Banks are like religions, people are often born into them.
The usual story is: at age 13 the parents bring their early teen to their bank to set up a chequing account and by age 19 the teen gets a credit card with the bank and the lifelong bond begins. This has been true for generations, especially in a country in Canada where there are only a handful of regulated banks that dominate the space.
But, there is a reason so many people have abandoned the traditional banks for online options like Tangerine, and there’s a reason Mogo (MOGO.Q) has 700,000 members – the banking system is broken and in the digital age it’s now easier than ever to figure that out.
One of the main issues is that most banks have not figured out what UI/UX design is, their websites look like they haven’t been updated since 2006 and people are often left using 3 or 4 different apps for their banking needs.
4 Major Problems Of the Canadian Big Banks
1. Bank apps and websites are outdated and time consuming
Big banks have always acted as middlemen between someone’s wealth and debt, or an investment. Some investors have cut out the bank’s investing platforms and invest through apps like Robinhood and Questrade. However, while many people do still people buy stocks through an account with a big bank, many of the other features banks offer are being utilized less, partially because the apps and websites that hold them and their information are so poorly designed.
Here are the reviews on Scotiabank and RBC’s apps, 2 of Canada’s biggest banks:
To put the final nail in the coffin, here is an uncropped version of RBC’s (Canada’s Largest bank) website on a laptop.
Again, hello 2006. Yikes.
2. In the current bull market people are now more than ever buying individual stocks and trading crypto without the need for a financial advisor
Since the market recovered after the crash of 2008 most of the world has seen a strong bull run. With industries like crypto and cannabis taking off last year, more and more people are looking to cut out the middleman and instead take matters into their own hands as they see more of their friends making money doing this.
3. Interest rates are far lower than on online banks with more fees than online banks
At the big banks in Canada we were not able to find an interest rate higher than 2% on a savings account, below are Tangerines numbers whose numbers far outweigh the big banks. Tangerine is an online bank which is owned by Scotiabank. Users can buy stocks through their mutual fund, open TFSA’s, have no fee chequing and saving accounts and apply for a Tangerine credit card.
4. People trust banks less and less every year
In the 2016 UVIC survey ranking trust among Canadian brands.
TD ranked 98th among 240 brands. Other major banks did not fare much better: RBC was 155th, Scotiabank 94th, Bank of Montreal 86th. CIBC came in at 74th — higher than its competitors, but far behind top-ranked Mountain Equipment Co-op, President’s Choice and Costco. Or, to put it another way, with Colgate coming in 43rd, Canadians trust their toothpaste more than those who handle their money.
The Gustavson Brand Trust Index looks at brand trust from three important angles: functional trust, relationship trust and values-based trust.
Functional trust is trust that the brand provides high quality and good value. Relationship trust is about how the brand interacts with individuals, and values-based trust reflects the brand’s social responsibility.
( )is a fintech company who has built a great app that has attracted over 700,000 members. Mogo’s app does what the big banks have not been able to accomplish as of yet, keep users happy. Mogo users have given the app very favourable views, especially when contrasted with RBC and Scotiabank’s reviews as seen above.
We spoke with Mogo last week to get a bit more understanding behind their vision, these guys are really going for it. They did $15 million in revenue last quarter, have over 200 full time employees which largely consists of developers and product teams spread across a stunning office in downtown Vancouver.
Mogo wants to change the banking industry, and with its 700,000 users it has the audience to leverage key partnerships that could allow it to really shake up the banking industry.
To read more about Mogo’s products check out this article:
Disclaimer: Mogo is a paid client of High Energy Trading, click here to read full disclosure.
High Energy Trading is not a licensed broker-dealer, market maker, investment advisor, or underwriter. All information that we provide is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities.