OTTOWA, Canada–Credit unions in this country more than tripled their market share among small and medium-size businesses since 1982 and now control 12% of the market, according to a new study.
The new survey by the Canadian Federation of Independent Business found that with a market share of 20%, Royal Bank of Canada continues to be the most used bank by small and mid-sized businesses, while the smallest businesses, those with fewer than five employees, primarily bank with Scotiabank, according to the analysis.
“Small businesses have specialized banking needs, so it’s important to know where they bank and the kind of service they’re getting there,” said Corinne Pohlmann, SVP-national affairs at CFIB, in a statement. “That’s why CFIB has been tracking and measuring small business banking trends for decades. Over the past five years, many small business owners have turned away from some of the longstanding big banks in favor of smaller financial institution.
One Bank’s Share Surges
Since the last CFIB banking survey in 2015, RBC is the only Big 5 bank that gained ground. Scotiabank has maintained its status as the second most frequently used bank among small businesses in 2019, with 17% market share. That figure is up by more than 50% since 2000, according to the CFIB.
The survey found Canadian Imperial Bank of Commerce (CIBC) continues its decline, going from more than 20% market share in 1982 to less than 9% in 2019. Bank of Montreal (BMO) has also been on the decline since 1997 and currently holds just over 9% market share.
According to the CFIB, where regional financial institutions exist, they are often seen as better able to understand their community’s needs. As a result, institutions such as Desjardins in Quebec and ATB Financial in Alberta beat out national competitors for the biggest market share in those markets.
Where CUs Do Well
The CFIB said credit unions do particularly well among smaller businesses, although their market share decreases as the number of employees in the business increases.
“The vast majority of businesses in Canada – 99%– are small. In addition to regular business banking services, their owners usually need a variety of complementary services, from investment and retirement planning to personal banking,” added Pohlmann.