SMALL BUSINESS OWNERS VIEWS OF BANKS AND LIFE AND HEALTH INSURANCE. Report Prepared for: February by:

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1 SMALL BUSINESS OWNERS VIEWS OF BANKS AND LIFE AND HEALTH INSURANCE February 2006 Report Prepared for: by: POLLARA Inc. ( the largest Canadian public opinion and marketing research firm, helps its clients improve their performance through strategic research designed and analyzed by consultants who are experts in their fields. Drawing on the talents of more than 650 employees located in 6 Canadian cities, POLLARA provides a full range of research services to leading global, national and local companies and to public and non-profit sector organizations. These services include quantitative and qualitative research and counsel in the areas of public affairs/public policy, employee satisfaction, customer value/satisfaction, new product development, advertising testing and tracking, branding, and consumer demand and pricing models. POLLARA consultants use innovative, leading-edge techniques to provide clients with strategic, data-driven advice.

2 Table of Contents I. Executive Summary...1 A. Concern about Privacy of Personal Information at Banks...1 B. Tied-Selling...1 C. Attitudes Toward Current Consumer Protections...2 D. Service by Banks and Bank Branch Employees...3 II. Background and Objectives...4 III. Concern about Privacy of Personal Information at Banks...5 A. Perceptions of the Amount of Personal Information Already Held by Banks...5 B. Concern With Having Business and Personal Health Information at the Same Bank Branch...7 C. Banks Use of Customers Personal Information...8 IV. Awareness of Consumer Protections Around Coercive Tied-Selling...13 A. Support for Protections that Prohibit Coercive Tied-Selling...13 B. Knowledge of Existence of Protections...14 C. Pressure to Give Financial Institution More Business...16 V. Attitudes Toward Current Consumer Protections...17 A. Privacy Risks Outweigh the Potential Benefit of Greater Access to Information...17 B. Access to Life and Health Insurance Information...19 C. Adequacy of Banks Current Selection of Financial Products...20 D. Removing Protections Will Lead to Less Choice...21 E. Bank Branches in Rural Areas...22 F. Bank Branches in Small Canadian Communities...23 G. Expectations of Price of Life and Health Insurance if Protections Removed...24 H. Expectations of Potential Savings Resulting from Banks Selling Life and Health Insurance...25 I. Views on Insurance-Related Service Charges...26 J. Concern about Banks Becoming Bigger...27

3 VI. Service by Banks and Bank Branch Employees...28 A. Overall Assessment of Banks...28 B. Assessments of Service Provided by Banks...32 C. Relationship with Account Manager...39 D. Reliable Advice and Convenient Service: Professional Life and Health Insurance Advisors vs. Bank Branch Employees...44 Appendix: Methodology...46

4 I. Executive Summary To follow is a summary of the main findings of this survey. All results are analyzed in greater detail within the report that follows this section. A. Concern about Privacy of Personal Information at Banks The majority (92%) of small business owners believe that banks already have enough or more than enough personal information about them. In addition, 86% do not want their bank to use their personal banking information to try to sell them products or services. A large majority of banks small business customers () believe that their bank has never asked them for permission to review and analyze their small business banking information, including transactions in their operating accounts, so that they can contact them with information about other products and services. Among this group, 63% would refuse if they were asked. Two-thirds (65%) of small business owners believe that this practice is not allowed. Further, if banks were to begin selling life and health insurance out of their branches, small business owners would be concerned about having both their business and personal health information at the same branch. Overall, 65% would be concerned about whether their health information is kept separate from their banking information; and 62% would be concerned about the amount of information that the bank would have about them. B. Tied-Selling Coercive tied-selling occurs when a customer is required to buy a product or service as a condition for obtaining another. Although more than half of small business owners (54%) believe that protections to prohibit coercive tied-selling should be in place, 46% of small business owners do not know that such protections already exist. Almost one-fifth of small business owners who have been approved by their bank within the past 7 years for a loan, commercial mortgage, or business line of credit felt pressure to give their bank more business. However, when asked if their bank has a formal complaint-resolution A POLLARA Report for Advocis 1

5 process in place, 34% are unsure, and an additional 32% believes their bank does not have one. C. Attitudes Toward Current Consumer Protections Currently, bank branches are not generally allowed to provide printed information to customers about their life and health insurance services or to refer their customers to life and health insurance companies. Most small business owners support these protections, as detailed through the following findings. After being provided with a description of current consumer protections, small business owners were presented with two views and asked which one best represents their own: 1. Some people want the protections removed to give consumers greater access to information about banks life and health insurance services. 2. Some people want the protections kept in place due to concerns about the privacy of their personal information and about being pressured to buy one product as a condition for obtaining another. The majority of small business owners (76%) believes that the protections should be kept in place due to privacy concerns and concerns about coercive tied-selling that is, being pressured to buy one product as a condition for obtaining another. A much smaller proportion (15%) says protections should be removed to give consumers greater access to information. These findings are not surprising given that the majority (82%) says they already have enough or more than enough access to information about life and health insurance products. In a different scenario, small business owners were presented with the following views, and asked which one best represents their own. 1. Some people say the protections should be removed to increase competition. 2. Some people say the protections should be kept in place because life and health insurance companies won t be able to compete against banks over the long term, which will eventually lead to less choice. A POLLARA Report for Advocis 2

