Scotiabank, Canada’s
third-largest bank by assets, is rolling out three new retail
banking products in the cards sector. Mike Henry, senior
vice-president and head of retail payments, deposits and lending,
tells Duygu Tavan that the product initiatives will drive sales and
boost digital channel growth.


bar chart showing revenue growth at Scotia Bank on a quarterly basis by geography as of end-JuneCanadians
like and stick to their traditions. Eight out of 10 Canadians still
use cash and debit cards for their day-to-day spending and half of
the adult population use debit cards in particular for household
expenses, such as groceries, gas and drug store purchases.

This trend was reflected in the
half-year results for Scotiabank; Canadia-based personal loans rose
by just under 1% from a year ago to C$36.6bn ($38.6bn), while
credit card loans declined by 0.4% to C$8.7bn.

Scotiabank is now launching three
new products: the Scotia Moneyback Account, Scotia Momentum Visa
Infinite and the Scotia Momentum No-Fee Visa Cards.

The bank hopes to spur cards
spending both on debit and credit further, whilst also enticing
customers to increase the use of direct channels.

Mike Henry, senior vice-president
and head of retail payments, deposits and lending, tells
RBI that the bank expects to generate a third of all new
account sales from the new cards.

The Scotia Moneyback Account offers
customers 1% cash back rewards on debit purchases and unlimited
self-service transactions.

Scotia also provides a Moneyback
Calculator, to determine the amount of cash back consumers can
estimate to receive on an annual basis.

With the new suit of Scotia
Momentum VISA Infinite cards, meanwhile, the bank is targeting an
increase in credit card spending, promising “higher cash back on
credit card purchases”.

The Scotia Momentum Visa Infinite
and the Scotia Momentum No-Fee Visa Cards are an addition to the
bank’s existing Momentum portfolio.

Scotia is offering up to 4%
cash-back from gas and grocery purchases and 2% for purchases from
drugstores and bill payments.

The bank looks to further incite
consumers to use debit cards with additional concierge services,
dining, travel, entertainment and sports services offers.

The Scotia Momentum No-fee Visa is
replacing the bank’s existing No Fee Scotia Moneybank card and
offers 1% cash-back on gas, grocery, drug store and recurring bill
payments, as well as 1.5% cash back on all other eligible

“We believe that cash back cards
appeal to those customers who prefer more straightforward rewards,”
Henry says.

“We believe we have a highly
competitive and attractive suite of solutions and that our
employees offer exceptional advice.

“If we marry these solutions with
the right advice, we will ensure we have the opportunity to have a
high share of our customers’ banking business.”

Although direct banking channels
are increasingly becoming popular among Canadians, the branch
channel is, as Henry puts it, alive and well.

“In fact, they are foundational,”
he says.

The bank is piloting new design
concepts, “to see if we can push the envelope and take our
customer’s experience to another level”.

A recent example is a new format
branch in the subway system in Montreal, Quebec, and Henry says the
bank will be testing more new format changes soon to enhance
advisory and service quality.

It is also in the process of
“making a very significant investment in upgrading our ATMs”, he

Bar chart showing net interest margin at Scotia Bank in Q210-Q211This will be
in line with growing acceptance of direct banking channels.

There is no time or reason for
complacency, as consumer needs are evolving fast. When Royal Bank
of Canada introduced its first mobile banking app at the end of
January, smaller lenders, including Scotia had been offering the
service for months.

But Henry acknowledges that
competition is intense and new solutions are under consideration
all the time.

“This environment places a lot of
pressure on our margins,” he says.

“We continue to review our online
offerings with a view to ensuring that they are relevant for our
customers’ needs.

“Direct banking channels remain
essential to our delivery model.”

He adds that customers continue to
use multiple channels – selectively using the right channel for the
right need, versus one channel displacing another completely.

In just over six months since
launching the mobile banking service, the bank registered almost
half am customers and, according to Henry, is already seeing manyms
of transactions per month through this channel.

But Scotiabank now faces intense
competition from Royal Bank of Canada (RBC) in mobile banking.
Until this year, RBC only offered a web browser-based mobile
banking service, launched in 2008.

That all changed with the RBC
launch on the iPhone and Blackberry platforms, soon to be extended
to Android (see ‘Bringing Advice to
life pays off for RBC’

“It is a strategic priority to
ensure our online and mobile banking offerings provide the
appropriate level of service and functionality to meet these
needs,” Henry says.

After introducing contactless
technology on its credit card portfolio in March, the bank is now
going to offer that service on debit cards.

Henry predicts that technology
trends in the payments business will create new opportunities even
in Canada.

“Technology continues to get faster, smaller and more prevalent
in our lives and we are working hard to leverage these
technological developments,” he says.

Bar chart showing market share growth at Scotia Bank in Q210-Q211


Bar chart showing transaction volumes by delivery channel among the six largest banks in Canada


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