The document provides an analysis of the Canadian banking industry through a STEEP analysis framework. It finds that the industry faces opportunities through its diverse customer base but also threats from foreign banks. Key points include: - The industry has opportunities to serve immigrant populations through multilingual services but faces threats from foreign banks familiar to some immigrants. - Technological advances provide opportunities for new digital services but also security threats from increased online and mobile banking. - The economic slowdown challenges growth but other industries are offsetting declines in oil; political regulations have kept the system stable.

1. Industry Analysis
Canadian Banking Industry
Aleena Anna James
300811928
Professor James MacDonald
International Banking and Finance
INTL 702, SEC-002
August 9 2015

2. Executive Summary
Canada has one of the soundest and best banking system of the world. The industry is dominated
by major six banks otherwise denoted as “Canada’s big six”. The country has a population of 35
million and a GDP of CAD$ 1.6 trillion. The Canadian banks mainly depend on the country’s
natural resources industry and the recent slowdown of the oil industry is significantly affecting
the profit margin of the major banks.
Banking Industry in Canada is heavily regulated. The country has a central bank, The Bank of
Canada, who governor has independent authority in determining the monetary policy of Canada.
The recession of 2008 has made it compulsory for the banks of Canada to follow Basel III
regulations to show stability and liquidity to withstand future financial crises.
Canadian banks have their presence in all fields of the industry. They are leading in innovations,
new services, and diverse employee resource to satisfy multicultural customers etc… Canadian
banks are also socially responsible and they participate actively in maintaining sustainability in
their operations as well they encourage their clients who use renewable energy sources.
There is an increase in the growth of credit unions in Canada, which is the result of expensive
nature of Canadian banking. Even though this is not widespread, banks might need to revisit
their policies in charging their customers in the future.
In spite of the impending economic recession and the presence of substitute service firms,
Canadian banks still remain strong and they still have the power of being “too big to fail”.

3. Table of Contents
Introduction 1
STEEP Analysis 2
Social 2
Technological 3
Economic
Environmental
Political
Table Summarizing Steep Analysis Results
3
3
5
6
Porter’s Five Forces
Analysis
8
Traditional Competitors
NewMarket Entrants
8
9
Substitute Products and Services 9
Customers
Suppliers
10
11
Integrated SWOT
Analysis
11
11
Bank ofMontreal 12
Canadian Imperial Bank ofCommerce 13
National Bank ofCanada
Royal Bank ofCanada
Scotiabank
TD Bank
13
14
Conclusion 15
References 16
Appendices 20
Appendix One – Charts 20
Appendix Two – Tables 21
Appendix Three – Figures 22

4. Introduction: Overview of Canadian Banking Industry
The beginning of Canadian Banking Industry dates back to the year 1817, when the Bank of Montreal
was opened by a group of merchants in Montreal, Quebec (Canada's Banks,2002) (Mishkin & Serilits,
2013). Following the formation of the Bank of Montreal, severalother banks were opened in Canada like,
the Bank of New Brunswick, the Chartered Bank of Upper Canada etc… (Mishkin & Serilits, 2013).
Initially function of the banks were limited to accepting deposits and granting loans (Canada's Banks,
2002), but as trade expanded and businesses started to boom, Canadian Banking system exhibited
significant changes. The Great Depression of 1930 stimulated the need for a centralized banking system
in Canada. In 1933, Prime Minister R.B. Bennett organized a commission to evaluate the organization of
monetary system in Canada to assess the need for a Central Bank for the nation (The Bank's History,
n.d.). The Bank of Canada came into existence in March 1935, and it has its current headquarters in
Ottawa (The Bank's History, n.d.). Mr. Stephen S. Poloz is the current governor of the Bank of Canada
(The Bank's History, n.d.).
Canadian banking industry is far more stable and developed now, with almost 14 domestic banks, 33
subsidiaries of foreign banks and 20 foreign banks (Canada's Banks,2002). These banks handle almost
CAD$ 1.7 trillion in assets; however,Canada has six large domestic banks that almost hold 90% of the
total banking assets (Canada's Banks,2002). Banking industry contributes to 3.1% of the total GDP i.e.,
CAD$53billion, of Canada (Canadian Banking System, 2015). The banking industry in Canada was
ranked among one of the most sound and healthy financial institutions in the Global Competitiveness
Report of 2001-2002 (Canada's Banks,2002). The World Economic Forum has ranked Canada’s banks as
the most sound in the world consecutively for seven years (Canada’s Banks – Made of Canada, 2015).
The industry has shown a stable growth in the last decade. The banking industry in Canada is controlled
by six major banks as listed below:
a) Bank of Montreal (BMO)
b) Canadian Imperial Bank of Commerce (CIBC)
c) National Bank of Canada (NBC)
d) Royal Bank of Canada (RBC)
e) Scotiabank
f) TD Bank
See Appendix 1 Chart 1 for the market share of the Big Six Banks based on the assets held by
them (Bank Financial Results 2013-2014 Fiscal year, February 2015). See Appendix 2 Table 2
for the Compound Annual Growth Rate of big six Canadian banks in the last decade.
The North American Industry Classification System (NAICS) Code of the Canadian banking industry is
52211, with 522111 denoting the personal and commercial banking industry, and 522112 which denotes
the corporate and institutional banking industry (NAICS,2012).

5. - 2 -
STEEP Analysis
Social
Canada is undergoing a demographic shift which has significant impact in every aspect of the
country’s growth and consumer behavior. Canada has a population of 35.2 million, in which the
median age is 40 years (Report on the Demographic Situation in Canada, 2013). The younger
population of Canada is mainly contributed by immigrant population from Asian, South
American continents. Canada is multicultural and multilingual, which forces the Canadian
banking industry to respond instantaneously to these changes. Time has flown by where the
banks could just use English/French as the medium of communication. Interestingly, the big six
banks of Canada has already responded to these changes. Customer service representatives of
almost all the big six banks provide services in different languages. This multicultural consumer
base provides opportunities for the Canadian domestic banks by providing them with services in
their languages and that are familiar to them. Also the technological advance and impeccable
service of the Canadian banking industry attracts consumers.
The presence of the Big Six banks provides a fair competitive market which provides consumers
with the best interest rates and services. TD bank offers its services in more than 200 languages
and has organized variety of events to support the multicultural nature of the Canadian
population (Serving Diverse Communities, 2015). The bank hours are also made flexible and
some branches operate on Sundays (Serving Diverse Communities, 2015). When it comes to
advertising, the banks face significant demands from people speaking over hundreds of
languages. Advertisements in specific regions are tailored to provide information in various
languages according to regional requirements. Scotiabank has a Vice President position for
multicultural banking. The position was opened in 2012, Ms. Winnie Leong, currently holds the
position (Morison, 2012). This shows the revolutionary changes ongoing in the Canadian
banking industry.
However, there is a threat to the Canadian domestic banking industry from Schedule II and
Schedule III banks which are subsidiaries or branches of foreign banks operating in Canada.
These banks provide a familiar atmosphere to immigrants from their respective countries which
might reduce the market share of domestic banks. Even though it is almost impossible to
compete with the big six banks of Canada, foreign banks possess an implicit upper hand on
consumers from their country.

