A report conducted by the Competition Bureau Canada said banks use customer stickiness techniques to prevent comparison shopping, according to Blacklock’s Reporter. .“Competitors closely tracked and promoted multi-product sales as a means of anchoring customers or encouraging customer stickiness,” said the Competition Bureau in a report. .“Personal transaction and credit card accounts in particular were cited as critical to lowering customer attrition as a whole.”.Customer stickiness makes it difficult for any rival to challenge Canada’s five largest banks. .The Competition Bureau said there are often direct costs associated with customers switching, such as break fees on mortgages or term loans, lost interest on term deposits, fees for investment transfers and possible missed payments when changing accounts. .It said banks track customer retention rates. Any new rival would have difficulty in the Canadian marketplace. .The Competition Bureau went on to say incentives “would be required of an entrant seeking to establish a customer base.” .“Impediments to customer switching may contribute to high barriers to entry when they limit an entrant’s ability to attract a sufficient customer base to operate profitably in the relevant markets,” it said. .Documentary evidence and stakeholder interviews emphasized there were major barriers to customer switching in several applicable markets..Stakeholders noted Canadians are reliant on their primary banking relationship for everyday transactions and their overall financial security, such that there are significant costs and risks associated with potential disruptions after switching providers. .These comments came in a report endorsing the Royal Bank of Canada’s (RBC) $13.5 billion takeover of Hongkong and Shanghai Banking Corporation (HSBC). .RBC has 1,162 branches and earned $50 billion. Meanwhile, HSBC had 128 retail branches and $2.2 billion in annual revenue. .A draft code of conduct published in February cautioned Canadian bankers to mind the bonuses awarded to managers for aggressive sales tactics. .READ MORE: Canadian banks told to mind their bonuses.“Leaders actively shape the culture by what they say and do and do not say and do,” said the Office of the Superintendent of Financial Institutes. .“This includes senior leaders, including senior management and heads of oversight functions setting a consistent tone from the top.”
