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- The Canadian Banking and Credit Union Market - June 2011
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Key Points:
- There is virtually no competition from U.S. banks in Canada except in credit cards, where MBNA and Capital One have managed to carve out respectable market shares.
- The Canadian banking market in general is much less competitive than its U.S. counterpart. Banking products tend to be more expensive than they are south of the border. Canadian banks tend to emphasize rewards to attract customers, not lower prices and fees.
- Although lower price alternatives exist, it’s very hard to get Canadian customers to switch banks
- Walmart entered the Canadian market in 2010 and immediately began offering a rewards MasterCard. If the company decides to expand into other consumer banking products, it could perhaps surpass other retailer-owned banks, such as those operated by Canadian Tire and President’s Choice.
- Asians are a very desirable, and growing, customer group for retail banking and consumer financial services in Canada.
Scope and Themes
What you need to know
Data sources
Consumer survey data
Abbreviations and terms
Terms
Companies mentioned in this report
Executive Summary
Industry overview
The Consumer – where they bank and why
How they bank
Innovations and innovators
Marketing channels
Marketing strategies
Custom consumer groups: Asians
Insights and Opportunities
Key points
Credit unions need to attract younger members: social media can help
Asians are grossly under-represented in credit unions
Customers need smartphones for mobile banking to take off
Inspire Insights
Inspire Trend: “Extend My Brand”
Market Size
Key points
Total Canadian bank and credit union assets total C$3.3 trillion
Types of banks and bank regulation in Canada
Credit unions and caisses populaires
Figure 1: Canadian bank and credit union assets, 2010
Competitive Context
Key points
Big Five banks control 80% of Canadian market
Figure 2: Market shares of top Canadian banks, by assets, 2010
Figure 3: Market shares of top Canadian credit card issuers, by receivables, 2010
Strict regulation keeps banks safe, but restricts competition
Figure 4: Big Five Canadian Banks, assets, 2009-10
Desjardins has big market share in Quebec
Figure 5: Top five credit unions outside Quebec, by asset size, Q4 2009 and Q4 2010
Segment Performance
Key points
Net income jumps 44% at Big Five banks in 2010
Figure 6: Net income at Big Five Canadian banks, 2009-10
Figure 7: Net income at other large financial institutions, 2009-10
Bank of Canada: Bank capital positions strengthen
Canadian banks continue to rank as world’s safest
Figure 8: World’s safest banking systems, 2010
Figure 9: Global Finance ranking of the world’s 50 safest banks, September 2010
Figure 10: Safest banks in North America, September 2010
Canadian banks look abroad to invest
Marketing Channels
Key points
Credit unions use social media campaign to attract Gen Y members
Differentiating credit unions from banks
Market Drivers
Key points
The Canadian economy is stable, but rising consumer debt is a concern
Solid and steady, if not spectacular
Figure 11: Quarterly GDP growth rate, Canada versus U.S., Q2 2007-Q4 2011
Figure 12: Unemployment rate, Canada versus U.S., Jan. 2008-April 2011
Canadian consumer debt levels grow to historic proportions
Canadian household debt-to-income ratio tops the U.S.