6. - 3 -
Technological
Advances and innovations in the field of technology are significantly changing the banking
industry in Canada. Almost 55% of the Canadian population resorts to internet as the medium for
their banking services (How Canadians Bank, 2015). Although ABMs and personal banking still
remain popular, mobile banking services and online banking services are gaining popularity
among the Canadian population. The usage of mobile devices for banking services has increased
by almost 26% in the last year (How Canadians Bank, 2015). All the major banks in Canada
provide meticulously designed mobile applications in various platforms (iOS, android, windows)
that enable user to do everything ranging from international money transfer to general bill
payments using their mobile devices. The big six banks of Canada has invested almost
CAD$55.8 billion in technology sector during 2009 (Canadian Banking Industry, 2013). Smart
phones have become the most important device that people use regularly to manage almost
everything in their day to day life. This has forced banks to give more focus to develop their
smart phone applications to competitive levels that attract their consumers. RBC and TD bank
are already helping users manage their payments just by using phones rather than resorting to
plastic debit/credit cards (Berman, TD, BMO unveil new mobile banking features, courting tech-
savvy clients, 2015). The current phase of technology is leading us to a “cardless, cashless”
society. The concept of digital wallet introduced by RBC will help its consumers to make retail
payments with their mobile phones (Berman, TD, BMO unveil new mobile banking features,
courting tech-savvy clients, 2015).
Technological innovations are always followed by their most imminent threat of security. When
everything is optimized to a single device, like the user’s smart phone, the bank implicitly is
responsible for a lost/stolen phone just like it was for lost/stolen credit/debit cards. The mobile
applications hold almost all information regarding a user’s bank account, which elevates the
security threat faced by the user and the bank as well. Another threat is that big six banks of
Canada are not recent institutions instead they are well developed and established companies that
run on legacy systems (Canadian Banking Industry, 2013). This doubles the time and
investments required for such institutions to suddenly change to new forms of technology that
require complex and different platforms compared to legacy systems (Canadian Banking
Industry, 2013). The widespread usage of online services has also reduced the importance of
traditional bank branches present in every town. The recent statistics presented by Scotiabank
reveals that an average customer only visits their home branches once in every two months, but
uses the online services twice every month (O'Hara, 2015). These closures will affect customers
in rural areas who still resort to using personal banking services by visiting their home branches
(O'Hara, 2015).

7. - 4 -
Economic
The collapse oil price has pushed down the economic growth of Canada in the first four months
of 2015. The projected average growth rate for the year 2015 is just over 1% as published by the
Bank of Canada Monetary Policy Report of July 2015 (Monetary Policy Report, 2015). This has
caused setback for the banking industry as the earnings growth is also expected to be sluggish
this year (Berman, Canada’s Big Six facing headwinds ahead of first-quarter reports, 2015).
CIBC World Markets analyst, Mr. Robert Sedran, has predicted the earnings in the first quarter
to increase only by 3% (Berman, Canada’s Big Six facing headwinds ahead of first-quarter
reports, 2015). The obvious reason for this decrease is the crude oil price that has decreased to
more than 50% since summer (Berman, Canada’s Big Six facing headwinds ahead of first-
quarter reports, 2015). In January 2015, Bank of Canada further reduced the key rate by quarter
of a percentage point; even though reduced interest rates attracts more borrowers this flattens the
profitability of the banks (Berman, Canada’s Big Six facing headwinds ahead of first-quarter
reports, 2015).
The recent Monetary Policy released by Bank of Canada confirms that Canadian economy has
met the definition of the term recession (Tencer, 2015). The predicted slowdown in economic
growth will further decrease the money flow in the country. However, experts predict that
Canadian economy might shrink in the coming quarter, but it is unlikely that country will face a
major recession (Tencer, 2015). The boom in the real estate industry and automotive industry
will neutralize the degradation of the manufacturing and oil industry (Tencer, 2015). In short the
current stagnant economy will impact the profitability of Canadian banks, but there is no reason
for panic as other industries are booming up their sales and eventually the banking industry will
regain its upward growth.
Environmental
Canadian banking industry has established principles and policies that help them to incorporate
sustainable practices in their operations. The big six banks of Canada has adopted “Equator
Principles, that is an international risk management framework that financial institutions follow
to assess environmental and social risks associated with their projects (Banks and the
Environment, 2014) (THE EQUATOR PRINCIPLES, 2015). Part of these equator principles is
for banks to work with their industrial clients to minimize environmental hazards in their
operations, encourage clients to enhance Canada’s green economic principles etc… (Banks and
the Environment, 2014). Following are some of the activities undertaken by Canadian banks to
enhance the environmental protection and to support sustainable development.

