The Canadian Financial Services Switching Study
What motivates some 6 million Canadians to move one or more of their bank accounts from one financial institution to another every year? Well, the ‘Switching Study’ has an answer for you ….. and a whole lot more.
The "Switching Study" is a syndicated product available to Canada’s financial institutions and subscribed to by most of Canada’s main banks. Over the years, the “Switching Study” has become the authoritative voice for understanding switching behaviour in Canadian financial services. Most of Canada’s main banks have been subscribers for well over a decade.
A perennial question for marketers is: What can I do to ‘up my marketing game’. For example, should I improve my levels of service? Offer better promotions? Make the online onboarding process easier? Stay open longer? Here the “Switching Study” can help. Naturally you will have your own convictions about what needs to be done. But the study of switching can help you confirm that what you are planning to do matches what really works in the real world of financial services switching.
The Switching Study is based on a simple truth, one which many marketers forget. In a market with a long purchase cycle, your real target market is never financial consumers in general. Why? Because, over a 12 month period, only 1 in 5 individuals actually switch. What’s more, this number rarely changes from year to year. So, your real target market is those who are planning to switch.
Why is that important? Well, for one, these individuals tend to be different, and considerably younger. For another, the real size of the switching market varies hugely by product and the level of marketing opportunity with it. For another, what makes people switch is not always what you expect. By examining actual switching behaviour, therefore, you can see what actually works in the marketplace.
The 12 Benefits of Studying Switching
- Understanding how big the market is - track changes in switching incidence over time
- Tracking market dynamics – for example, track changes in the types of products being switched
- Planning your media spend – identify the information sources that switchers use to help them decide
- Assessing how many switchers you are attracting (and how many are switching away)
- Developing new products based on what actually attracts switchers
- Planning promotions based on those promotions-types that have been shown to work
- Developing marketing strategies separately in order to 1) attract new clients and 2) retain current ones
- Identifying your competition – where switchers TO you are coming from
- Identifying your competition – where switchers FROM you are going
- Determining which product features – separately for all nine product categories – are most likely to attract switchers.
- Defining your target group in considerable detail – demographics, financial habits, information sources consulted, core motivations and more
- Uncovering the emotional dimensions of the switch.
Moreover the “Switching Study can do this for 1) Canadian financial services in general and 2) the 9 consumer financial products separately.
In More Detail
First conducted in the late 90s, the “Switching Study” has been repeated every two years since. The study begins with a 5 minute examination of a cross-section of 40,000 Canadians interviewed online to identify those who have switched. Typically, a total of 5000 switchers of personal financial services in Canada in nine product categories are identified from this process and then interviewed in the main 20 minute exercise. The design allows for an overall, macro look at Canadian switching patterns as well as the detailed examination of the nine consumer financial products. The basic structure of the interview is retained wave-to-wave with new questions added as market conditions change.
Study deliverables include the overall report plus nine detailed reports, one for each of nine product categories – savings accounts, chequing accounts, GICs, credit cards, loans and LOCs, mortgages, RRSPs, investments and TFSAs. The overall report includes an examination of results from the client’s perspective. The individual product reports detail results by product. These are typically distributed to the client’s individual business units.
Why Study Switching?
There are three primary benefits of The Switching Study:
1) Addressing Behaviour Not (Just) Intentions.
When people actually reach the point of making a decision they often act in a way they hadn’t expected. A chance encounter with that special, helpful individual, or finding that promotional deal that was too good to resist, can trigger a decision that was unanticipated. What seemed important suddenly takes on a different shape in the actual moment of decision-making. By analyzing switching behaviour as opposed to intentions, therefore, we can obtain a more reliable reading of the factors which motivate a switch, together with their relative importance.
2) Offering an Early Warning System on Change.
Year after year we find that about 1 in 5 Canadians switch one or more financial products over a 12 month period. We estimate that these switchers switch perhaps only 15%, of their total financial assets and liabilities. Hence change occurs slowly.
But over time - make no mistake - the overall market will come to look like the switching patterns we are seeing right now. Thus the study of switching offers an early warning view on change, alerting you to what is likely to come in the next few years.
3) Detecting the Rise of Fintech and Disruptive Financial Institutions.
Of course, we know that change is happening. What we don’t know is how soon and just how extensive it will be. In recent years – since the pandemic – we have noted an escalation in the rates of change. Thus the study of switching can alert us early on to the rise of fintechs and alternative financial institutions and whether they are gaining traction. Just as importantly, the study of switching can help us understand why they are having the success they are and what you can do about it.
Switching Study Fast Facts
40,000 screener interviews conducted online to identify financial services switchers
5,000+ completed 20 minute interviews in English and French
7 major Canadian markets: Halifax, Montreal, Toronto, Winnipeg, Calgary, Edmonton and Vancouver
10 reports – the Main Report plus 9 in depth, individual product reports (Savings, Chequing, GICs, Credit cards, Loans/LOCs, Mortgages, RRSPs, Investments and TFSAs).