7% of immigrants and 12% of those born in Canada own credit cards with Aeroplan rewards

Insights

With Air Canada’s recent announcement that it will be launching its own loyalty program in 2020, credit card issuers have some decisions to make. According to Environics Research’s latest Financial Services among New Canadians Syndicated Study, TD, CIBC and American Express have an opportunity to surprise and delight, or to disappoint a very lucrative customer base.

 

In our latest 2017 study of 1,500 immigrants (those born elsewhere) and 1,000 Canadian-born consumers, the Financial Services team at Environics Research found that 7% of immigrants and 12% of those born in Canada own credit cards with Aeroplan rewards. These Aeroplan-related credit cardholders from TD, CIBC and American Express are more lucrative on multiple measures when compared to non-Aeroplan credit card holders:

  • They have higher household incomes
  • They have more investible assets
  • They have higher monthly spending on their credit card
  • They are more likely to own all kinds of financial products, including investments, debt and insurance products
  • They are more open to new financial relationships (agreement with the statement “I prefer to spread my financial dealings across several financial advisors” is higher among Aeroplan cardholders than non-Aeroplan cardholders)
  • They expect a great deal from their financial institutions and are more likely to seek out new banks after their first financial institution relationship. Aeroplan cardholders are more likely to use multiple financial institutions (an average of 2.2) than non Aeroplan card holders (an average of 1.8.).

Since high-value customers like these are not shy about taking their business elsewhere, or giving other financial institutions a try, we can expect a mounting credit card war on the horizon. Credit card issuers will likely send out lucrative offers to attract Aeroplan credit card users who may be looking for alternatives in the face of uncertainty, but which population segment is the right one to target?

When looking for high-value customers, there’s a very important group that financial institutions often miss: new Canadians. With an aging baby boomer population and low birth rates, immigration is the main source of population growth in Canada. Moreover, the government has plans in place to keep the rate of immigration at 300,000+ newcomers per year, with a focus on economic immigration – those who can be, or already are, gainfully employed. For credit card issuers, this policy should represent an attractive prospect pool of 300,000+ younger, employed and more financially savvy new Canadians every year. Compared to past decades, recent immigrants hold more senior-level employment roles, and have Canadian education and social networks – a key to overcoming barriers when it comes to finding suitable employment opportunities in Canada.

Comparing these new Canadian Aeroplan credit card users with those born in Canada, we see that newcomers are much more likely to:

  • Work as professionals in such areas as accounting, medical or IT
  • Be self-employed or the sole proprietor of their own business
  • Be of Chinese or South Asian descent
  • Be between the ages of 26 and 35, or 55 and 65

Aside from understanding the profile of their born in Canada customer base, TD, CIBC and American Express should really examine and build a better understanding these potential newcomer Canadian customers. If they want to win the upcoming credit card war and grow their base, this population segment is going to be essential.

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