8. - 5 -
a) Green Products and Services
Canadian banks are meticulously using technological innovations to reduce their impact
on environment. E-banking, paperless transactions etc… are some of the tools major
banks use to reduce paper consumption (Banks and the Environment, 2014). According
to their survey, TD bank has stated on their website that 60% of consumers prefer to use
green and environment safe products if they are competitive financially (Green Options,
2015). Apart from services offered, banks also provide incentives to customers who use
sustainable products, for example, automotive insurance for electric/hybrid vehicles,
special line of credit for home owners to use energy saving electric amenities (Banks and
the Environment, 2014).
b) Community Activities
Banks in Canada are active participators in community service initiatives that work for
betterment of society. Canada’s big six banks were recognized for their sustainable
initiatives by Maclean’s magazine in 2014. BMO, RBC, TD were ranked among the top
50 socially responsible corporations of 2014 (Top 50 socially responsible corporations,
2014). TD is the first commercial bank in Canada to offer its own bond for developing
green projects (Top 50 socially responsible corporations, 2014). RBC launched a project
known as “Blue Water”, in 2007 that is solely aimed at preserving, conserving and
ensuring the availability of fresh water in Canada (Banks and the Environment, 2014)
(RBC Blue Water Project, 2015). These examples are a few among various steps taken by
Canadian banking industry to ensure a safe and secure environment.
Political
The main reason why Canada’s banks tops as the soundest banks of the world is because of strict
regulations imposed by the federal government. Even during the period of global recession of
2008, Canadian banks were well capitalized, regulated and managed (Global Banking
Regulations and Banks in Canada, 2015). Canadian banks are strictly to follow regulations under
capital management, liquidity and systemic risk management.
a) Capital Management
Banks in Canada should be capitalized adequately so that depositors will not have to
worry about their savings or the stability of the bank. Banks in Canada should exceed the
2019 capital limits set by Basel III rules before the year 2013 to ensure their stable
working (Global Banking Regulations and Banks in Canada, 2015).
b) Liquidity
The ease with which a bank in Canada can convert assets into cash should meet the
criteria provided by Basel III regulations for liquidity. The Liquidity Coverage Ratio
(LCR) of a bank must have a 30 day horizon and the Net Stable Funding Ratio (NSFR)

9. - 6 -
should have a horizon of one year (Global Banking Regulations and Banks in Canada,
2015).
c) Systemic Risk Management
Systemic risk management rules advise banks to maintain capital, liquidity and leverage
ratios that ensure their strength during the time of a financial crisis. The big six banks in
Canada are designated as D-SIBs (Domestic- Systemically Important Banks), and they
should hold additional one percent capital (Global Banking Regulations and Banks in
Canada, 2015)
The federal election coming in the fall is to have significant changes in bail-in regulations of
Canadian banking industry. In 2014, Finance Minister, Mr. Joe Oliver, proposed new bail-in
rules for Canadian banks under Basel III framework (Doyle, 2015). The new bail-in rules require
bank shareholders, investors and bondholders to absorb losses before the utilizing public funds
for bail-out purposes (Doyle, 2015). Simultaneously, Canadian bankers are requesting a revision
of the insurance amount instituted by the Banks of Canada, which is currently at $100,000
(Doyle, 2015). The uncertainty that exists during this periods and the outcome of future
discussions will have impacts in the operations of big six banks of Canada.
Table Summarizing STEEP Analysis Results
STEEP Factor Opportunities Threats
Social i) Significant increase in the
number of immigrant
consumers.
ii) Reliability of Canadian
banks attracts new
immigrant consumers from
developing countries.
iii) Diverse set of employees
and their talents could be
utilized to satisfy the needs
of diverse Canadian
population
i) Presence of Schedule II and
Schedule III banks might
reduce customers of
domestic banks.
ii) Foreign branches operating
in Canada can canvas the
citizens of their respective
nations to choose foreign
banks over domestic banks.
Technological i) Innovations in the financial
sector help banks to attract
young customers who are
used to digital world to
control their routine
activities.
ii) Bank activities could be
more optimized and
i) Technological innovations
pose a higher threat of
security.
ii) Smart phones applications
that hold user information
and account details, makes
the bank responsible once
the phone is stolen/lost.