Leading Companies
Key points
Royal Bank of Canada
TD Bank (Toronto-Dominion)
Bank of Nova Scotia (Scotiabank)
Bank of Montreal (BMO)
CIBC (Canadian Imperial Bank of Commerce)
Desjardins Group (Fédération des Caisses Desjardins du Québec)
National Bank Financial Group
President’s Choice Financial (PC)
Canadian Tire Financial Services
HSBC Bank Canada
ICICI Bank Canada
MBNA Canada Bank
Vancouver City Savings Credit Union (Vancity)
Servus Credit Union
Coast Capital Savings
Meridian Credit Union
First West Credit Union
Innovations and Innovators
Key points
Walmart enters Canadian banking market with rewards credit card
TD Canada Trust rolls out Sunday banking across Canada
M&T Bank is latest U.S. bank to test Canadian waters
B.C. credit union launches financial literacy program for kids
Mobile phone app lets consumers create virtual wallets
Scotiabank adds eighth language to StartRight website for newcomers
BMO hosts “speed mentoring” event to help immigrants find jobs
Marketing Strategies
Key points
Overview
Representative direct mail advertising
No Fee Bank Account from President's Choice Financial
Figure 13: President’s Choice financial direct mail ad, October 2010
Tax Free High Interest Savings Account from Canadian Tire
Figure 14: Canadian Tire direct mail ad, December 2010
Banking Package from RBC
Figure 15: Direct mail ad, December 2010
Mobile Banking from Scotiabank
Figure 16: Scotiabank direct mail ad, October 2010
MoneyLogic from Bank of Montreal
Figure 17: Bank of Montreal direct mail ad, January 2011
Easy Web Internet Banking from TD Bank Financial Group
Figure 18: TD Bank direct mail ad, October 2010
Unlimited Chequing Account from CIBC
Figure 19: CIBC direct mail ad, January 2011
Statement Mailing from Steinbach Credit Union
Figure 20: Steinbach Credit Union direct mail ad, January 2011
High-Interest Savings Account from Ally Bank
Figure 21: Ally Bank direct mail ad, December 2010
HSBC Premier from HSBC
Figure 22: HSBC direct mail ad, September 2010
Statement Mailing from Servus Credit Union
Figure 23: Servus Credit Union direct mail ad, September 2010
Statement Mailing from NorthShore Credit Union
Figure 24: Northshore direct mail ad, August 2010
TV advertising
Figure 25: TD Bank South Asians, 2010
Figure 26: TD Canada Trust, 2010
Figure 27: Scotiabank Asian mortgage customers, 2010
Figure 28: BMO Launches MoneyLogic, 2010
Where Canadian Consumers Bank and Why
Key points
More than two thirds bank at big national banks, 19% at credit unions
Figure 29: Type of institution for primary banking relationship, by gender, December 2010
Figure 30: Type of institution for primary banking relationship, by age, December 2010
Figure 31: Type of institution for primary banking relationship, by household income, December 2010
Figure 32: Type of institution for primary banking relationship, by census region, December 2010
Figure 33: Type of institution for primary banking relationship, by survey language, December 2010
Influence on choice of primary bank: Location, location, location
Figure 34: Primary influence on bank choice, by gender, December 2010
Figure 35: Primary influence on bank choice, by age, December 2010
Figure 36: Primary influence on bank choice, by household income, December 2010
Figure 37: Primary influence on bank choice, by survey language, December 2010
Most respondents bank at just one institution
Figure 38: Number of banking relationships, by gender, December 2010
Figure 39: Number of banking relationships, by age, December 2010
Figure 40: Number of banking relationships, by household income, December 2010
Figure 41: Number of banking relationships, by census region, December 2010
Attitudes Concerning Banking Products and Services
Security is most important service banks and credit unions offer
Figure 42: Banking service rated “very important,” by gender, December 2010
Figure 43: Mean of importance rating for banking services, by gender, December 2010
Figure 44: Banking service rated “very important,” by age, December 2010
Figure 45: Mean of rating for importance of banking services, by age, December 2010
Figure 46: Banking service rated “very important,” by census region, December 2010
Figure 47: Mean of rating for importance of banking services, by census region, December 2010
Figure 48: Banking service rated “very important,” by survey language, December 2010
Figure 49: Mean of rating for importance of banking services, by survey language, December 2010
Checking accounts are most popular products at primary bank
Figure 50: Types of products at primary bank/credit union, by gender, December 2010
Figure 51: Types of products at primary bank/credit union, by age, December 2010
Figure 52: Types of products at primary bank/credit union, by household income, December 2010
Figure 53: Types of products at primary bank/credit union, by census region, December 2010
Credit cards are most popular product to have at another bank
Figure 54: Banking products at institution other than primary bank, by gender, December 2010
Figure 55: Banking products at institution other than primary bank, by age, December 2010
Figure 56: Banking products at institution other than primary bank, by household income, December 2010
Figure 57: Banking products at institution other than primary bank, by census region, December 2010
Figure 58: Banking products at institution other than primary bank, by survey language, December 2010
