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Consumer Lending - Canada - March 2015

“Leveraging the goodwill generated through customer interactions while selling complex products such as mortgages, can be a catalyst for the sale of other lending products.”
– Sanjay Sharma, Senior Financial Services Analyst

This report looks at the following areas:

  • Establishing positive banking relationships with debt burdened groups
  • Mortgage owners and their intention to switch financial institutions
  • Marketing additional lending products to existing customers
  • Can specialized credit card companies successfully expand into the larger consumer lending market in the coming years?
 

The consumer lending business has thrived under the prolonged low interest rate environment and Canada’s strong economic fundamentals. The continued strength of the housing market in most parts of the country has ensured record profits for financial institutions. Canada has one of the highest rates of home ownership in the world and around a third of Canadians have a mortgage product. In addition to mortgages, Canadians continue to borrow money through lines of credit, credit cards and specific product loans, such as auto or Registered Retirement Savings Plan (RRSP) loans. The lending market is dominated by the major banks but smaller banks, credit unions and specialized lending companies also continue to thrive.

This report covers consumer behaviour and attitudes related to consumer lending (credit cards, mortgages, loans and lines of credit). In this survey, we explore issues such as lending product ownership rates, which lenders are dominant in the Canadian lending market, the reasons for their dominance; satisfaction with the lending process among customers of different financial institutions and general attitudes related to lending/debt.

 

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Table of contents

  1. Introduction

      • Methodology
        • Abbreviations
        • Executive Summary

            • Market factors
              • Overall negative impact of lower oil prices on the Canadian economy
                • Impact of interest rates, inflation and exchange rates
                  • Outlook on the real estate and housing market
                    • British Columbians have the highest net worth
                      • Household debt in Canada
                        • Population count and growth in Canada
                          • Companies, brands and innovation
                            • The consumer
                              • Most Canadians have at least one debt product
                                • Figure 1: Ownership of lending products, January 2015
                              • TD^ and RBC are the market leaders for consumer lending products
                                • Figure 2: Choice of financial institution for lending products, January 2015
                              • Having a prior banking relationship emerges as the most significant overall choice factor
                                • Figure 3: Reasons for selecting the financial institution for lending products, January 2015
                              • Satisfaction of factors by FI: CIBC and Tangerine lead in satisfaction scores
                                • Figure 4: Satisfaction with factors when applying for lending products, January 2015
                              • Young females are the most debt burdened
                                • Figure 5: Attitudes towards borrowing, January 2015
                              • What we think
                              • Issues in the Market

                                  • Establishing positive banking relationships with debt burdened groups
                                    • The facts
                                      • The implications
                                        • Mortgage owners and their intention to switch financial institutions
                                          • The facts
                                            • The implications
                                              • Marketing additional lending products to existing customers
                                                • The facts
                                                  • The implications
                                                    • Can specialized credit card companies successfully expand into the larger consumer lending market in the coming years?
                                                      • The facts
                                                        • The implications
                                                        • Trend Application

                                                            • Trend: Help Me Help Myself
                                                              • Trend: Life Hacking
                                                                • Trend: FSTR HYPER
                                                                • Market Drivers

                                                                  • Key points
                                                                    • Economic overview
                                                                      • Overall negative impact of lower oil prices on the Canadian economy
                                                                        • Figure 6: Canada’s GDP, by quarter, Q1 2008-Q1 2014
                                                                        • Figure 7: Household disposable incomes and savings in Canada, by quarter, Q1 2008-Q1 2014
                                                                        • Figure 8: Canada’s unemployment rate, by gender, 2008-14
                                                                      • Impact of Interest rates, inflation and exchange rates
                                                                        • Figure 9: Inflation rates in Canada, 2004-14
                                                                      • Outlook on the real estate and housing market
                                                                        • British Columbians have the highest net worth
                                                                          • Figure 10: Canada median net worth, by province, 2012
                                                                        • Household debt in Canada
                                                                          • Demographic overview
                                                                            • Population count and growth in Canada
                                                                              • Figure 11: Share of population of Canada, by territory/province, 2014
                                                                            • Canada’s population is expected to age in the coming years
                                                                              • Figure 12: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                                                              • Figure 13: Projected trends in the age structure of the Canada population, 2014-19
                                                                          • Who’s Innovating?

                                                                            • Key themes
                                                                              • Quantum credit cards “impossible” to hack
                                                                                • Marketplace lending or person-to-person lending
                                                                                  • Float Money (US)
                                                                                  • Companies and Products

                                                                                      • TD Financial Group
                                                                                        • Overview and company information
                                                                                          • Recent activity
                                                                                            • RBC
                                                                                              • Overview and company information
                                                                                                • Recent activity
                                                                                                  • Scotiabank
                                                                                                    • Overview and company information
                                                                                                      • Recent activity
                                                                                                        • American Express
                                                                                                          • Overview and company information
                                                                                                            • Recent activity
                                                                                                              • Meridian Credit Union
                                                                                                                • Company overview
                                                                                                                  • Recent activity
                                                                                                                    • Capital One
                                                                                                                      • Overview and company information
                                                                                                                        • Recent activity
                                                                                                                        • Brand Communication and Promotion