10. - 7 -
automated that helps
customers to carry out
simple transactions using
their mobile devices.
iii) Absence of hard documents
will reduce paper
consumption.
iii) Established banks operating
on legacy systems will have
to make significant initial
investments to migrate to
newer forms of technology.
iv) Reduction in the number of
customers using physical
branches forces banks to
close their less crowded
offices.
Economic i) The boom in the field of
automotive and real estate
industry will hold the
Canadian economy and
banking industry from
collapsing.
i) The oil industry collapse
and slowdown of Canadian
economy, has reduced the
borrowing/spending powers
of Canadians.
ii) Even though interest rates
are lower, banks cannot
make sufficient loans to
meet their profit margins.
Environmental i) Investing in sustainable
products will attract
consumers who prefer
sustainable ethics of a
company.
ii) Reducing paper documents
and using hybrid sources of
power will help banks to
make profits in the long run.
i) Initial investments for
sustainable projects will be
more than conventional
methods.
Political i) The sound nature of
Canadian banks protect
them being subjected to
changes in rules that affect
their stability.
i) Recommendations for new
bail-in procedures affect the
operations of banks.
ii) The impending federal
election and the following
changes in financial
policies have created an
uncertain environment for
the operation of banks.

11. - 8 -
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a tool used to understand the distribution of power among the
various players in an industry. This model gives us a general idea of the industry, its direct
competitors and the environment in which the industry operates (Laudon, Laudon, & Brapston,
2013) See Appendix 3, Figure 1).
Traditional Competitors
Canada’s banking industry is highly competitive. Canada has more than 80 domestic and foreign
banks operating; in this pool, six major banks dominate the industry that hold almost 90% of the
total banking business (Mishkin & Serilits, 2013), (Competition in the Financial Services Sector,
2015). The banking industry in Canada is well grown that it provides almost 40 products and
services to its consumers ranging from banking accounts, credit cards, loans etc… (Competition
in the Financial Services Sector, 2015). New regulations that came after 1980 made the Canadian
banking industry more flexible and diverse. This allowed foreign banks to operate in Canada
under new rules (Competition in the Financial Services Sector, 2015). Following are some
specific new comers in the Canadian banking industry:
a) Oil boom in Alberta resulted in the generation of financial institutions that provided
banking services that mainly concentrated on oil industry (Competition in the Financial
Services Sector, 2015).
b) The grocery store giant Loblaws offer a bank in its store in Toronto, known as
Presidential Choice Financial/Online Banking (Loblaws, 2015).
c) HSBC has its branches in Canada, a few Indian banks namely, ICICI, State Bank of India
etc… are also operating in Canada (Competition in the Financial Services Sector, 2015).
Apart from these traditional competitors, banks are also having rivals in the digital world. A
simple example is the loyalty card programs offered by chain restaurants and retail stores (Busch
& Moreno, 2014). Paypal has gained its position as the top online payment methods in developed
countries (Busch & Moreno, 2014). Google has introduced plastic debit card for its service
Google Wallet (Busch & Moreno, 2014). The advances in the field of technology and
globalization bring significant competitors to the Canadian banking industry. The notion that
Canada’s banks are too big to fail and the soundness in their operation; however, prevents a
favorable atmosphere for the big six of Canada.

12. - 9 -
New Market Entrants
The idea of a new bank entering the Canadian market is highly improbable. However, the new
entrants are not necessarily another physical domestic bank. It could be firms providing banking
services exploiting innovations in the financial sector. Even though Canadian banks are
advanced in using technology to make banking easier, their main business is not technological
advancement. Companies that dedicate themselves for advancements in this field can easily
overcome banks in certain areas. Traditional banking services will still be the monopoly of
banks, but services like, online bill payments, digital wallets, biometric accounts etc… are areas
that digital companies have their upper hand in. In short banks in Canada should keep up with
innovations in digital field to not lose to new entrants.
Royal Bank of Canada itself is becoming a new threat to its fellow competitors. RBC recently joined with
MasterCard and a Canadian startup Bionym to use cardiac rhythms as key to open bank accounts
(Kiladze, 2014). Being unique and inaccessible by other individuals this technology will offer far more
security than PIN,passwords etc… and is latest comparing to fingerprint scanning. This new safety
system will be using a wristwatch to detect the cardiac rhythm of the user (Kiladze, 2014). Scotiabank
recently launched an application for Samsung Smart watch users that enable them to check their bank
account details on their wristwatches (Kiladze, 2014). See Appendix 3, Figure 2 to visualize the changes
in Canada’s history in banking innovations.
Substitute Products and Services
Tight regulations and increased banking fees are forcing Canadians to switch to alternate service
providers in the financial sector. The most common form of substitute that Canadian seem to be
interested in is “credit unions”. An average Canadian citizen has been using the services of a
single bank for almost 15 years, yet 40% of them seem to be dissatisfied with their services
(Lahey, 2012). There is a chance that this dissatisfaction could not be because of quality of
service offered by domestic banks, rather it could be the extra services provided by credit unions
with comparatively lower service charges. According to one of the interviewee, “not having to
pay a monthly service charge is a huge deal”, the person also emphasize that the reason he/she
prefer a credit union is because of their impeccable quality of service (Lahey, 2012).
The idea of banking fees and the non transparent nature of this fee is the main reason why
customers are eroding from banks to credit unions for their financial services (Lahey, 2012). This
notion of fee has resulted in various alternatives for Canadians to have no fee chequing accounts
as listed below:
a) Loblaws offer its Presidential Choice Bank’s chequing account free of charges for its
customers. It also provides loyalty points to customers while shopping in their grocery
store (Young, 2015).
b) Tangerine also offers a no fee chequing account, that will not charge montly fee, or fee
for debit card transactions on the account (Young, 2015).

