Even before the COVID-19 outbreak, our research showed that Canadian consumers were facing multiple financial challenges and were worried about their financial situation. To see how the pandemic was impacting consumer finances and behaviors, we surveyed 1,119 Canadian online adults in April 10–15, 2020 and found that Canadians:
- Are already feeling the impact of COVID-19 on their finances. Twenty percent of Canadian adults have seen their income (hours and/or wages) reduced due to COVID-19. This is impacting their ability to spend and meet financial commitments: Most have reduced spending to the minimum, and 13% have missed a bill or loan payment. This spells trouble given that, even before this crisis, many Canadians felt overwhelmed by debt.
- Have become much more anxious about their financial situation. The number of Canadians who are anxious about their financial situation has more than doubled, from 19% before COVID-19 to 46%. Our data shows that older generations are feeling more confident due to less debt and their reliance on pensions, while Millennials and younger adults, people with dependent children, or those who have been laid off are worrying more about their financial future.
Now more than ever, banks and financial services companies need to offer more holistic and personalized solutions that support and sustain customers’ financial well-being. But banks have their own battle to fight, as well, because customers’:
- Depleted finances are chewing up banks’ profits. The crisis has forced banks to commit almost three times more money to bad loan provisions, impacting banks’ profits worldwide. Canada was hit a bit later, and the full impact is still not evident in Q1 results. For example, the Royal Bank of Canada reported a 5% year-on-year growth in net income in Q1 2020 — but they expect a tougher Q2, having processed about 250,000 payment deferrals on mortgages and other loans for customers impacted by the COVID-19 crisis.
- Changing behaviors will reduce transactions and alter credit demand. One in three Canadian adults (32%) have delayed major purchases, and 17% have postponed major life events because of COVID-19. As customers hit pause on big-ticket items, delay life events such as marriages, and postpone home purchases, banks will feel the impact through reduced demand for loans and mortgages and will need to fight for deposits as consumers tap into savings to finance day-to-day purchases.
You can see our research on the impact of COVID-19 on financial services customers and read more about COVID-19 on our public content page here. There, you will find forecasts and advice on how companies should respond now and at the same time think strategically about the longer-term impact of the current crisis.
In addition, we’re currently developing planning tools that will help banks navigate three economic scenarios Forrester is forecasting for COVID-19, so stay tuned!
- Age of the Customer
- CMO Trends
- customer centricity
- customer engagement
- customer experience
- customer insights
- customer loyalty
- customer segmentation
- customer-centric design
- data insights
- digital business
- experience design (XD)
- financial services
- member experience
- values-based customer experience
- wealth management