Bank of Mon­treal ‘con­fi­dent’ it can add a mil­lion cus­tomers

Lender to boost mar­ket­ing, sales force, ex­ploit data and dig­i­tal ca­pa­bil­i­ties

Calgary Herald - - FINANCIAL POST - GE­OFF ZOCHODNE gzo­[email protected]­tion­al­ Twit­ Ge­of­fZo­chodne

Bank of Mon­treal said Wednes­day that it is look­ing to add one mil­lion cus­tomers to its per­sonal bank­ing busi­ness over five years, join­ing its ri­vals in set­ting big client-ac­qui­si­tion tar­gets in an al­ready com­pet­i­tive Cana­dian mar­ket.

“We’re con­fi­dent in the num­ber for one rea­son pri­mar­ily, and that is our pri­mary cus­tomer growth over the last cou­ple of years has been dou­ble digit,” said Cam Fowler, pres­i­dent of North Amer­i­can per­sonal and busi­ness bank­ing for BMO, dur­ing the lender’s in­vestor day in Toronto. “We are here to grow this busi­ness.”

To add to the more than seven mil­lion cus­tomers it al­ready has in its per­sonal busi­ness, BMO said it would boost its sales force, par­tic­u­larly its num­ber of fi­nan­cial plan­ners and mort­gage spe­cial­ists, as well as put its data and dig­i­tal ca­pa­bil­i­ties to work.

The bank will be in­creas­ing its spend­ing on mar­ket­ing over the next five years as well.

BMO’s new goal also comes in the wake of sim­i­lar tar­gets set by its Cana­dian com­peti­tors. Royal Bank of Canada said at its in­vestor day in June that it was tar­get­ing 2.5 mil­lion new Cana­dian bank­ing clients by 2023, while Bank of Nova Sco­tia said in Fe­bru­ary it was aim­ing for one mil­lion new pri­mary bank­ing cus­tomers in both its Cana­dian and in­ter­na­tional bank­ing units.

The banks are set­ting these tar­gets at a time when the Cana­dian mar­ket has some favourable tail­winds be­hind it for the lend­ing busi­ness. The Cana­dian econ­omy con­tin­ues to grow, and the Bank of Canada has been hik­ing its pol­icy rate, with the lat­est in­crease an­nounced on Wednes­day.

Speak­ing with re­porters, Fowler said that the one-mil­lion-cus­tomer tar­get was a “re­al­is­tic” goal given the num­ber of peo­ple look­ing to switch banks, as well as the num­ber of new adults and new Cana­di­ans en­ter­ing the mar­ket. Fowler also high­lighted BMO’s busi­ness in China, which can give the bank an in­tro­duc­tion to po­ten­tial cus­tomers who are com­ing to Canada.

“There are a cou­ple mil­lion cus­tomers that are in play in Canada ev­ery year,” he said. “It’s just us say­ing we’d like a lit­tle more of that share than we’ve been tak­ing in the past.”

Even with the favourable out­look on the home front, the banks are look­ing to di­ver­sify, and BMO is no ex­cep­tion.

The bank pro­jected Wednes­day that, over five years, one-third of its earn­ings could flow from the U.S. As of the end of its third quar­ter, in which BMO re­ported ap­prox­i­mately $1.56 bil­lion in ad­justed net in­come, the bank’s U.S. busi­ness had made up 28 per cent of its ad­justed earn­ings for the year to date, up from 24 per cent for the pre­vi­ous fis­cal year.

CEO Dar­ryl White told the in­vestor day at­ten­dees that the lender would gen­er­ate this U.S. growth “or­gan­i­cally, through the ini­tia­tives that we’ve got in place.”

“It’s not just be­cause the en­vi­ron­ment is good,” White said. “But it’s also be­cause we be­lieve that we can com­pete with any­body in the mar­ket. And we’re tak­ing share, and we’re beat­ing the mar­ket in the busi­nesses where we’re choos­ing to com­pete in the United States.”

Ma­jor do­mes­tic lenders that have ex­panded into the U.S. have also been en­joy­ing the perks of a grow­ing econ­omy and cor­po­rate tax cuts. Hav­ing a pres­ence in the U.S. is also al­low­ing the banks to serve cus­tomers who want to do busi­ness on both sides of the bor­der.

Ac­cord­ing to White, a sur­vey of his bank’s whole­sale cus­tomers found that 70 per cent were ei­ther cur­rently or in­tend­ing to con­duct trans­ac­tions on both sides of the U.S. bor­der.

On the cap­i­tal mar­kets side of BMO’s op­er­a­tions, White said that the quar­terly U.S.-based in­vest­ment bank­ing rev­enues have been out­strip­ping those of the bank in Canada, “more of­ten than not,” over the past few years.

“It’s a bal­ance that we like,” White said. “And it’s a bal­ance that’s re­flec­tive of the unique ap­proach that I’m talk­ing about.” Fi­nan­cial Post


The Bank of Mon­treal says the dou­ble-digit growth in its pri­mary cus­tomers has mo­ti­vated it to pur­sue its tar­get of one mil­lion new clients in per­sonal bank­ing.

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