Canadian banks are developing new tactics to attract business from immigrants, devoting greater effort to locking down newcomers even before they settle in their new country.
Traditionally, financial institutions relied on relatively simple, well-worn strategies to win accounts from immigrants. These include offering free chequing accounts for one year and issuing credit cards to people who have no credit history in Canada. But as the competition for these clients grows, those methods are no longer enough.
Earlier this month, Canadian Imperial Bank of Commerce signed a new deal with the Greater Toronto Airports Authority, making it the only bank allowed to advertise in Toronto’s Lester B. Pearson International Airport – the country’s largest – and giving it the exclusive right to offer banking services through automated banking machines and branches. Soon, CIBC will be able to help new immigrants set up bank accounts before they even leave the airport.
Meanwhile, Bank of Nova Scotia announced a partnership with Bank of Beijing that will allow Chinese residents to open a Scotiabank account and apply for a Canadian credit even before they leave their home country. The services will be available in roughly 20 Bank of Beijing branches. The deal is similar to one Scotiabank recently inked with China’s Bank of Xi’an.
Immigrants are so fiercely coveted because market share is extremely difficult to pick up in Canadian retail banking. The major banks are already so entrenched – and consumer banking is so profitable – that simply adding 1 per cent of national market share in a year can be considered a big win.
“Any kind of new customer acquisition in Canada is hard,” said James McPhedran, head of retail distribution at Scotiabank. “It’s been intense for a period of time now.” Scotiabank earned $2.3-billion from its Canadian banking unit in fiscal 2013.
Attracting newcomers has always been viewed one of the easier ways to win new clients, because immigrants typically do not have any allegiances to individual banks before they arrive. The banks are disrupting that, however, with their plans to target new Canadians as early as possible.
CIBC’s contract with the GTAA dovetails with recent changes to its banking package for new arrivals, called Welcome to Canada, which was first rolled out in 2009. The package was enhanced this past summer by adding more products to it, such as different types of credit cards, and the bank launched an advertising campaign in multiple languages to spread its appeal.
Such initiatives are necessary because simply having a branch in the airport will not grab all newcomers. In many cases, new brick-and-mortar branches in growing immigrant communities are needed to secure the business. Larry Tomei, CIBC’s head of national sales and service, said his bank recently built a new branch in Brampton, Ont., a suburb northwest of Toronto that is home to many South Asian immigrants, and found a long line of customers waiting when the doors opened.
Scotiabank enhanced its own efforts to attract new Canadians in 2008, when the bank set up a multicultural banking group to develop new ways to lure immigrants. Competition for newcomers was intense then and will continue to be.
“It’s not new for us,” Mr. McPhedran said. “I think the intensity of acquisition focus in the segment has always been significant … Appealing to this segment absolutely remains a key focus.”Report Typo/Error