The Colour of Money

The Colour of Money: Banks roll out welcome
Newcomers to Canada are being targeted with financial services tailor-made for them

By Dana Lacey, Financial Post, Feb. 2, 2009

Baskar Rao and his wife, Shisma, have lived in Canada for all of two weeks. Their visa applications had almost been forgotten — they applied six years ago from their home in Bangalore, India — but when the opportunity came, the couple knew it was now or never. “We had to take this chance,” Mr. Rao, 35, says. “We didn’t want to be sorry later.”

Despite leaving behind a hot climate, their home, family, friends and well-established careers — he’s a chartered accountant, she’s a software engineer — the Raos admit the culture shock hasn’t been as jolting as they imagined. They stepped off the plane on a Friday and walked into a local Bank of Nova Scotia on Saturday. “Within 24 hours of arriving,” Mr. Rao says, “we had our social security numbers, our credit cards and a bank account.”

To show their support of multicultural customers — and their money — Canadian banks are increasingly catering their services to new immigrants like the Raos, a population that grows by about 250,000 a year in Canada. They focus mostly on Asian markets — roughly 50% of new Canadians are from China or South Asia — where cultural ideas about saving, spending and investing are often radically different.

“Moving to a new country is a very overwhelming experience,” says Manisha Burman, director of multicultural markets at Royal Bank of Canada, herself a daughter of Indian immigrants. “You have to adjust to a new socio-economic life, learn an unfamiliar language … it takes new Canadians five to 10 years to catch up to their peers, and we try to support them through that transition.”

There’s good reason for the banks to want their business. Statistics Canada predicts that by 2017, one-half of the people living in Toronto and Vancouver will identify themselves as a visible minority. By 2030, according to StatsCan, when the Baby Boomers have exited the workforce, immigrants will account for 100% of our labour force growth and population growth. (Immigrants currently account for two-thirds of Canada’s population growth.)

To build trust in immigrant communities, banks build brand recognition as sponsors of such cultural events as Caribana, Chinese New Year festivals and cricket leagues. Big-city ATMs have begun offering a Mandarin option. It’s a competitive market; RBC boasts service in 150 different languages, Bank of Montreal has branches in China and Scotiabank recently launched a partnership with India’s second-largest private bank, HDFC Bank, which allowed Mr. Rao to establish a relationship with them before the big move.

“Immigrants have a great thirst for financial knowledge,” says Srini Iyengar, BMO director of multicultural markets, who immigrated to Canada from Calcutta 30 years ago. “Part of their goal is to make a better life. If you do your job right and give good advice, they will reward you by staying with you for life, even if you move to another location. Trust is very important.”

Trust means bank employees trained in multicultural relations will help a new Canadian with everything from opening bank accounts and applying for insurance and credit cards to giving advice on how to get a driver’s license, preparing taxes, even deciding where to live or send their kids to school. RBC’s Community Corner Web site (communitycorner.ca) provides details on the demographic and cultural makeup of most communities in Canada. Before they even arrive, immigrants can check out neighbourhoods, including home values, and find cultural communities they want to be close to. Mr. Rao was inspired to follow his family to Canada after his brother became a citizen here. Until they can afford a place of their own, the couple will live with his brother and his wife in Mississauga, Ont. “Canada’s health care and education systems appealed to us,” Mr. Rao says. “When we’re ready to have a family of our own, I want them to spend their formative years here. So we are prepared to take this risk for our children.”

For most immigrants, their child’s education is a top priority. A recent RBC survey revealed that during their first decade in Canada, 70% of new immigrants are still focusing on covering their daily expenses. Despite this, 46% list saving for their children’s education as a top financial goal in the next year.

In fact, most new immigrants don’t have much of a retirement plan at all when they arrive. They expect their children to support them in old age.

“It’s another form of investment,” explains Shallima, a nuclear engineer-in-training. She was born in Saudi Arabia, the youngest of five daughters. Before they moved to Canada when she was 10, her family was wealthy; her father’s company paid for the house, car, butler and cook. Money was spent on wants, not needs. “The concept of investing or savings or RRSPs was nonexistent,” she explains.

