures, banks will need to have strategies in place should consolidation become necessary. As simple transactions continue to migrate to digital channels, they will also need to rethink the function of the branch, pivoting to staffing models and layouts that handle more complex sales and offer financial advice. 

The future of consumer banking is clearly digital, and in the U.K., the future is now. To size up and prepare for what’s to come, Canada may be well advised to take a page, or several, from its playbook.  

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