The Globe and Mail, Tara Perkins, 9 June 2007
Down in Toronto's Queen Street subway station, where thousands of transit riders are funnelled every morning into the district housing the Eaton Centre and upper reaches of Bay Street, a commuter cacophony is unavoidable - trains whizzing by, chimes ringing, breaks screeching, teenagers laughing.
But at least one man is focused on a task at hand.
Frank Techar has just taken a subway ride to check out a key part of the most expensive advertising campaign his company, Bank of Montreal, has ever had for one product offering. It's pitching BMO's no-longer-secret weapon: The bank is taking Air Miles, and its credit card loyalty game, to the debit card.
Mr. Techar, who heads up personal and commercial banking operations, BMO's biggest division, insists there are other weapons coming later. But the focus right now is on the lure of the travel points program, so he's sizing up the billboards that plaster the underground station, conveying just how important this campaign is to BMO.
"I think the market, in particular for deposit balances and new customers, is tough right now," Mr. Techar says. "I think everyone is trying to figure out what they have to bring to the table in their own unique way."
The stakes are high. Industry executives say the retail banking industry is in a new wave of competition, with customers up for grabs like never before. A study by IBM just found that only 27 per cent of Canadian banking customers are "advocates" for their banks - meaning they would recommend it to others and look to it for new financial products.
And one of the victims has been BMO. Canada's fifth-biggest bank grabbed more of the personal lending and mutual fund business in its latest quarter, but disappointed analysts by losing market share in personal deposits. It held $24.2-billion of personal deposits in Canada, down from $25-billion a year earlier, as its market share slid to 11.84 per cent from 12.44.
On a conference call with analysts last month, Mr. Techar admitted that the bank is No. 4 out of the Big Five on personal customer loyalty scores. He wouldn't disclose the numbers, but added "what I can tell you is, over the last six months we've made no improvement relative to the other competitors."
Ouch.
Mr. Techar knows BMO's weaknesses. "If you look at our business, we've been performing very well in the West and Alberta and British Columbia, and we haven't been performing as well in the eastern part of the country," says the boy-faced executive who, now 50, was hauled back from his post at the top of the bank's U.S. operations last summer to fix the Canadian operations.
He's shaken up the management ranks in recent months. About one-third of branch executives in Ontario, Quebec and the Atlantic region are now new to their jobs.
And then this, a brainwave to offer customers Air Miles each time they use their debit card.
The images that wallpaper the Queen Street station feature BMO debit cards alongside Air Miles logos. The same pictures can also been seen in national television commercials, wrapping commuter newspapers, and on buses, trains and the Internet.
With this campaign BMO is targeting young families who are just starting out. It wants their savings and chequing accounts, obviously. But it also wants the rest of their banking business. Under the new program, customers with two BMO products, such as an account and a credit card, earn more points. Adding a third product increases the number of points again.
Air Miles collectors are a dedicated following, BMO has found. It has been allowing them to collect points by using credit cards for some time.
The simple idea to offer points with debit cards was a more difficult move. "Debit card usage has continued to climb," Mr. Techar says. "If you go back five years ago, we were probably more uncertain about customers' views on the use of debit as a payment system."
Overall debit purchases in Canada have grown 73 per cent since 2002.
Mr. Techar likes the idea of this loyalty program, as opposed to some other offerings from rival banks, such as free iPods to new customers. "This offer is significantly better than a free iPod, and I'll tell you why. First of all, it's ongoing; it's not one time. Second of all, not only can non-customers benefit from it, but our current customers can benefit."
No sense in angering existing customers to attract new ones.
There are nine million active Air Miles accounts in Canada. BMO's only doing business with about a third of those, and Mr. Techar is salivating over the other six million.
There are a few more ideas simmering in his brain, but he's not ready to share them yet. He's looking across the bank's product line to see what can be done to make them more appealing at a retail level. His M.O. is to get programs ready, keep them under wraps, and then blast them into the market.
"We're going to try to come to market with a few of those every year, and we're going to support them very aggressively with our advertising," he says.
Down in Toronto's Queen Street subway station, where thousands of transit riders are funnelled every morning into the district housing the Eaton Centre and upper reaches of Bay Street, a commuter cacophony is unavoidable - trains whizzing by, chimes ringing, breaks screeching, teenagers laughing.
But at least one man is focused on a task at hand.
Frank Techar has just taken a subway ride to check out a key part of the most expensive advertising campaign his company, Bank of Montreal, has ever had for one product offering. It's pitching BMO's no-longer-secret weapon: The bank is taking Air Miles, and its credit card loyalty game, to the debit card.
Mr. Techar, who heads up personal and commercial banking operations, BMO's biggest division, insists there are other weapons coming later. But the focus right now is on the lure of the travel points program, so he's sizing up the billboards that plaster the underground station, conveying just how important this campaign is to BMO.