Switching Behavior
Eight of 10 Canadians have not switched banks in the past five years
Figure 59: Number of times switched banks in past five years, by gender, December 2010
Figure 60: Number of times switched banks in past five years, by age, December 2010
Figure 61: Number of times switched banks in past five years, by household income, December 2010
Lower fees, higher savings rates are most likely reasons to switch banks
Figure 62: Reason to potentially switch banks, by gender, December 2010
Figure 63: Reason to potentially switch banks, by age, December 2010
Figure 64: Reason to potentially switch banks, by census region, December 2010
Figure 65: Reason to potentially switch banks, by survey language, December 2010
The Consumer and Banking Channels
Key points
Online is most popular banking method by a wide margin
Figure 66: Primary method of banking, by gender, December 2010
Figure 67: Primary method of banking, by age, December 2010
Figure 68: Primary method of banking, by household income, December 2010
Figure 69: Primary method of banking, by census region, December 2010
One in five Canadians—and 25% of men—has a smartphone
Figure 70: Attitudes about mobile banking activities, by gender, December 2010
Figure 71: Attitudes about mobile banking activities, by age, December 2010
Figure 72: Attitudes about mobile banking activities, by household income, December 2010
Figure 73: Attitudes about mobile banking activities, by survey language, December 2010
Credit and debit card usage
Key points
Figure 74: Attitudes about debit and credit card usage, by gender, December 2010
Figure 75: Attitudes about debit and credit card usage, by age, December 2010
Figure 76: Attitudes about debit and credit card usage, by household income, December 2010
Custom Consumer Groups—Asians
Key points
Asians are a highly attractive—and growing—consumer group
Asians love big national banks, shun credit unions
Figure 77: Type of institution for primary banking relationship, white vs. Asian, December 2010
Asians are more picky when choosing a bank
Figure 78: Primary influence on bank choice, by race/ethnicity, December 2010
Asians more likely to bank online than other Canadians
Figure 79: Primary method of banking, by race/ethnicity, December 2010
Asians have more products at their primary bank than other Canadians do
Figure 80: Types of products at primary bank/credit union, by race/ethnicity, December 2010
Asians have more accounts at their other banks, too
Figure 81: Banking products at other than primary bank, by race/ethnicity, December 2010
Majority of Asians have accounts with more than one bank
Figure 82: Number of banking relationships, by race/ethnicity, December 2010
Asians have switched banks more often...
Figure 83: Number of times switched banks in past five years, by race/ethnicity, December 2010
… and have more reasons to want to switch again
Figure 84: Reason to potentially switch banks, by race/ethnicity, December 2010
More Asians have smartphones, and more interested in mobile banking
Figure 85: Attitudes about mobile banking activities, by race/ethnicity, December 2010
Attitudes about debit and credit cards
Figure 86: Attitudes about debit and credit card usage, December 2010
Asians less worried about security, but want more branch hours
Figure 87: importance of banking services, by race/ethnicity, December 2010
Figure 88: ranked importance of banking services, by race/ethnicity, December 2010
Cluster Analysis
Onliners
Characteristics
Demographics
Conveniently Large
Characteristics
Demographics
Friends and Family Fans
Characteristics
Demographics
Characteristic tables
Figure 89: Canadian banking and credit union clusters, December 2010
Figure 90: Primary banking relationship, Canadian banking and credit union clusters, December 2010
Figure 91: Primary influence on choice of bank, Canadian banking and credit union clusters, December 2010
Figure 92: Number of banking relationships, Canadian banking and credit union clusters, December 2010
Figure 93: Importance of banking services, Canadian banking and credit union clusters, December 2010
Figure 94: Frequency of switching banks, Canadian banking and credit union clusters, December 2010
Figure 95: Primary banking method, Canadian banking and credit union clusters, December 2010
Demographic tables
Figure 96: Canadian banking and credit union clusters, by gender, December 2010
Figure 97: Canadian banking and credit union clusters, by age, December 2010
Figure 98: Canadian banking and credit union clusters, by household income, December 2010
Figure 99: Canadian banking and credit union clusters, by race, December 2010
Figure 100: Canadian banking and credit union clusters, by language, December 2010
Figure 101: Canadian banking and credit union clusters by employment, December 2010
Cluster methodology
Appendix—Trade Associations
- Ally Financial Inc.
- Bank of America Corporation
- Bank of Montreal
- Bank of Nova Scotia
- Bureau of Economic Analysis
- Canada Deposit Insurance Corporation (CDIC)
- Canadian Bankers Association (CBA)
- Canadian Payments Association (CPA)
- Canadian Tire Corporation, Limited
- Credit Union Central of Canada
- Credit Union National Association
- Interac Association
- National Bank of Canada
- Steinbach Credit Union Limited
- U.S. Bureau of Labor Statistics
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