“Even today, my father hasn’t gotten the hang of it. He has no savings. He lives paycheque to paycheque. His children are his retirement plan,” she says. His investment has been a life of hard work, acting as sole breadwinner to younger brothers and their families, as well as his own. In Canada, Shallima’s family opened a restaurant staffed by family and scraped by for years as they put each daughter through university.

Needless to say, one of the most popular financial products for new Canadians, the banks say, is RESPs.

But the first hurdle for many newcomers is simply understanding Canadian financial terms. Jessica Shi is a senior private banker at BMO Harris Private Banking, who immigrated from Beijing nine years ago to earn her MBA. “Credit isn’t available [in China]. When you buy a house, you pay in cash. They also don’t like debit cards and often carry huge amounts of money around.” Ms. Shi teaches her clients how to write cheques and how to build their credit rating.

Banks have created special rules for immigrant borrowing. While they have to have a certain amount of money to enter the country, most arrive jobless, without permanent addresses, which would traditionally make them ineligible for credit.

Most banks also publish guidebooks in different languages to help newcomers navigate their new lives. RBC’s 300-page Arrival Survival Guide, written by the co-founders of Canadian Immigrant magazine, offers tips on winter driving, bargaining (“it is rare for store owners to lower their marked prices”), even business etiquette, including how to decline alcohol at your boss’s dinner party.

Rania Llewellyn, Scotiabank’s vice-president of multicultural banking, was born in Kuwait to an Egyptian father and a Jordanian mother. When it came time for university, her heart was set on North America. “But my father, being a typical Middle Eastern man, said I couldn’t go on my own.” So he packed up the entire family and moved to Halifax.

Like most daughters in Middle Eastern families, Ms. Llewellyn did not move out until she got married. “When my father found out how much it would cost to get our rings done, he gave me my baby bracelet — it was 24-karat gold — and said, ‘Why don’t you make your wedding bands from this?’ The minute your child is born, you buy gold for them. It’s a form of saving that’s also extremely sentimental.

“A lot of Chinese and South Asians have gold as a major component of their investment basket,” Ms. Llewellyn adds, making safety-deposit boxes another top immigrant product.

Like Ms. Llewellyn, Shallima’s family also bought gold jewellery in lieu of such investments as mutual funds. And, she points out, the idea of interest — receiving money you did nothing to earn — goes against Middle Eastern and Islamic culture. It’s right up there with gambling.

On the other hand, believers in Islam donate a percentage of their yearly income to charity, known as zakat (Arabic for “alms of the poor”). It’s similar to Jewish and Christian practices of tithing.

“It’s based on faith,” Shallima says, “but it’s not hard to believe that the more you give away, the more you get in return.”

So every year Shallima her father and each of her sisters give up 2.5% of their salaries to charity. In a son-less Saudi family, the youngest daughter assumes the responsibilities of the eldest son, meaning 24-year-old Shallima also helps her father pay the bills.

“There’s pressure to succeed,” she admits. “But it’s also humbling. I know I’m going to take care of my parents when I’m older; you grow up knowing it. That’s just how it is.”

What about immigrants from other parts of the world? Latin Americans also approach saving differently than Canadians do, Ms. Llewellyn says. Scotiabank has 600 Latin American branches.

“They’re not considered savers; they live for today,” she explains. “There’s also an element of distrust when it comes to banking systems.”

The list goes on. Greeks tend to involve the entire family when making financial decisions such as buying a house, although the final word usually lands with the father of the household. Jews have to include synagogue fees and charitable donations in their budgeting. Africans often send money back home to support extended families.

For Mr. Rao, his first step is buying a home. Truth is, he will probably have an easier time obtaining a mortgage here than in Bangalore.

“Indian banking tends to be more conservative,” he says. “It’s why their banks haven’t been hit by the financial crisis as hard. But it also means they don’t offer loans to just anyone.” Compared with Canada, he says, “it’s like two different worlds.”

Regardless of culture, the numbers show that once they get the hang of how things work here, new Canadians are better savers, more conscientious spenders and more likely to hold investment incomes than native-born Canadians. Culture shock?

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