"I think the market, in particular for deposit balances and new customers, is tough right now," Mr. Techar says. "I think everyone is trying to figure out what they have to bring to the table in their own unique way."
The stakes are high. Industry executives say the retail banking industry is in a new wave of competition, with customers up for grabs like never before. A study by IBM just found that only 27 per cent of Canadian banking customers are "advocates" for their banks - meaning they would recommend it to others and look to it for new financial products.
And one of the victims has been BMO. Canada's fifth-biggest bank grabbed more of the personal lending and mutual fund business in its latest quarter, but disappointed analysts by losing market share in personal deposits. It held $24.2-billion of personal deposits in Canada, down from $25-billion a year earlier, as its market share slid to 11.84 per cent from 12.44.
On a conference call with analysts last month, Mr. Techar admitted that the bank is No. 4 out of the Big Five on personal customer loyalty scores. He wouldn't disclose the numbers, but added "what I can tell you is, over the last six months we've made no improvement relative to the other competitors."
Ouch.
Mr. Techar knows BMO's weaknesses. "If you look at our business, we've been performing very well in the West and Alberta and British Columbia, and we haven't been performing as well in the eastern part of the country," says the boy-faced executive who, now 50, was hauled back from his post at the top of the bank's U.S. operations last summer to fix the Canadian operations.
He's shaken up the management ranks in recent months. About one-third of branch executives in Ontario, Quebec and the Atlantic region are now new to their jobs.
And then this, a brainwave to offer customers Air Miles each time they use their debit card.
The images that wallpaper the Queen Street station feature BMO debit cards alongside Air Miles logos. The same pictures can also been seen in national television commercials, wrapping commuter newspapers, and on buses, trains and the Internet.
With this campaign BMO is targeting young families who are just starting out. It wants their savings and chequing accounts, obviously. But it also wants the rest of their banking business. Under the new program, customers with two BMO products, such as an account and a credit card, earn more points. Adding a third product increases the number of points again.
Air Miles collectors are a dedicated following, BMO has found. It has been allowing them to collect points by using credit cards for some time.
The simple idea to offer points with debit cards was a more difficult move. "Debit card usage has continued to climb," Mr. Techar says. "If you go back five years ago, we were probably more uncertain about customers' views on the use of debit as a payment system."
Overall debit purchases in Canada have grown 73 per cent since 2002.
Mr. Techar likes the idea of this loyalty program, as opposed to some other offerings from rival banks, such as free iPods to new customers. "This offer is significantly better than a free iPod, and I'll tell you why. First of all, it's ongoing; it's not one time. Second of all, not only can non-customers benefit from it, but our current customers can benefit."
No sense in angering existing customers to attract new ones.
There are nine million active Air Miles accounts in Canada. BMO's only doing business with about a third of those, and Mr. Techar is salivating over the other six million.
There are a few more ideas simmering in his brain, but he's not ready to share them yet. He's looking across the bank's product line to see what can be done to make them more appealing at a retail level. His M.O. is to get programs ready, keep them under wraps, and then blast them into the market.
"We're going to try to come to market with a few of those every year, and we're going to support them very aggressively with our advertising," he says.
___________________________________________
• Frank Techar
Title: President and chief executive officer, personal and commercial banking Canada, Bank of Montreal
Family: Married, with two 13-year-old twin daughters.
Birthplace: Hibbing, Minn.
Citizenship: American. "I have not lived here long enough in any consecutive period of time to be able to get my Canadian citizenship, so it's still something that's out there in the future."
Second-choice career path: "Professional sports management. I'd like to run or own a professional sports team."
What investments are you making with your Air Miles?: "I haven't decided yet. I've been collecting since 1998, when I first arrived in Canada. I'm saving up. I have about 4,000."
Real favourite reading: "I read - you can't write this though - I read novels." (He likes James Lee Burke)
The official story: "My favourite book is a book called Truman by David McCullough."
;
Title: President and chief executive officer, personal and commercial banking Canada, Bank of Montreal
Family: Married, with two 13-year-old twin daughters.
Birthplace: Hibbing, Minn.
Citizenship: American. "I have not lived here long enough in any consecutive period of time to be able to get my Canadian citizenship, so it's still something that's out there in the future."
Second-choice career path: "Professional sports management. I'd like to run or own a professional sports team."
What investments are you making with your Air Miles?: "I haven't decided yet. I've been collecting since 1998, when I first arrived in Canada. I'm saving up. I have about 4,000."
Real favourite reading: "I read - you can't write this though - I read novels." (He likes James Lee Burke)
The official story: "My favourite book is a book called Truman by David McCullough."