6 The majority (66%) believes current protections should be kept in place because life and health insurance companies won t be able to compete over the long term, which will eventually lead to less choice for consumers. Furthermore, when probed about additional impacts of the removal of consumer protections that prohibit banks from selling life and health insurance from their branches, most small business owners do not expect to feel any benefits. Specifically, if these protections were removed, most (71%) small business owners expect that the price of life and health insurance would either increase (31%) or stay the same (), and the majority (69%) does not expect any savings realized by banks to be passed on to customers. Given these findings, it is not surprising that 65% of small business owners expect that any insurance-related service charges that banks might apply would be unfair. Over half of small business owners (57%) also express concern about banks becoming bigger if they begin selling life and health and insurance through their branches. D. Service by Banks and Bank Branch Employees A majority of small business owners believe they are treated unfairly by banks with respect to certain services, including: interest paid on business accounts, interest rates on business credit card purchases, and service fees for business transactions. In light of this, it is not surprising that the majority believes banks make too much profit. Four in ten small business owners believe that banks do not provide small businesses with enough access to credit. In addition, the majority of small business owners believes that life and health insurance advisors would perform better than bank branch employees in terms of providing reliable advice and convenient service. The following sections of this report analyse these findings in greater detail. A POLLARA Report for Advocis 3

7 II. Background and Objectives Currently, restrictions prevent banks from selling life and health insurance from their branches. Advocis commissioned POLLARA to conduct a telephone survey of small business owners (e.g. business owners of companies with fewer than 50 employees) to explore their attitudes toward the removal of consumer protections related to the sale of life and health insurance by banks. Specifically, this study explores: perceptions of the provision of service by banks and bank branch employees; concerns about privacy and coercive tied-selling; opinions of current consumer protections regarding the sale of life and health insurance from bank branches; and, perceptions of the amount of access small business owners have to information about life and health insurance. A POLLARA Report for Advocis 4

8 III. Concern about Privacy of Personal Information at Banks The following section focuses on small business owners opinions on the privacy of their information held by banks. The majority believes that banks already have enough personal information about them. Further, if banks begin selling life and health insurance out of their branches, most small business owners would be concerned about having both their personal health information and their business banking information at the same branch. When small business owners were asked whether they want their banks to analyze their personal banking information, including transactions in their operating account, to try to sell them products or services, eight in ten said they do not. In addition, the majority believes that this practice is not allowed. A. Perceptions of the Amount of Personal Information Already Held by Banks Nine in ten (92%) small business owners say that banks already have more than enough (52%) or about the right amount of () personal banking information about them. Only 4% believe that banks do not have enough personal information about them. A POLLARA Report for Advocis 5

9 Figure 1 Perceptions of Amount of Personal Information Held by Banks 10 52% 4% 1% 3% More Than Enough About The Right Amount Not Enough Don t Deal With A Bank Don t Know/ Q: Do you think that banks have more than enough, about the right amount, or not enough personal information about you? Small business owners most likely to share the view that banks have more than enough of their personal information include those: who feel that banks are doing a poor/very poor job at meeting the needs of small businesses (); who feel banks sell more than enough insurance products (67%); who are very concerned about the banks becoming bigger if they are allowed to expand into other businesses (66%); who would be very concerned about how much information a bank would have if their business banking and personal life and health insurance information were held at the same branch (63%); who would be very concerned about whether personal health information in insurance applications is kept separate from business banking information (62%) if banks were allowed to sell insurance from their branches; and who live in rural areas (61%, compared to 5 of those living in urban areas). A POLLARA Report for Advocis 6

10 B. Concern With Having Business and Personal Health Information at the Same Bank Branch The majority of small business owners are concerned about banks having their personal health information and business banking information at the same bank branch. Respondents were asked to imagine that banks are allowed to sell life and health insurance out of their branches and to imagine that they had purchased their life and health insurance from the branch where they conduct their business banking. In this scenario, more than six in ten small business owners (65%) would be very (38%) or somewhat (27%) concerned about whether their health information would be kept separate from their business banking such as loan applications. Figure 2 Concern About Having Business and Personal Health Information at Same Bank Branch Concern that Health Information in Insurance Application is Kept Separate from Business Banking Information 38% 27% 16% 16%3% Concern about Amount of Information Bank Would Have 34% 28% 17% 19% 3% 10 Very Concerned Somewhat Concerned Not Too Concerned Not At All Concerned Don't know/ I d like you to imagine that banks are allowed to sell life and health insurance out of their branches and you have purchased a life and health insurance policy from the same branch where you conduct your business banking. How concerned would you be about: (ROTATE) Q: Whether the personal health information in your insurance application is kept separate from your business banking information, such as loan applications? Q The amount of information that the bank would have as a result of having your business banking information and your personal life and health insurance information at the same branch? Those most likely to be very concerned about whether information would be kept separate include those who feel the banks are doing a poor/very poor job at meeting the needs of small businesses (51%), those who feel banks already have more than enough personal information about them A POLLARA Report for Advocis 7