13. - 10 -
c) Credit Unions are the most common alternatives for Canadians. Even though some of
them charge monthly fee, they offer certain waivers and extra services that attracts
customers (Young, 2015).
Apart from these issues, alternative lending facilities are also booming in Canada. Bank loans are
tightly regulated and are often less accessible. The new substitute player in this field is online
market place lending facilities that can determine the customer’s eligibility for a loan online
24*7 (Bell, 2015). One reason for the success of such online market places is because banks
prefer large loans that offer them more profit; this leaves small lenders no options that to search
of alternative sources (Bell, 2015). Such small lenders are the biggest consumer base for these
online marketplaces.
Customers
Customers to the banking industry are the entire Canadian population. Canadian population is
financially sound, but most of the population resort to smaller businesses as their livelihood. Out
of its 35 million residents almost 300,000 is formed by immigrants (Population by year, by
province and territory , 2015). This diverse consumer base is significantly altering the way
Canadian financial sector works. The emerging credit unions, alternate financial institutions,
foreign bank branches etc… is altering the atmosphere of Canadian banking industry.
However, the power is not necessarily vested in the hands of the end customer. Even though they
can resort to alternate services, banks in Canada are well established and financed, that their
clients are all big industries that handle million dollar investments and withdrawals. Alternate
service providers can never get into these big established customers of the big six banks in
Canada. All of these new substitutes concentrate on startup entrepreneurs and other consumers
who are dissatisfied by the major banks.
On the other hand, banks in Canada are also under high competition in the technology field. The
fair competition among major six offers consumers enough choices to select. Customers are
focused upon the services provided by banks in all fields starting from behavior of the teller,
facilities in the branch, online services, multilingual services, services on holidays etc… The
demands in all these fields have to be met by banks for it to attract consumers. Banks in Canada
are vigorously advertising their new schemes and plans to consumers in all possible media
available. They offer targeted services to various groups that satisfy the needs and wants of the
specific group. One reason why Canadian banks provide impeccable services is because they are
continuously innovating and changing their cervices to satisfy their growing customer base

14. - 11 -
Suppliers
The suppliers of the banking industry include its customers and the Central Bank of Canada,
their investors, shareholders etc… The power of customers as we already discussed give rise to
innovation in the services, rise of alternative service providers etc… The customer satisfaction
provided by Canadian banks, though has received certain remarks, still remain to be the best of
its kind.
Another major player is the Bank of Canada, as it decides the interest rates, money supply and
regulations based on which banks operate, has significant power to control the banking industry.
Even though banks use their lobbying power to influence decisions, Bank of Canada having its
own autonomy in decision making often limits the influence of domestic banks. The recession of
2008 and the subsequent Basel regulations have provided strict regulations for the operation of
the banks of Canada. This again shows the limitation in the power of investors and shareholders
in decisions regarding to the operation of banks. Even though they are the owners of the bank,
Canada does not provide a ground for unfair competition. In short power of suppliers is mainly
concentrated on the customers and the Bank of Canada.
Integrated SWOT Analysis
Bank of Montreal (BMO)
Opportunities Threats
i) BMO should explore the new
immigrant population in Canada.
ii) BMO has strong roots in US that will
help the bank to gain global presence.
iii) BMO Capital Markets services entering
into Abu Dhabi is a smart move from
bank’s side to venture the booming
Middle East (BMO Financial Group,
2013).
i) Slowdown of Canadian economy affects
the profitability of banks.
ii) Lowered interest rates flatten the profit
margin.
iii) Foreign banks and credit unions give rise
to considerable competition.
Strengths Weaknesses
i) BMO was ranked as the Best Canadian
Investment Bank in the year 2013
(BMO Financial Group, 2013)
ii) BMO was ranked among Canada’s best
25 brands in the year 2014 (The Top 25
Canadian Brands, 2014)
iii) Named as the Best Bank in Canadian
Dollar Foreign Exchange by FX Week
magazine (BMO Financial Group,
2013)
i) BMO does not have as many branches as
its competitors in Canada.
ii) Comparatively less popular among new
immigrants.

