With a market share of 20 per cent, 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 a new survey by the Canadian Federation of Independent Business (CFIB).
“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, Senior Vice-President of National Affairs at CFIB. “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.”
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 per cent market share. This is up by over 50 per cent since the year 2000.
Credit unions more than tripled their market share since 1982 and have a market share of 12 per cent. Conversely, the Canadian Imperial Bank of Commerce (CIBC) continues its decline, going from more than 20 per cent market share in 1982 to less than 9 per cent in 2019. Bank of Montreal (BMO) has also been on the decline since 1997 and currently holds just over 9 per cent market share.
Market share by region and size
Where regional financial institutions exist, they are often seen as better able to understand their community’s needs. As a result, institutions like Desjardins in Quebec and ATB Financial in Alberta beat out national competitors for the biggest market share in those markets.
Business size also affects where a business is likely to bank. 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 per cent – 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. Having access to financing is also critical to the success of small businesses, allowing them to grow, create jobs and reinvest in their communities,” added Pohlmann. “This is why CFIB encourages all banks to develop a strategy to focus on small business as it can be of great benefit to the bank and to the local economy.”
For more details, consult the full Small Business Bank Market Share report.
This paper presents findings from the CFIB National Banking, Financing and Payments online and paper survey was conducted from April 9 to July 29, 2019 and is based on a sample of 11,599 small business owners from across Canada. For comparison purposes, a probability sample with the same number of respondents would have a margin of error of plus or minus 0.91 per cent, 19 times out of 20.
Market shares for Credit unions between 2006 and 2015 have been adjusted retroactively to take into account changes in the methodology. Small businesses that did not select “Credit union” but wrote a financial institution that is a Credit union in their answer are now being considered as if they had selected “Credit union”.
It should be noted that some business owners may be participating in exclusive discounts offered by Scotiabank through the CFIB Scotiabank Savings Program.