11 (45%) and those that are very concerned about the banks becoming bigger if they are allowed to expand into other businesses (62%). Under the same scenario, six in ten (62%) small business owners would be very (34%) or somewhat (28%) concerned about the amount of information that the bank would have about them if they had their business banking information and their personal life and health insurance information at the same branch. Those most likely to be very concerned about the amount of information that the bank would have include those who feel the banks are doing a poor/very poor job at meeting the needs of small businesses (45%) and those that are very concerned about the banks becoming bigger if they are allowed to expand into other businesses (64%). C. Banks Use of Customers Personal Information Most small business owners do not want their bank to use their business banking information to try to sell them products or services offered by the bank. However, the majority believes that this practice is not allowed. Although most small business owners have not been asked for permission by their bank to review their business banking information so that the bank could contact them with information about other products and services, the majority would not give permission if asked. i. Permission for Banks to Review Customers Personal Banking Information A large majority () of small business owners believe they have not been asked by their bank for permission to review and analyze their business banking information, including transactions in their operating accounts, so that the bank could contact them with information about other products and services. Among those who say their banks did not ask for permission to review their business banking information, the majority (63%) would not give permission if they were asked. A POLLARA Report for Advocis 8

12 Figure 3 Percentage Who Were Not Asked for Permission Bank asked for permission? Would you give permission? Don't Know/ 3% Yes 17% No 10 29% 63% 8% Q: (BANK USERS) Has your bank ever asked you for permission to review and analyze your small business banking information, including transactions in your operating account, so that they can contact you with information about other products and services? Yes No Don t Know/ Q: (IF NO) If you had been given this option, would you have given your bank permission? Rural residents (74%) who were not asked for permission are more likely than urban residents () to deny their bank permission to review their personal banking information if given the option. A POLLARA Report for Advocis 9

13 Among the 17% of small business owners whose bank did ask for permission to review their personal banking information, 44% provided consent, while 47% did not. Figure 4 Percentage Who Were Asked for Permission Bank asked for permission? Did you give permission? 10 No Yes 17% Don't Know/ 3% Q: (BANK USERS) Has your bank ever asked you for permission to review and analyze your small business banking information, including transactions in your operating account, so that they can contact you with information about other products and services? 44% 47% 9% Yes No Don t Know/ Q: (IF YES) Did you give your bank permission to do so, or not? A POLLARA Report for Advocis 10

14 ii. Desire for Banks to Use Customers Personal Banking Information When small business owners are presented with a scenario where their bank reviews their business account transactions to try to sell them a product, 86% say they do not want their bank to do this while only 1 say they do want their bank to engage in this practice. Figure 5 Desire for Banks to use Small Business Owners Business Banking Information to Try to Sell Them Products 10 86% 1 4% Yes No Don t Know/ Q: (BANK USERS) Suppose you have a business chequing account at Bank A. Bank A reviews your business account and notices that you are making payments to a life insurance company. Bank A phones you to suggest that you take out a life insurance policy with Bank A s life insurance company. Do you want your bank to do this, or not? A POLLARA Report for Advocis 11

15 iii. Views of Rules Around Banks Use of Customers Personal Banking Information More than six in ten (65%) small business owners are confident that banks are not allowed to use their customers business banking information to try to sell them banking products and services while a further are unsure. Figure 6 Opinions of Whether Banks are Allowed to use Customers Business Banking Information to Try Sell Them Products 10 65% 15% Allowed Not Allowed Don t Know Q: To the best of your knowledge, are banks allowed or not allowed to use their customers banking information to sell them products and services offered by life insurance companies that the bank owns? A POLLARA Report for Advocis 12

16 IV. Awareness of Consumer Protections Around Coercive Tied-Selling Coercive tied-selling occurs when a customer is required to buy a product or service as a condition for obtaining another. Although over half of small business owners believe that protections to prohibit coercive tied-selling should be in place, they are largely unaware that such protections exist. In addition, the findings discussed in this section demonstrate that almost one-fifth of small business owners who have been approved by their bank for a loan, commercial mortgage, business lease or business line of credit over the past 7 years have felt pressured by their bank to give them more business. When asked if their bank has a formal complaint-resolution process in place, two-thirds are unsure or believe their bank does not have one. A. Support for Protections that Prohibit Coercive Tied-Selling Over half (54%) of small business owners believe that protections should be in place to prohibit coercive tied-selling. Figure 7 Opinions of Protections that Prohibit Coercive Tied-Selling 10 54% 38% 8% Should Be In Place Should Not Be In Place Don t Know/ Q: Do you believe that protections prohibiting banks from engaging in this type of activity should or should not be in place? A POLLARA Report for Advocis 13

