An online banking company has seen its profits plummet, while its competitors are growing faster.
The bank’s business has been in a steady decline for more than a decade, and the results of a study released this week suggest the downturn is being driven by changes in the industry, such as digital technology and the rise of “Internet-connected” bank cards.
Online banking, the industry’s primary form of online banking for consumers, is expected to become the most popular way for Canadians to open and maintain accounts over the next few years, according to a survey of nearly 2,000 Canadians.
The survey found that only 15 per cent of respondents have been using online banking services at least once a month, compared with a median of 29 per cent in 2015.
The findings, which are being published by The Globe and Mail, show that online banking is becoming more of a niche industry.
In fact, online banking accounted for just 2 per cent and 0.4 per cent respectively of total revenue in the past year, according the survey, which was conducted by Cenovus Research and commissioned by the Bank of Montreal.
And the industry is not growing as quickly as other areas of the economy.
Banks have seen a drop in revenue for a number of reasons, including the rise in costs associated with new online services, increased competition from online lenders and increased costs for managing customer accounts, the survey said.
A large chunk of those savings have been redirected into new businesses, while other businesses are shrinking, Cenova Research said.
Some of the businesses are turning to technology, such an app, to better serve customers.
Some banks, including CIBC and TD, are investing in new online banking products.
CIBC said its online banking business is on track to be the most profitable in the sector in 2020, and that its new mobile app will allow customers to check account balances, open accounts and access financial services.
“This is the first time we have seen such an investment in online banking.
We are seeing a lot of money being spent in that space,” said David Stannard, a CIBC executive vice-president.
Tata Banking, which is also a part of CIBC, said its mobile app has helped boost the profitability of its online business.
CIBC said it is working with its customers to better understand the benefits of the new digital banking products and will be offering more information about the benefits later this year.
While some banks are focusing on increasing their profitability through technology, others are not as aggressive, said Cenocus Research.
As for the online banking industry’s role in helping Canadians with their finances, Crenshaw Bank said the results show that it has a strong financial literacy program.
Its customers have the most control over the money they have in their accounts, and its service is designed to help them understand and manage their accounts.
It has also been able to help customers manage their savings through a variety of channels, including a variety on its website, a mobile app and online services like a smartphone app.
According to the survey released this month, CIBC’s online banking revenue fell 1.4 percent from the previous year.
Its net income fell 1 per cent, from $7.8-million to $7-million.
CI, the largest Canadian bank, is in a difficult financial position.
Its shares have dropped more than 15 per the last six months.
The stock closed Thursday at $4.93.