Small businesses say they receive better customer service at credit unions and regional financial institutions than at Canada's biggest banks, according to a new report by the Canadian Federation of Independent Business (CFIB).

"Credit unions are taking measures to be very small-business friendly, and it's paying off," said Corinne Pohlmann, CFIB's senior vice-president of national affairs and partnerships. "While the big banks still have the advantage of market share in most regions, they should consider how they can better serve the needs of small businesses if they wish to remain competitive with this customer base."

Credit unions ranked first

CFIB surveyed 11,599 small businesses across the country on their satisfaction with their financial institution within the areas of financing, fees, account manager and service. “Credit unions not only achieved the highest overall score and ranking, but also the highest scores in each area of evaluation,” says the organization. ATB Financial and Desjardins came in second and third respectively, while National Bank came in fourth.

Meanwhile, for the second report in a row, “HSBC received the lowest overall score, performing particularly bad in the area of service,” says the CFIB.

How the big banks fared

The Bank of Montreal (BMO) was the first of the big banks in the ranking, coming in fifth overall; the Canadian Imperial Bank of Commerce (CIBC) placed sixth; TD was seventh, Scotiabank eighth and Royal Bank of Canada ninth.

CFIB said the smallest businesses, those with fewer than five employees, have the lowest level of satisfaction overall. It noted that Scotiabank, RBC and TD performed significantly better among businesses with 50 to 499 employees.

"The big banks have a lot of room for improvement when it comes to serving the needs of small businesses," said Pohlmann. "Often, small business owners can feel like their needs aren't taken as seriously as those of the big guys. Some banks are even charging their small business clients fees every time they move money between accounts within the same institution."

CFIB issued a list of recommendations for banks to improve their performance with small businesses, including: “reduce fees and ensure value for services offered to small and medium-sized business clients; eliminate fees to move money within the same institution; ensure that account managers work in the best interest of the client by focusing less on sales and more on providing advisory services; focus on "relationship" lending by ensuring small business bankers get to know their SME clients and continue to find ways to keep meaningful contact with small business owners in order to better understand their needs. In particular, do not abandon SMEs in non-urban areas.”

To learn more, consult the full Banking Service 2020 Report Card.