17 Rural small business owners are most likely to believe protections should be in place (63%, compared to 52% of urban small business owners). Small business owners most likely to agree that protections should be in place include those: that are very concerned about the banks becoming bigger if they are allowed to expand into other businesses (62%); that are very concerned about how much information the bank would have if business banking information & personal life and health insurance information were held at the same branch (62%); and that are very concerned about whether personal health information in insurance applications is kept separate from business banking information (62%). B. Knowledge of Existence of Protections Almost three-quarters of small business owners are unware of protections prohibiting coercive tied-selling. Specifically, 27% believe these protections exist, while a further 27% say they do not and 46% are unsure. Figure 8 Knowledge of Existence of Protections to Prohibit Coercive Tied-Selling 10 46% 27% 27% Exist Do Not Exist Don t Know/ Q: To the best of your knowledge, do protections prohibiting this type of activity currently exist or not? A POLLARA Report for Advocis 14

18 In addition, when asked if their bank has a formal complaint-resolution process, two-thirds (66%) of small business owners either do not know (34%) or do not believe their bank has one in place (32%). Figure 9 Knowledge of Existence of Formal Complaint Resolution Process at Banks Don t Know 34% Yes 34% No 32% Q: (BANK USERS) To the best of your knowledge, does your bank have a formal process that small business owners can use to resolve complaints? Rural small business owners are most likely to say their bank has a complaint-resolution process in place (41%, compared to 32% of urban small business owners). Small business owners with businesses that have been in operation between 10 and 20 years are the most likely to say their bank does have a complaint-resolution process in place (41%); while those with businesses that have been in operation 20 or more years are the least likely (27%). A POLLARA Report for Advocis 15

19 C. Pressure to Give Financial Institution More Business Almost one-fifth (18%) of small business owners whose businesses have been approved for a bank loan, commercial mortgage, business lease or business line of credit over the past 7 years have felt pressured by their bank to give them more of their business. Figure 10 Pressure to Give Bank More Business 10 18% 1% Yes No Don t Know Q: (IF APPROVED BY BANK OR BOTH) At any time, did you feel any strong or even subtle pressure from the bank to give them more of your business? A POLLARA Report for Advocis 16

20 V. Attitudes Toward Current Consumer Protections Currently, bank branches are not generally allowed to provide printed information to customers about their life and health insurance services or to refer their customers to life and health insurance companies. Most small business owners support these protections. Furthermore, small business owners do not expect to feel any benefits from the removal of current consumer protections, and are concerned about banks becoming bigger if they begin selling insurance through their branches. These findings are detailed in the following section. Also discussed is the issue of access to life and health insurance in rural areas and small Canadian communities should banks begin selling life and health insurance through their branches. A. Privacy Risks Outweigh the Potential Benefit of Greater Access to Information After being provided with a description of current consumer protections, small business owners were presented with two views and were asked which one best represents their own: 1. Some people want the protections removed to give businesses greater access to information about banks life and health insurance services. 2. Some people want the protections kept in place due to concerns about the privacy of their personal information and concerns about being pressured to buy one product as a condition for obtaining another. Approximately three-quarters (76%) of small business owners say that protections should be kept in place due to concerns about privacy and coercive tied-selling that is, being pressured to buy one product as a condition for obtaining another. In the minds of small business owners, these concerns outweigh the potential benefit of having greater access to information. A small minority (15%) says protections should be removed to give businesses greater access to information. A POLLARA Report for Advocis 17

21 These findings are not surprising given that the majority (82%) of small business owners say they already have enough (65%) or more than enough (17%) access to life and health insurance information. These results are discussed in the next sub-section of this report. Figure 11 Protections Should be Kept in Place due to Privacy Concerns 10 76% 15% 8% Protections Should Be Removed Protections Should Be Kept in Place Don t Know/ Q: (ROTATE SOME/OTHER) Some people want these [protections removed to give businesses greater access to information about banks life and health insurance services]. Other people want the [protections kept in place due to concerns about the privacy of their personal information and concerns about being pressured to buy one product as a condition for obtaining another]. Which of these views best represents your own? (IF NECESSARY: Protections are in place that prevent banks from providing printed information to customers about their life and health insurance services or from referring their customers to life and health insurance companies. ) A POLLARA Report for Advocis 18

22 B. Access to Life and Health Insurance Information Eight in ten (82%) small business owners say they currently have enough (65%) or more than enough (17%) access to information about life and health insurance products, while an additional 15% say they do not have enough access. Figure 12 Perceptions of Access to Life and Health Insurance Information 10 65% 17% 15% 3% More Than Enough Enough Not Enough Don t Know/ Q: Do you think your business currently has more than enough, enough, or not enough access to information about life and health insurance products? A POLLARA Report for Advocis 19

