Tangerine, Scotiabank’s Canadian digital-only bank, has substantially enhanced its digital customer experience. Mark Nicholson, Tangerine’s VP of client experience, says the redesigned website introduced last September was the most fundamental change since the bank’s launch in 1997. Robin Arnfield reports
Direct banks
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Although the Canadian banking market is dominated by branch-based banks and credit unions, direct banks and fintechs are an increasingly important part of the financial landscape.
ING Direct Canada and President’s Choice Financial, a supermarket banking joint venture between retailer Loblaws and CIBC, were the first direct banks in Canada. They were joined by Zag Bank, acquired by Desjardins to extend the Quebec-based cooperative financial institution’s reach across Canada; Alterna Bank, owned by credit union Alterna Savings; and EQ Bank, owned by Toronto-based lender Equitable Bank.
There are also fintechs such as Koho and Mogo which offer prepaid debit cards linked to mobile apps and personal financial management (PFM) tools, and robo-advisor providers such as Wealthsimple.
In August 2017, CIBC and Loblaws said they would dissolve their partnership and the reportedly 2 million PC Financial banking customers would be transferred to CIBC’s new digital bank, Simplii Financial.
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By GlobalDataLoblaws retains sole ownership of its PC Financial Mastercard credit card customer base, with the credit card continuing to be tied to Loblaws’ loyalty program, now renamed PC Optimum. In November 2017, the Canadian Press news agency reported that there were technical issues when Simplii Financial went live with the banking customer base transferred from PC Financial.
Full-service model
Tangerine, which currently has over 2.1 million members and C$38bn in total assets, claims to be the only direct bank offering a full range of banking products. Customers can opt for Tangerine chequeing and instant access savings accounts, Tax-Free Savings Accounts, debit/ATM cards, lines of credit, mortgages, fee-free cashback credit cards, Registered Retirement Savings Plans, and index-based mutual funds.
“Because we are a full-service bank, we find an increasing number of members use us as their primary bank,” Nicholson says.
Initially, before Tangerine introduced chequeing accounts, customers used it as a home for their savings and did their day-to-day banking with another institution. However, Christie Christelis, president of Canadian consultancy Technology Strategies International (TSI), says consumers are still likely to remain with a bricks-and-mortar financial institution. “For the vast majority of Canadians, their first choice for a primary bank would be one of the big five,” he says.
“Typically, 75% of respondents to TSI’s survey say that one of the Big Five Canadian banks is their primary bank. If we extend that to other well-known banks and credit unions such as National Bank of Canada, Desjardins, Vancity, Laurentian Bank and HSBC Canada, that percentage goes up to 85%.
“There may be a small cadre of consumers to whom a digital-only bank may appeal as a primary bank. Otherwise, a digital-only bank’s role is as a secondary bank – possibly one that offers the best rates on savings accounts, or has the best brand image.”
Digital onboarding
Tangerine has upgraded its client enrolment process to make digital onboarding easier.
Under Canada’s banking regulations, FIs are no longer required to obtain paper signatures from new account applicants, Nicholson says. “A customer can complete the Tangerine account-opening process in a few minutes and be up and running with some products,” he adds. “We do a credit check on them to verify the ID details they supply such as their address and date of birth, and then ask them some random questions from their credit file.”
“Most banks require you to apply for one or more products before you can become a client,” says Nicholson. “Our model is similar to that of the retail industry. You, first of all, become a member of Tangerine and then you decide which of our products to put into your Tangerine ‘shopping basket’. Over 25% of new clients start with more than one product during enrolment as a result of our new onboarding process, instead of just taking out one product.”
So far this year, Tangerine has seen a 32% increase in customers compared to the same period in 2017. “People are attracted by our lack of fees and higher savings interest rates and lower borrowing rates,” says Nicholson. “They then stay because they like the customer experience.”
Nicholson says 99% of Tangerine transactions are digital, and there is a heavy predominance of mobile users. However, clients in a number of big cities have the option of face-to-face banking.
Tangerine operates Tangerine Cafés, pop-up locations and permanently sited kiosks in Canada where clients can sign up for an account and engage with a Tangerine associate.
Website upgrade
New features offered on Tangerine’s website include spending categorisation with colourful visuals to make it easier for clients to see where their money is being spent – for example, on shopping, housing or transit. The Transactions section also includes transaction details for all the client’s Tangerine accounts in a single location for greater convenience.
“We’re the only Canadian bank to offer PFM from within the native banking app,” says Nicholson. “Other banks may offer access to third-party PFM capabilities.” TD, for example, offers TD MySpend based on software provided by US-based Moven.
“We also offer authenticated chat with our agents which is fully integrated within a transaction,” Nicholson adds. “This means that, when you chat with an agent, they know where you are in the transaction process.”
The new Bills section lets clients see their bill payment history and how their bills have trended over time. Quick actions such as moving money from one Tangerine account to another, or performing email money transfers, are now listed at the top of the page. When a client logs into the Tangerine site, insights appear at the top of their screen, including actionable notifications, hints, alerts and other helpful information about their account.
During the first quarter of 2018, Tangerine plans to roll out all these enhancements to its mobile banking app.
“The new customer experience involved a total code rewrite and was created simultaneously for desktop and mobile banking users,” Nicholson explains. “But we implemented the desktop version first.”
In April 2018, Tangerine will launch a beta pilot of new features designed to help customers make smarter decisions on how they spend their money and achieve their financial goals, Nicholson adds.
Mobile innovation
“Tangerine has a long history of creating simple and convenient banking experiences for our clients, and continuous innovation is a big part of how we do this,” says Nicholson.
“Our mobile banking app enables clients to log in leveraging biometric capabilities like face recognition and Touch ID or by scanning their eyes with Eyeprint ID. We also enable clients to authenticate themselves with their voice through our VocalPassword solution.”
Forrester Research’s 2017 Canadian Mobile Banking Benchmark report by Peter Wannemacher and August du Pont says: “Digital teams at most of the Canadian banks we evaluated have steadily improved the design and features of mobile banking, making apps and mobile sites easier to use, adding transactional features, and building better marketing and sales tools. But digital banking teams need to keep raising the bar to engage customers and differentiate their brands.
“Established competitors such as Tangerine, and disruptors such as Koho and Mogo are competing for customers by promising better experiences,” the report adds.
In July 2017, Tangerine announced that, for the sixth consecutive year, it had earned the highest ranking in terms of customer satisfaction among mid-sized banks in the 2017 JD Power Canadian Retail Banking Customer Satisfaction Study.
