Abstract
In a relatively mature industry, what target markets are available for Canadian financial institutions to develop their business and find sustainable growth? This report details the strategies of the Canadian Financial leaders-domestic demographic targets; specific marketing strategies; growth through foreign acquisitions; usage of technological advances; and specific product developments. This report looks at banking services for individual customers, such as savings and checking accounts, mortgages, personal loans, debit cards, and credit cards.
Until very recently, the Canadian financial sector has been somewhat insulated. Each type of institution had a unique niche in the market, with allowances as to what type of financial products they could provide, and competition that was closely monitored by regulatory authorities. In the last few decades, however, due to regulatory evolutions, the lines demarcating established niches and barriers to foreign entry have become blurred.
Today, the chartered banks that dominate the industry have developed into “one-stop” financial providers. This has left trust companies and credit unions at the mercy of market supply and demand. Competition comes not only from domestic sources, but also from international entities, as regulatory barriers to foreign entry have become more relaxed.
Globally, financial institutions are in the midst of aggressive merger and acquisition activity, resulting in growing corporations with ever-increasing market shares. Meanwhile, Canadian banks face regulatory barriers to such strategies domestically. In the face of such strong competition outside of Canada' s borders, Canadian financial institutions need to, and are developing, growth strategies that include both foreign and domestic components.
Table of Contents
- Scope and Themes
- What you need to know
- Scope of the report
- Abbreviations and terms
- Terms
- Executive Summary
- Top trends and issues in the industry
- Economic and financial overview
- Mortgage and insurance markets
- Credit and debit
- Competitive trends
- Canadian banking customers are loyal
- Personal service is important
- The consumer and online banking
- Opportunities for organic growth
- Overview of the Canadian Banking Sector
- History
- Figure 1: Distribution of deposit-taking institution branches in Canada,
2003
- Domestic vs. foreign, and new competitors
- Figure 2: Real value of services produced (VSP) by type of institution,
1997 and 2004
- Figure 3: Market share by type of institution, Canada, 1997-2004
- Figure 4: Market share of real value of services produced (vsp) by
business line, Canada, 1997 to 20041
- Income from traditional sources
- Figure 5: Financial institution income from traditional sources,
1995-2003
- Domestic bank non-interest income results align with Canadian stock indexes
- Figure 6: Non-interest income for Canadian financial institutions,
1996-2004
- Market Drivers
- Demographic market drivers
- Figure 7: Components of Canadian population growth, July 2005-June 2006
- Aging
- Figure 8: Median age of the Canadian population, 1921-2004
- Figure 9: Population, median age and age distribution, Canada,1946 to
2056
- International banking penetration--a comparison
- Figure 10: Percentage of population with an account at a financial
institution, by country, 2005
- Economic market drivers
- Figure 11: Composite Economic Indexes, September 2005-September 2006
- Effects of the U.S. economy on the Canadian financial sector
- Figure 12: Selected interest rates, 2001-05
- Figure 13: Canadian conventional one-, three- and five-year mortgage
rates, 1996-2006
- Canadian GDP
- Figure 14: Canadian gross domestic product, annualized, quarter to
quarter change, 2003-06
- New mortgage loan products available in Canada
- Figure 15: Chartered bank administered interest rate--prime rate,
1996-2006
- Canadian GICs
- Technological market drivers
- Finance, marketing and technology
- Figure 16: Chronology of advances in Canadian banking, 1968-2005
- The Internet and online banking
- Figure 17: Percentage of adult Canadians using the Internet, 2005
- Figure 18: Concerns about online banking, 2005
- Figure 19: Potential steps to increase trust and protect privacy, 2005
- Figure 20: Reasons adult home Internet users go online, 2005
- Figure 21: Characteristics of individuals using the Internet in Canada,
2005
- Household statistics
- Household debt to service ratio
- Figure 22: Household debt and assets as a percentage of disposable
income, 1965-2005
- Household savings
- Figure 23: Household savings as a percentage of disposable income,
1960-2005
- Housing prices
- Immigration
- Figure 24: Percentage of visible minorities in metropolitan areas, 2001
and 2017(proj.)