23 C. Adequacy of Banks Current Selection of Financial Products Eight in ten () small business owners say that banks already sell more than enough () or enough () financial products, leaving 13% of small business owners who believe that banks are lacking in their product range. Figure 13 Adequacy of Banks Current Selection of Financial Products 10 13% 8% More Than Enough Enough Not Enough Don t Know/ Q: Do you think that banks sell more than enough, enough, or not enough financial products? A POLLARA Report for Advocis 20

24 D. Removing Protections Will Lead to Less Choice Following a description of the current protections, small business owners were asked which of the following views about the protections best represents their own: 1. Some people say the protections should be removed to increase competition. 2. Some people say the protections should be kept in place because life and health insurance companies won t be able to compete against banks over the long term, which will eventually lead to less choice. Two-thirds (66%) of small business owners say current consumer protections that prohibit banks from providing printed information to customers about their life and health insurance services or from referring their customers to life and health insurance companies should be kept in place to preserve choice over the long term. This view is held more than twice as often as the view that removing protections will increase competition (25%). Figure 14 Protections Should be Kept in Place Because Life and Health Insurance Companies Won t be Able to Compete 10 66% 25% 9% Protections Should Be Removed Protections Should Be Kept in Place Don t Know/ Q: (ROTATE SOME/OTHER) Some people say these [protections should be removed to increase competition]. Other people say the [protections should be kept in place because life and health insurance companies won t be able to compete against banks over the long term, which will eventually lead to less choice]. Which of these views best represents your own? (IF NECESSARY: Protections are in place that prevent banks from providing printed information to customers about their life and health insurance services or from referring their customers to life and health insurance companies. ) A POLLARA Report for Advocis 21

25 Both rural (64%) and urban (66%) small business owners are favourable towards keeping protections in place, as they believe it will preserve choice in the long term. E. Bank Branches in Rural Areas Approximately one-quarter (26%) of rural small business owners say there are fewer bank branches in their community than there were 10 years ago. Among this group, 39% say a bank branch where they carried out their day-to-day business banking activities has closed down. Figure 15 Perceptions of Number of Bank Branches in Rural Areas Number of Branches Rural Areas Over Last 10 Years Closure of Own Branch Same Number 53% 10 More 15% Don t Know/ 6% Fewer 26% 39% 46% 14% Yes No Don t Know Q: (RURAL BUSINESS OWNERS) And thinking about the community where this office is located, would you say that there are more, the same number, or fewer bank branches than there were 10 years ago? Q: (RURAL BUSINESS OWNERS) (IF FEWER) Has a bank branch where you carried out your day-to-day business banking activities closed down in the last 10 years? A POLLARA Report for Advocis 22

26 F. Bank Branches in Small Canadian Communities Two-thirds (67%) of small business owners believe that there will be fewer bank branches in small Canadian communities over the next 10 years, a majority (54%) of whom are very (23%) or somewhat (31%) concerned about the issue. Figure 16 Expectations and Concern for Future of Bank Branches in Small Canadian Communities Same Number 16% Number of Branches in Small Canadian Communities Over Next 10 Years 10 Concern More 11% Fewer 67% 23% 31% 23% 23% Don t Know/ 6% Q: Over the next 10 years, do you expect that there will be more bank branches, the same number of bank branches, or fewer bank branches in small Canadian communities? Very Concerned Somewhat Concerned Not Too Concerned Not At All Concerned Q: (IF FEWER) How concerned are you about this? Are you: Rural small business owners (75%) are more likely to expect there to be fewer branches than urban small business owners (65%), as are men (7 compared to 61% of women). A POLLARA Report for Advocis 23

27 G. Expectations of Price of Life and Health Insurance if Protections Removed Seven in ten (71%) small business owners believe that if consumer protections that prohibit banks from providing printed information to customers about their life and health insurance services and from referring their customers to life and health insurance companies are removed, the price of life and health insurance will either increase (31%) or stay the same () over the long term. Fewer than one in five (17%) expect the price to decrease. Figure 17 Price Expectations if Protections Removed 10 31% 17% 12% Increasing Decreasing Staying The Same Don t Know/ Q: If these protections were removed, do you expect that they would result in the price of life and health insurance increasing, decreasing or staying the same in the long-term? (IF NECESSARY: Protections are in place that prevent banks from providing printed information to customers about their life and health insurance services or from referring their customers to life and health insurance companies. ) Women (39%) are more likely to expect the price to increase than men (27%). A POLLARA Report for Advocis 24

28 H. Expectations of Potential Savings Resulting from Banks Selling Life and Health Insurance If banks were to expand into other products or services, such as selling life and health insurance through their branches, they could potentially save money as their expenses would be spread across more lines of business. Almost seven in ten (69%) small business owners do not believe that any potential savings realized by banks in this way would be passed on to consumers. Figure 18 Expectations of any Savings Realized by Banks 10 69% 22% 9% Savings Would Be Passed On To Consumers Savings Would Not Be Passed On To Consumers Don t Know/ Q: Sometimes organizations are able to save money by offering more products and services. If banks are allowed to sell life and health insurance out of their branches, do you expect that any potential savings would be passed on to customers or not? A POLLARA Report for Advocis 25