15. - 12 -
iv) BMO has more than 35,000 employees
and 7 million customers at its service
(Satisfying Customers, 2015)
Canadian Imperial Bank of Commerce (CIBC)
Opportunities Threats
i) CIBC offers charge free credit card to
students, this should be incorporated
into student banking accounts to
increase customers.
ii) CIBC can explore the growing
immigrants in Canada by offering them
tailored services to suit their needs.
i) Slowdown of Canadian economy affects
the profitability of banks.
ii) Lowered interest rates flatten the profit
margin.
Strengths Weaknesses
i) CIBC was ranked as the 15th strongest
bank of the word by Bloomberg in
2014 (Hemmadi, 2014).
ii) CIBC was ranked among best 25
brands in the year 2014 (The Top 25
Canadian Brands, 2014).
iii) CIBC has more than 1070 branches in
Canada.
i) CIBC lags behind its competitors in the
number of its retail clients.
National Bank of Canada (NBC)
Opportunities Threats
i) NBC should expand its services to
immigrant population of Canada.
ii) Agricultural services provided by the
banks should be published nationwide.
i) Economic slowdown decreases the profit
margin for Canadian banks.
ii) Foreign banks offer competition in
capturing immigrant customers.
Strengths Weaknesses
i) NBC is the leading bank in Quebec
(Banks in Quebec, 2015).
ii) NBC has almost 20,000 employees.
iii) NBC offers diverse services for
agricultural loans (AGRICULTURE
SERVICES, 2015)
iv) NBC was ranked 6th among the best
domestic banks of Canada (Said, 2013).
i) NBC is less popular among immigrants
and this limits the bank from expanding
its customer base.

16. - 13 -
Royal Bank of Canada (RBC)
Opportunities Threats
i) RBC can use its existing presence in
Canadian market to attract incoming
foreigners.
ii) RBC has started operating in emerging
markets like India which will help the
bank to gain global presence.
i) Economic slowdown and low interest
rates decreases the profit margin for
Canadian banks.
ii) Foreign banks offer competition in
capturing immigrant customers.
iii) Fellow competitors and subsidiary credit
unions place significant competition.
Strengths Weaknesses
i) RBC is popular among Canadians
irrespective of demographic factors.
ii) RBC is technologically advanced and
offer wide variety of services to
automate banking services.
iii) It was ranked among the 25 best
Canadian brands of 2014 (The Top 25
Canadian Brands, 2014).
iv) RBC employs more than 65,000
people.
v) RBC was ranked as world’s 4th safest
lender in the year 2013 by Bloomberg
(4 Canadian banks on Top 10 list of
world's strongest, 2013).
i) RBC offer a variety of services, but lags
behind those provided by competitors.
Scotiabank
Opportunities Threats
i) The bank acquired 51% of Banco
Colaptria which will help its expansion
in Colombia (Robertson, 2012).
ii) Strong hold in South America will help
the bank to explore the emerging
economies like Brazil, Chile etc…
i) Economic slowdown and low interest
rates decreases the profit margin for
Canadian banks.
ii) Foreign banks offer competition in
capturing immigrant customers.
iii) Fellow competitors and subsidiary credit
unions place significant competition by
offering short term loans.
Strengths Weaknesses
i) Scotiabank provides Guaranteed
Income Certificate for international
students in Canada that directly
increases the customer base of bank.
ii) Strong presence in South America and
i) Lacks global presence compared to its
competitors.
ii) Concentrated to large loans and deposits
which might result in the drain out of
customers.