- Banks targeting new immigrants
- Figure 25: Ranking of banking institutions by share of primary
relationships for ethnic groups, 2005
- India
- China
- Banks in the sub-prime sector
- Low-cost accounts
- Figure 26: Designated ' low-cost account' features, 2006
- Automated Banking Machines (ABMs)
- Figure 27: Number of bank-owned ABMs in Canada, 1995-2005
- Figure 28: ABM statistics, 2005
- Regulatory issues
- Basel II accord
- Market Size and Segmentation
- Figure 29: Canadian market share of domestic assets, deposits, consumer
credit and mortgages, by banking type. 2005
- Figure 30: Market share of Canadian banking institutions as of Q4 2005
- Figure 31: Canadian financial institution market share of total banking
assets, by type of institution, 2005
- Sub-sectors of Canada' s finance and insurance sector
- Canadian financial sector quick facts and statistics
- The chartered banks
- The ' Big Six'
- Figure 32: Canadian domestic banks by type of company, 2006
- Foreign banks operating in Canada
- Provincial cooperative credit associations
- Trust companies
- Loan companies
- Regulatory environment, financial standards and associations
- Notable financial regulatory amendments
- CDIC
- OSFI
- Insurance product networks
- Mortgage insurance
- Domestic market shares
- Trust companies
- Market share for Registered Retirement Savings Plan assets
- Figure 33: Financial institution market share for RRSP accounts, 2005
- Mortgages and mortgage-backed securities
- Figure 34: Total outstanding balances of residential mortgage credit by
institution type, 2000-05
- Consumer credit excluding mortgages
- Figure 35: Graph: Market share for consumer credit excluding mortgages,
by type of institution, 2005
- Competitive Landscape
- Figure 36: The Top 25 Boards Ranked by Canada Business Online-2006
(financial companies only)
- Figure 37: Top Six Chartered Banks by Net Income, 2003-05
- Canadian banks abroad
- Figure 38: Assets owned abroad by Canadian financial institutions,
1996-2004
- Chartered bank mergers
- Canadian chartered bank market shares
- Figure 39: Canadian banks ranking by assets, 2005
- Figure 40: Top six banks ranked by deposits/savings, 2005
- The financial co-Operatives, credit unions and caisses populaires
- Figure 41: Number of credit unions in Canada, 1987-2005
- Figure 42: Canadian credit union ranking by revenue, year-end 2005
- Advertising and Promotion
- Top direct mailers 2006
- Figure 43: Top ten Canadian banking acquisition direct mailers, Q1--Q3
2006
- Figure 44: Top ten Canadian banking portfolio direct mailers, Q1--Q3 2006
- Notable banking direct mailers 2006
- Figure 45: Notable mailers of 2006
- ING Direct
- Figure 46: ING Direct Investment Savings Account acquisition mailing,
September 2006
- Figure 47: Royal Bank No Limit Account acquisition mailing, September
2006
- Figure 48: Royal Bank No Limit Account acquisition mailing (continued),
September 2006
- Figure 49: President' s Choice Federal No Fee Bank Account
retention/cross-sell mailing, October 2006
- Top credit card mailers
- Figure 50: Top Canadian credit card acquisition mailers, July 2005
through September 2006
- Notable credit card mailers, 2006
- Figure 51: Capital One Gold Mastercard, 2006
- Figure 52: American Express Air Miles Card, 2006
- Television advertising
- Figure 53: Bank of Montreal, 2006
- Figure 54: Assurances Banque Nationale, 2006
- Figure 55: BMO Bank of Montreal, 2006
- Figure 56: CIBC bank, 2006
- Figure 57: HSBC (corporate), 2006
- Figure 58: Royal Bank of Canada, 2006
- Figure 59: Scotiabank, 2006
- Figure 60: TD Canada Trust Bank, 2006
- The Consumer
- Summary
- Canadian banking customers are loyal
- How and where they do their banking
- Why consumers choose a bank
- Number of banking relationships
- Mintel' s Canadian banking consumer survey
- Type of banking institution preferred
- Figure 61: Type of institution for primary banking relationship,
December 2006
- Figure 62: Type of institution for primary banking relationship,
December 2006
- Figure 63: Type of institution for primary banking relationship,
December 2006
- Figure 64: Type of institution for primary banking relationship, by
province, December 2006
- Primary influence in choice of bank
- Figure 65: Primary influence in choice of bank, by gender, December 2006
- Figure 66: Primary influence in choice of bank, by age, December 2006
- Figure 67: Primary influence in choice of bank, by income, December 2006
- Figure 68: Primary influence in choice of bank, by province, December
2006
- Number of banking relationships
- Figure 69: Number of bankig relationships, by gender, December 2006
- Figure 70: Number of banking relationships, by age, December 2006
- Figure 71: Number of bankig relationships, by income, December 2006
- Type of accounts at primary bank
- Figure 72: Type of accounts at primary bank, by gender, December 2006
- Figure 73: Type of accounts at primary bank, by age, December 2006
- Figure 74: Type of accounts at primary bank, by income, December 2006
- Types of accounts at other institutions
- Figure 75: Type of accounts at any financial services company other than
primary institution, by gender, December 2006
- Figure 76: Type of accounts at any financial services company other than
primary institution, by age, December 2006
- Figure 77: Type of accounts at any financial services company other than
primary institution, by income, December 2006
- Importance of banking services
- Figure 78: Importance of banking services, overall, December 2006
- Figure 79: Importance of banking services, males, December 2006
- Figure 80: Importance of banking services, females, December 2006
- Switching frequency
- Figure 81: Frequency respondents have changed banks in last five years,
by gender, December 2006
- Figure 82: Frequency respondents have changed banks in last five years,
by age, December 2006
- Figure 83: Frequency respondents have changed banks in last five years,
by income, December 2006
- Why respondents would switch
- Figure 84: Products/services that would potentially influence
respondents to switch banks, by gender, December 2006
- Figure 85: Products/services that would potentially influence
respondents to switch banks, by age,
- Figure 86: Products/services that would potentially influence
respondents to switch banks, by income, December 2006
- Other consumer surveys
- Age and finance
- Figure 87: How young Canadians learn about savings and bank accounts,
2006
- Figure 88: Average age for opening first bank account, 2006
- Figure 89: Reason for opening first bank account, 2006
- Financial Consumer Banking Preferences
- Figure 90: Canadians' primary methods of banking, 2005
- Figure 91: Canadians' primary means of bill payment, 2005
- Payment method preferences
- Figure 92: Preferred payment methods for consumers, 1998--2004
- Figure 93: Estimated volume of transactions at point of sale, by payment
method, 1997-2004
- Figure 94: Consumer preferences for payment method by transaction value,
2005
- Future Trends
- Bank earnings growth likely to slow
- Bank of Montreal Outlook
- CIBC Outlook
- Figure 95: CIBC Economic Outlook, 2005-07
- CDIC Outlook
- The Bank of Canada Outlook
- National Bank of Canada Outlook
- Future financial institution expansion strategies and capital use
- Demographic trends changing the future customer base
- The importance of technological innovation
- Figure 96: Potential steps to increase trust and protect privacy, 2005
- Organic growth and expansion--the "booming" and the "struggling" provinces
- Global economics in 2007
- New sources of competition
- Appendix: Trade Associations
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