Canada’s banks target newcomers as key source of customer growth – National

Canada relies on newcomers to keep the economy afloat, while the banks themselves see the hundreds of thousands of people who come to the country each year as a key source of customer growth.

These efforts have grown with the number of new arrivals, including further efforts to attract people as customers before they even arrive in Canada.

“We see this as a major focus across all categories of banks, not just the big banks,” said Abhishek Sinha, head of banking transformation at EY Canada.

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“Whether you’re talking to the Big Five, or after that to the next tier, or even the credit union segment, newcomers and penetration into that segment of the market is extremely important.”

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The effort comes as Canada has welcomed a record number of new arrivals, aiming to attract 432,000 permanent residents this year and increase to 451,000 by 2024, while in the first half of the 2010s the average number of new arrivals was about 260,000 .

The segment, which the federal government says is responsible for nearly all of Canada’s labor force growth and about three-quarters of population growth, has pushed banks to forge partnerships like one recently struck between RBC and ICICI Bank, India’s largest , was announced.

“As immigration numbers are expected to rise to record levels, we have announced a cooperation agreement with ICICI Bank Canada,” RBC CEO Dave McKay said at an analyst meeting in August.

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Some student visa classes require students to deposit cash deposits, and the program allows for this to be seamlessly transferred to an RBC account in Canada. The program starts with students, but RBC later wants to expand the pipeline of account transfers to a broader field.

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“As part of our agreement, ICICI Bank Canada will refer all new customers to RBC over time, making it easier for them to open a bank account upon arrival,” McKay said.

The programme, only the second off-country initiative for RBC after launching a program with a separate focus on China a few years ago, is tapping into a growing source of newcomers, said Amit Brahme, head of newcomers and cultural clients segment at RBC. in an interview.

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“We know that the international student segment is one of the fastest growing segments within the different visa classes. We are therefore very pleased that we will be opening up a growing segment.”

Overall, the number of international students coming to Canada more than tripled in the decade leading up to 2019, reaching 638,000. The pandemic then led to a decline in numbers, attracting about 622,000 people in 2021.

And while many students will only be in Canada temporarily, more are returning as potential long-term clients. About three in 10 international students become landed immigrants within 10 years of arrival, according to Statistics Canada.

Other banks have also stepped up their efforts, such as Simplii Financial, which launched a digital identity verification program last year that allows customers to open accounts before they even land in the country. However, some efforts to attract customers before they come to Canada, like Scotiabank’s partnerships in China, date back more than a decade.

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The rise of fintechs has also opened up new avenues to solve old challenges for newcomers, such as B. Using more global data and international banking partnerships to solve the credit history challenge, Sinha said.

“We’ve seen a few fintechs develop lending models based on a more holistic story of the individual than just their history in Canada, and that’s starting to get more mainstream traction.”

Post-arrival efforts in Canada are also evolving. Banks like CIBC at Toronto Pearson International have established themselves as the first port of call at airports, while banks have also worked to expand and customize their product offering, including credit cards without the need for a credit history, which is a key stumbling block for many.

The credit union’s efforts at VanCity included supporting financial literature courses to help both immigrants and refugees, while also trying to help newcomers on the business side, said Gurpreet Jhaj, vice president of marketing.

“We support them with microfinance. And we finance it on favorable terms. And we’re really looking beyond credit history. We check what their ambitions, character will and things like that are.”

It also provides credit to newcomers to help them write exams to get their foreign credentials recognized, a major obstacle for many, and has also worked with the BC government to assist incoming displaced Ukrainians.

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Refugees, like people fleeing the war in Ukraine, are expected to make up about 77,000 of the broader permanent residency destinations this year, so it’s an important segment for banks, while for those who arrive, a bank account is absolutely crucial. to settle down, he told Effat Ghassemi, executive director of the Newcomer Center of Peel.

“It’s like oxygen, they have to have a bank account.”

She said the banks have helped by bringing teams into the hotels where refugees are staying to help them set up the accounts needed to receive government aid.

The biggest obstacle for newcomers is really trust, Ghassemi said.

“Put yourself in their shoes, you know, they’re new, they’ve come out of the war. You don’t trust anyone. They don’t trust the government or the banking industry.”

Banks are working to build the trust factor in part by becoming common resources for customers. RBC has created hubs near cultural centers and on campus where newcomers can get answers to all sorts of questions beyond banking, such as the tough market, Brahme said on RBC.

“The space is extremely competitive as newcomers are the source of new customers for most businesses.”

© 2022 The Canadian Press Canada’s banks target newcomers as key source of customer growth – National

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