Credit unions and regional banks beat out the biggest banks on small business customer satisfaction
Toronto, March 5, 2020 – Small businesses say they get better customer service at credit unions and regional financial institutions than at Canada’s biggest banks, finds a new report by the Canadian Federation of Independent Business (CFIB).
“Credit unions are taking measures to be very small-business friendly, and it’s paying off,” said Corinne Pohlmann, CFIB’s senior vice-president of national affairs and partnerships. “While the big banks still have the advantage of market share in most regions, they should consider how they can better serve the needs of small businesses if they wish to remain competitive with this customer base.”
How did the banks rank
CFIB surveyed 11,599 small businesses across the country on their satisfaction with their financial institution within the areas of financing, fees, account manager and service (ex: clarity of bank statements). Credit unions not only achieved the highest overall score and ranking, but also the highest scores in each area of evaluation. ATB Financial and Desjardins came in second and third respectively, while National Bank came in fourth. For the second report in a row, HSBC received the lowest overall score, performing particularly bad in the area of service.
The Bank of Montreal (BMO) was the first of the big banks in the ranking, coming in fifth overall thanks to good results in financing and account manager. The Canadian Imperial Bank of Commerce (CIBC) placed sixth overall, mostly due to a low score in the area of fees. TD came in seventh and scored the lowest in providing financing, but received the best score in the area of service among the Big Five banks. Scotiabank came in eighth and scored the lowest out of all banks in the area of account manager. Finally, Royal Bank of Canada had the lowest score of the big banks and was ninth overall, getting the lowest rating on its fees.
Service to the smallest businesses presents the biggest opportunity for improvement
The smallest businesses, those with fewer than five employees, have the lowest level of satisfaction overall. Scotiabank, RBC and TD performed significantly better among businesses with 50 to 499 employees.
“The big banks have a lot of room for improvement when it comes to serving the needs of small businesses,” added Pohlmann. “Often, small business owners can feel like their needs aren’t taken as seriously as those of the big guys. Some banks are even charging their small business clients fees every time they move money between accounts within the same institution.”
CFIB issued a list of recommendations for banks that want to improve their performance with small businesses, including:
Reduce fees and ensure value for services offered to small and medium-sized business clients.
Eliminate fees to move money within the same institution.
Ensure that account managers work in the best interest of the client by focusing less on sales and more on providing advisory services.
Focus on “relationship” lending by ensuring small business bankers get to know their SME clients.
Continue to find ways to keep meaningful contact with small business owners in order to better understand their needs. In particular, do not abandon SMEs in non-urban areas.
“All businesses start small and they’re an important market and customer-base,” concluded Pohlmann. “Financial institutions that help their small business clients grow and remain competitive are likely to reap the benefits of loyal customers who come back to them for their other banking needs as well.”
Read the full Banking Service 2020 Report Card for more details.