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News   February 22, 2024   by Adam Malik

Small biz likes credit unions over big banks: Survey

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Canadian small businesses continue to be more satisfied with credit unions than with the Big Five banks in terms of overall service quality.

The findings come from the Canadian Federation of Independent Business (CFIB), which released the third and final report in its “Financing Main Street” research series.

The report highlighted a general decline in small businesses’ satisfaction with banking services in 2022 compared to 2019, with credit unions maintaining their strong position.

Corinne Pohlmann, executive vice president of advocacy at CFIB, pointed out that despite the Big Five holding most small business market share, they fall short in meeting their clients’ needs as effectively as credit unions. Pohlmann cited high banking fees, difficulty in direct contact, and a lack of serious consideration for unique banking needs as major concerns for small businesses.

CFIB’s evaluation ranked banks and credit unions on a scale of 0 to 10 across various parameters, including financing, fees, account manager quality and service aspects like online banking access and clarity of bank statements. In 2019, credit unions not only scored the highest overall but also led in all four evaluation areas. Fast forward to 2022, they continued to dominate with an overall score of 5.97, excelling in banking fees and account manager categories.

Michelle Auger, CFIB senior policy analyst, expressed concern over the top score being below 6.0 when the highest possible score is 10.

“It shows there’s still a lot of room for improvement for all financial institutions, even the top-rated ones,” she said.

The report also assessed banking services during the COVID-19 pandemic across four categories: Access to pandemic financing, fee/payment assistance, remote service offering, and general satisfaction. Desjardins, National Bank, and credit unions received the highest scores, while the larger banks ranked lower.

To improve access to financing and enhance the quality and affordability of banking for small businesses, CFIB recommended several measures for governments to enact. These include ensuring adherence to the Small Business Banking Code of Conduct, expanding the consumer provisions of the Bank Act to include small businesses, carefully reviewing banking mergers and acquisitions and ensuring affordability and accessibility of new banking/payment technologies for small businesses.

Financial institutions are also encouraged to increase access to low-cost financing, understand their small business clients better, and avoid promoting credit cards as the primary source of long-term financing.

“Small businesses deserve efficient, responsive, and helpful banking services,” Pohlmann said, emphasizing the need for financial institutions to adapt their services to meet the unique demands of this sector.

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