29 I. Views on Insurance-Related Service Charges Approximately two-thirds (65%) of small business owners believe that any service charges that banks might apply to insurance-related transactions would be unfair. Figure 19 Perceptions of Service Charges if Banks Could Sell Insurance 10 65% 24% 1 1% Fair Unfair Don t Know Q: If banks could sell life and health insurance from their branches, do you think any service charges they might apply for insurance related transactions would be fair or unfair? Rural small business owners are most likely to say service charges would be unfair (73%, compared to 63% of urban small business owners). Additionally, women (7) are slightly more likely to say service charges would be unfair than men (63%). A POLLARA Report for Advocis 26

30 J. Concern about Banks Becoming Bigger Almost three-fifths (56%) of small business owners are concerned about banks becoming bigger if they are allowed to expand into other businesses such as selling life and health insurance from their branches, with 28% very concerned and 28% somewhat concerned. Figure 20 Concern about Banks Becoming Bigger if they are Allowed to Expand into other Businesses 10 28% 28% 21% 19% 3% Very Concerned Somewhat Concerned Not Too Concerned Not At All Concerned Don t Know/ Q: Are you very concerned, somewhat concerned, not too concerned, or not at all concerned about banks becoming bigger if they are allowed to expand into other businesses, such as selling life and health insurance from their branches? Women are most likely to be concerned about banks becoming bigger if they are allowed to expand into other businesses (67%, compared to 52% of men. A POLLARA Report for Advocis 27

31 VI. Service by Banks and Bank Branch Employees Overall, small business owners are divided as to whether or not banks understand and are meeting the needs of their business, including their business financial needs. Furthermore, the majority of small business owners believe they are treated unfairly by banks with respect to certain services, including: interest paid on business accounts, interest rates on business credit card purchases, and service fees for business account transactions. In light of these concerns, it is not surprising that the majority believes that banks make too much profit. Additionally, while most small business owners feel they have enough or more than enough access to credit, small business owners appear less than satisfied with the extent to which banks are providing financing options that meet the needs of their small business. This may indicate that small business owners are looking for a wider range of financing options and/or more options tailored to meet the specific needs of small businesses. The majority of small business owners believes that life and health insurance advisors would perform better than branch employees in terms of providing reliable advice and convenient service. A. Overall Assessment of Banks Overall, small business owners provide luke-warm ratings of their banks ability to understand the needs of their business and to understand their business financial needs. About one third feels that banks are doing an excellent/good job in this regard, while an equal proportion feel they are doing a poor/very poor job. A POLLARA Report for Advocis 28

32 i. Understanding and Meeting Needs Overall Small business owners are divided as to their overall opinions about how well banks understand the needs of their business. About one third feel banks have an excellent or good understanding of their business needs (33%); while another third feel banks have a poor or very poor understanding (36%). This leaves 29% saying they have a fair understanding. There are no differences in opinions by rurality, gender or tenure of business ownership. Figure 21 Understanding Business Needs 10 28% 29% 24% 5% 12% 3% Excellent Good Fair Poor Very Poor Don t Know Q: Do you think that banks have an excellent, good, fair, poor or very poor understanding of your business? A POLLARA Report for Advocis 29

33 Given that small business owners are divided as to whether or not banks understand the needs of their business, it is not surprising that they are also divided as to whether or not banks are meeting the needs of small businesses in general. While 32% feel banks do an excellent of good job at meeting the needs of small businesses, 33% feel they do a poor or very poor job. This leaves 3 saying they have do a fair job at meeting the needs of small businesses. Figure 22 Meeting the Needs of Small Businesses 10 28% 3 22% 4% 11% 4% Excellent Good Fair Poor Very Poor Don t Know/ Q: Do you think that banks do an excellent, good, fair, poor or very poor job of meeting the needs of small businesses? A POLLARA Report for Advocis 30

34 ii. Understanding and Meeting Financial Needs Small business owners are also divided about how well banks understand the financial needs of their business. Equal proportions feel banks have an excellent/good (32%), fair (31%) or poor/very poor (33%) understanding of their business financial needs. Women are more likely than men to feel banks do an excellent or good job at understanding the financial needs of small businesses (, compared to 28% of men). Figure 23 Understanding Financial Needs 10 28% 31% 23% 4% 11% 4% Excellent Good Fair Poor Very Poor Don t Know/ Q: Do you think that banks have an excellent, good, fair, poor or very poor understanding of your business s financial needs? A POLLARA Report for Advocis 31

