Editorial: Big banks shirk customer loyalty incentives

Canada’s big banks love to lure new customers using free tablets or phones, but where's the incentive to stay for loyal customers?

Canada’s big six banks love to lure one another’s customers using incentives such as free tablets, prepaid credit cards or other consumer temptations.

Qualifying for that iPad usually means transferring not just a chequing account, but also RSPs, a Tax-Free Savings Account and opening a new credit card.

But what are the banks doing to retain loyal customers? Not very much, it seems.

Most banks offer rewards programs, where points are accumulated through use of an annual fee credit card. Those fees tend to range upwards of $100 to $150. Rewards points accumulated through the credit card can then be redeemed for anything from a kitchen appliance to a tropical vacation. You’re looking at a lifetime of average consumer use to build up enough points for the latter option.

It’s little wonder the lure of a $500 gadget is so appealing to Canadians, when two or even six decades of banking loyalty adds up to little more than a friendlier smile at your home branch.

Banks are terrible at proactively contacting loyal customers and even worse at offering incentives to stay. Ten years with RBC? We’ll waive your banking fees for the next six months. Half a century with TD? Pick a weekend getaway on us. One can dream.

Unlike most grocery rewards programs, banking rewards points require the use of a credit card.

The added benefit of most of those credit cards is a separate travel rewards program, where points can be redeemed for discounted flights (or in other cases, free coffee and donuts). Often the taxes and fuel surcharges are so excessive on flights that those flight points equate to only a few hundred dollars off the price of a $1,000 ticket.

So who’s really benefiting from customer loyalty at the big banks in Canada? Mostly the shareholders and senior executives. Canadian banks are among the most stable investments in the world, thanks in part to good federal policies but also because Canadians are so complacent when being charged for everything from retaining a chequing account to the privilege of using a credit card.

Customers in the U.K. don’t have to put up with a fee for using ATMs at competing banks. Free basic chequing accounts abound online and at many credit unions across Canada.

So next time you’re at the bank, don’t be afraid to ask: But what have you done for me lately? If they’re dismissive, jump ship and show them the consequence of a lack of proactive customer loyalty incentives.


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