17. - 14 -
Mexico
iii) The bank has more than 2000 branches.
iv) Offers a variety of services including
loyalty programs.
v) It was ranked 7th as the world’s safest
lender in the year 2013 (4 Canadian
banks on Top 10 list of world's
strongest, 2013).
TD Bank
Opportunities Threats
i) The bank acquired MBNA’s Canadian
Credit Card business that increases the
bank’s presence in Canadian credit card
market (TD buys MBNA's Canadian
credit card business, 2011).
ii) Strong hold in United States of
America will help the bank to increase
its growth in the midst of Canadian
recession.
i) Economic slowdown and low interest
rates decreases the profit margin for
Canadian banks.
ii) Foreign banks offer competition in
capturing immigrant customers.
iii) The bank is more dependent on US
market, so the regulatory changes in US
will affect its growth.
Strengths Weaknesses
i) TD Bank has significant presence in
North America, with more than 1000
branches in both US and Canada.
ii) TD has a strong presence among new
immigrants and international students.
iii) The bank offer services in more than
200 languages and branch operations
are flexible compared to its
competitors.
iv) TD was ranked as the 8th safest bank
for lending in the year 2013 (4
Canadian banks on Top 10 list of
world's strongest, 2013).
i) Lacks global presence compared to RBC
and Scotiabank.
ii) Even though TD offers flexible services,
strong competition hinders it from
growing its market share.

18. - 15 -
Conclusion
The banking industry in Canada is well regulated, well established and highly competitive. Even
though the banks face significant competition from alternate service providers like credit unions,
it is highly improbable that such financial intermediaries will take over the banking industry. The
banks in Canada always have shown their presence in the list of world’s strongest banks for
years. The recent recession pose significant threat to the profit margin of Canadian banks, as the
economy of Canada is mainly depended on oil industry. The big six banks of Canada are also
present in the global market place, that further enhance the strength of them. In terms of
innovations in the field of finance, domestic banks in Canada are running faster than banks in
other parts of the world. In short Canada has the so called best banking industry in the world, for
a country with population of 35 million that is a big achievement.
To enter the banking industry in Canada, the best idea will be to acquire a Canadian domestic
bank. Though the option seems farfetched, the strong nature of the industry and high competition
actually limits new entrants. In the discussion, it was seen that many banks in Canada resort to
long term bulk lending this could be an area where the new entrant can be flexible. If it can
provide short term lending at a reasonable rate it will also lead to the deterioration of credit
unions in the country.
Another drawback is the monthly banking fee that causes dissatisfaction in most of the
Canadians, providing a charge free chequing account and debit transactions will attract
consumers. All these services should be focused on the part of population that is highly
dissatisfied by what the existing banks offer or focus on the part of population resorting to credit
unions. Another major target market is new immigrants, who are unaware of Canadian banking
industry.
These services demand a no profit running for the first couple of years, because as soon as a new
bank enters the industry, existing banks will resort to predatory pricing to throw the new entrant
to bankruptcy. The options available for a new entrant seem to be risky, but in a country with a
well established system less risky options are not present.

19. - 16 -
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23. - 20 -
Appendix One – Charts
Chart 1 – Market share of Canada’s big six banks
Chart 1| Market Share of Big Six Canadian Banks (Bank Financial Results 2013-2014 Fiscal year,
February 2015).
BMO, 14.90%
CIBC, 10.50%
NBC, 5.20%
RBC, 23.80%
Scotiabank,20.40%
TD, 23.90%
Others, 1.40%

24. - 21 -
Appendix Two – Tables
Table 1 – Compound Annual Growth Rate of Canada’s big six banks
Table 1| (Best Canadian Bank to Buy Now, 2015)

25. - 22 -
Appendix Three – Figures
Figure 1 – Porter’s Five Forces
Figure 1| (The Five Forces That Shape Industry Competition, n.d.)
Figure 2 – Canada’s history in banking innovations

26. - 23 -
Figure 2| (Kiladze, 2014)