35 While most small business owners feel they have enough or more than enough access to credit (as discussed in the following section of the report) small business owners appear less than satisfied with the extent to which banks are providing financing options that meet the needs of their small business. This may indicate that small business owners are looking for a wider range of financing options and/or more options tailored to meet the specific needs of small businesses. Just over a third (35%) feel they are doing a poor/very poor job, 29% feel they are doing a fair job and 28% feel they are doing an excellent/good job at providing financing options that meet the needs of their small business. There are no differences in opinions by rurality, gender or tenure of business ownership. Figure 24 Providing Small Businesses with Financial Options 10 3% 25% 29% 23% 12% 8% Excellent Good Fair Poor Very Poor Don t Know/ Q: Do you think that banks do an excellent, good, fair, poor or very poor job of providing financing options that meet small business s needs? B. Assessments of Service Provided by Banks When probed about their perceptions of their banks performance in the provision of certain services, most small business owners rate banks poorly in four of five areas tested, including interest paid on business accounts, interest rates on business credit card purchases, service fees for business transactions, and bank profitability. In contrast, small business owners are more favourable towards banks with respect to their treatment of small business owners when it comes access to credit. A POLLARA Report for Advocis 32

36 i. Perceptions of Interest on Operating Accounts Six in ten () small business owners say that banks do not pay enough interest on business operating accounts. This view is consistently held by both urban and rural small business owners; as well as by both men and women. Furthermore, there is no significant difference by tenure of business ownership. Almost one-quarter say that banks provide enough interest. Figure 25 Perceptions about the amount of Interest Banks Pay on Business Operating Accounts 10 24% 9% 8% Too Much Enough Not Enough Don t Know/ Q: Do you think that banks pay too much, enough, or not enough interest on business operating accounts, that is, the accounts businesses use for day-to-day banking transactions? A POLLARA Report for Advocis 33

37 ii. Views of Interest Rates on Business Credit Card Purchases Just over half (51%) of small business owners feel that banks offer unfair interest rates on business credit card purchases. Both urban and rural small business owners; as well as both male and female small business owners share this point of view. No significant differences exist by tenure of business ownership either. Less than one-third believe that credit card interest rates are fair. Figure 26 Views about the Fairness of Interest Rates on Business Credit Card Purchases 10 32% 51% 17% Fair Unfair Don t Know/ Q: Do you think that banks offer fair or unfair interest rates on business credit card purchases? A POLLARA Report for Advocis 34

38 iii. Perceptions of Service Fees for Business Account Transactions More than one-half (52%) of small business owners say that banks offer unfair service fees for business account transactions, while 38% see them as fair, and 1 are undecided. There are no differences in opinions by rurality, gender or tenure of business ownership. Figure 27 Perceptions of Service Fees for Business Account Transactions 10 38% 52% 1 Fair Unfair Don t Know/ Q: Do you think that banks have offer fair or unfair service fees for business account transactions and other services such as night deposits? A POLLARA Report for Advocis 35

39 iv. Perceptions of Bank Profitability Three-quarters (76%) of small business owners say banks make too much profit. Rural small business owners are most likely to say that banks make too much profit (86%, compared to 73% of urban small business owners). Fewer than one-in five business owners believe that banks make the right amount (17%) or not enough (1%) profit. Figure 28 Perceptions of Bank Profitability 10 76% 17% 1% 6% Too Much About The Right Amount Not Enough Don t Know/ Q: Do you think that banks make too much profit, about the right amount of profit, or not enough profit? A POLLARA Report for Advocis 36

40 v. Perceptions About Access To Credit More than half of small business owners feel favourably towards banks when it comes to access to credit. While 55% feel banks provide small businesses with enough or more than enough credit, 39% feel they are not provided with enough. Figure 29 Perceptions About Access to Credit 10 46% 39% 9% 6% More Than Enough Enough Not Enough Don t Know/ Q: Do you think that banks provide businesses such as your own with more than enough, enough, or not enough access to credit? (IF NECESSARY: By credit, I mean loans, commercial mortgages, and lines of credit.) A POLLARA Report for Advocis 37

41 Small business owners that have been operating a business for 20 or more years are most likely to feel banks provide them with enough/more than enough credit (59%); while those who have been operating a business for less than 10 years are the least likely (49%) to hold this view. Figure 30 Perceptions About Access to Credit by Business Tenure 10 Less Than 10 Years 10 Years To Less Than 20 Years 20 Years Or More 42% 44% 52% 45% 38% 33% 7% 13% 7% 5% 5% 8% More Than Enough Enough Not Enough Don't Know/ Q: Do you think that banks provide businesses such as your own with more than enough, enough, or not enough access to credit? (IF NECESSARY: By credit, I mean loans, commercial mortgages, and lines of credit.) A POLLARA Report for Advocis 38

42 C. Relationship with Account Manager Over the course of their relationship with their bank, two-thirds of small business owners have been assigned an account manager, while one-third have not. The majority of business owners with an account manager have not met with their account manager in the past year. Furthermore, most small business owners indicate that their account manager has been replaced an average of 3 times over the course of their business banking relationship with their current bank. i. Access to an Account Manager Of those small business owners (93%) with an operating bank account for their business banking transactions, two-thirds have an account manager (65%), while one third does not. Figure 31 Access to an Account Manager Don't Know 7% No 28% Yes 65% Q: (BANK USERS) Does your business currently have an account manager at this bank? A POLLARA Report for Advocis 39