                                                                                                                          • Key points
                                                                                                                            • Citibank is the most active direct mailer
                                                                                                                              • Figure 14: Direct acquisition mail volume related to lending, January 2014-January 2015
                                                                                                                            • RBC unveils 'movie trailers' aimed at new home buyers
                                                                                                                              • RRSP Loan from Tangerine
                                                                                                                                • RBC’s Year of the Goat Visa Gift Card
                                                                                                                                  • Personal Loan from Citibank
                                                                                                                                    • TD’s Unsecured Line of Credit Offer
                                                                                                                                    • The Consumer – Ownership of Lending Products

                                                                                                                                      • Key points
                                                                                                                                        • Most Canadians have at least one debt product
                                                                                                                                          • Figure 15: Ownership of lending products, January 2015
                                                                                                                                        • Around a quarter of seniors have a mortgage product
                                                                                                                                          • Figure 16: Ownership of lending products, by age, January 2015
                                                                                                                                        • 45-54s have the highest incidence of owning four or more products
                                                                                                                                          • Figure 17: Repertoire analysis of ownership of lending products, January 2015
                                                                                                                                      • The Consumer – Choice of FI for Lending Products

                                                                                                                                        • Key points
                                                                                                                                          • TD^ and RBC are the market leaders for consumer lending products
                                                                                                                                            • Figure 18: Choice of financial institution for lending products, January 2015
                                                                                                                                        • The Consumer – Choice Factors for Selecting FI

                                                                                                                                          • Key points
                                                                                                                                            • Having a prior banking relationship emerges as the most significant overall choice factor
                                                                                                                                              • Figure 19: Reasons for selecting the financial institution for lending products, January 2015
                                                                                                                                            • Reward and loyalty programs are key in credit card decisions
                                                                                                                                              • Figure 20: Reasons for selecting the financial institution for credit cards, January 2015
                                                                                                                                            • Consumers choosing mortgage provider based on previous experience
                                                                                                                                              • Figure 21: Reasons for selecting the financial institution for mortgages, January 2015
                                                                                                                                            • Loan choice factor varies by product type
                                                                                                                                              • Figure 22: Reasons for selecting the financial institution for loans, January 2015
                                                                                                                                            • Prior banking relationship is the leading choice factor when selecting line of credit
                                                                                                                                              • Figure 23: Reasons for selecting the financial institution for line of credit, January 2015
                                                                                                                                          • The Consumer – Satisfaction with Factors

                                                                                                                                            • Key points
                                                                                                                                              • Older debt product holders are significantly more satisfied with the application process
                                                                                                                                                • Figure 24: Satisfaction with factors when applying for lending products, January 2015
                                                                                                                                              • Satisfaction of factors by FI: CIBC and Tangerine lead in satisfaction scores
                                                                                                                                                • Figure 25: Satisfaction rank by factor, January 2015
                                                                                                                                            • The Consumer – Switching Lenders

                                                                                                                                              • Key points
                                                                                                                                                • Mortgage holders most likely to want to switch lenders
                                                                                                                                                  • Figure 26: Switching intention by product, January 2015
                                                                                                                                                • Interest rates are the main reason for switching lenders
                                                                                                                                                  • Figure 27: Reasons for switching lenders, January 2015
                                                                                                                                              • The Consumer – Attitudes towards Borrowing

                                                                                                                                                • Key points
                                                                                                                                                  • Summary of attitudes towards debt and borrowing
                                                                                                                                                    • Figure 28: Attitudes towards borrowing, January 2015
                                                                                                                                                  • Young males more likely to use a debt counselling agency
                                                                                                                                                    • Figure 29: Attitudes regarding debt burden and its impact on lifestyle, January 2015
                                                                                                                                                  • Almost half of 25-44s are interested in consolidated borrowing options
                                                                                                                                                    • Figure 30: Attitudes around comfort with debt levels, January 2015
                                                                                                                                                  • Young males and non-Caucasian Canadians more positive on balance transfer offers
                                                                                                                                                    • Figure 31: Attitudes regarding awareness of debt usage, January 2015
                                                                                                                                                  • Young females are the most debt burdened
                                                                                                                                                    • Figure 32: Difficulty with debt (% agree), by gender 18-34, January 2015
                                                                                                                                                • The Consumer – Chinese Canadians and Consumer Lending

                                                                                                                                                  • Key points
                                                                                                                                                    • Chinese Canadians under-index on ownership of lines of credit and loans
                                                                                                                                                      • Figure 33: Ownership of lending products, Chinese Canadians vs overall population, January 2015
                                                                                                                                                    • TD is the most popular choice among Chinese Canadians for lending products
                                                                                                                                                      • Figure 34: Choice of financial institution for lending products, Chinese Canadians vs overall population, January 2015
                                                                                                                                                    • Half of Chinese Canadians interested in a consolidated borrowing option
                                                                                                                                                      • Figure 35: Select attitudes towards borrowing, Chinese Canadians vs overall population, January 2015
                                                                                                                                                  • The Consumer – Target Groups

                                                                                                                                                    • Key points
                                                                                                                                                      • Three target groups
                                                                                                                                                        • Figure 36: Target Groups, January 2015
                                                                                                                                                      • Debt Minimalists (34%)
                                                                                                                                                        • Savvy Borrowers (36%)
                                                                                                                                                          • Debt Burdened (30%)

                                                                                                                                                          Companies Covered

                                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                                          Consumer Lending - Canada - March 2015

                                                                                                                                                          US $3,995.00 (Excl.Tax)