43 Over six in ten small business owners with account managers (64%) have had no in-person contact with their account managers in the past year. This leaves 14% who have met with their account managers once in the past year and 17% who have had two or more meetings with their account managers. Figure 32 Number of Meetings with Account Manager 10 Mean: % 14% 8% 9% 6% Never Once Twice 3 Or More Times Don t Know/ Q: (IF HAS AN ACCOUNT MANAGER) How many times has your account manager met with you at your place of business or in your home over the past year? Small business owners who have been managing their businesses for ten or more years are most likely say they have met with their account managers at least once in the past year (34%, compared to 19% of those who have been running their businesses for less than ten years). Rural small business owners are most likely to say the have met with their account managers at least once in the past year (46%, compared to 27% of urban small business owners). A POLLARA Report for Advocis 40

44 ii. Continuity of Service from Account Managers On average, small business owners say their account managers have been replaced almost three times over the course of their business banking relationship with their current bank. This includes 28% who say their account manager has changed four or more times, 22% indicating that their account manager has changed two or three times and 13% that say their account manager has changed once. Conversely, 25% of small business owners say their account manager has never changed. Figure 33 Continuity of Account Manager 10 Mean: % 13% 11% 11% 28% 12% Never Once Twice Three Times 4 Or More Times Don t Know Q: (IF HAS AN ACCOUNT MANAGER) Over the (INSERT YEARS/MONTHS DEALT WITH CURRENT BANK) your business s operating account has been at this bank, how many times, if ever, has your account manager been replaced by someone else? (IF DON T KNOW/REFUSED YEARS/MONTHS - Over the years and months... ) (RECORD NUMBER OF TIMES REPRESENTATIVE HAS BEEN REPLACED) (IF RESPONDENT SAYS THEY ARE UNSURE - PROBE Please provide your best estimate... ) A POLLARA Report for Advocis 41

45 Small business owners who have been running their own business for 20 or more years have had an average of 5 account managers; while those running their own business for less than 10 years have had an average of 1.5 account managers. Figure 34 Continuity of Account Manager by Business Tenure 10 Less Than 10 Yrs - Mean: Yrs To Less Than 20 Yrs - Mean: Yrs Or More - Mean: % 41% 29% 19% 12% 15%16% 8% 14% 14% 11% 12% 12% 7% 9% 9% 1 17% Never Once Twice Three Times 4 Or More Times Don't Know Q: (IF HAS AN ACCOUNT MANAGER) Over the (INSERT YEARS/MONTHS DEALT WITH CURRENT BANK) your business s operating account has been at this bank, how many times, if ever, has your account manager been replaced by someone else? (IF DON T KNOW/REFUSED YEARS/MONTHS - Over the years and months... ) (RECORD NUMBER OF TIMES REPRESENTATIVE HAS BEEN REPLACED) (IF RESPONDENT SAYS THEY ARE UNSURE - PROBE Please provide your best estimate... ) A POLLARA Report for Advocis 42

46 While 54% of small business owners are not concerned about the number of times their account manager has been replaced, 42% say they are somewhat (24%) or very (18%) concerned. There is no difference in the proportion of small business owners concerned by gender, rurality or tenure of business ownership. Figure 35 Concern About Frequency with which Account Managers Have Been Replaced Not Too Concerned 21% Somewhat Concerned 24% Very Concerned 18% Don t Know/ 3% Not At All Concerned 33% Q: (ALL EXCEPT NEVER) Are you very concerned, somewhat concerned, not too concerned, or not concerned at all about the frequency with which your bank account manager has been replaced? A POLLARA Report for Advocis 43

47 D. Reliable Advice and Convenient Service: Professional Life and Health Insurance Advisors vs. Bank Branch Employees Small business owners believe that professional life and health insurance advisors would provide more reliable advice and convenient service than bank branch employees. These findings are explored further in the following sub-sections. i. Reliability of Advice The majority (86%) of small business owners trust that professional life and heath insurance advisors would provide more reliable advice about life and health insurance than bank branch employees. A majority of small business owners (52%) also believe that professional life and health insurance advisors would provide more reliable advice about their company s investments. Figure 36 Reliability of Advice: Professional Life and Health Insurance Advisors vs. Bank Branch Employees Trust to Give More Reliable Information about Life and Health Insurance 86% 6% 8% More Reliable Advice about your Company s Investments 52% 32% 16% 10 Professional Life & Health Insurance Advisors Bank Branch Employees Don't Know/ Q: Who would you trust to give you more reliable information about life and health insurance for your company: a professional life and health insurance advisor who offers access to products from a range of companies or a bank branch employee who represents only their bank s products? Q: Who do you think would provide more reliable advice about your company s investments: a professional life and health insurance advisor or a bank branch employee? A POLLARA Report for Advocis 44