National Bank Targeting Wealthy Canadians with Credit Card Offering

Posted September 4, 2014 by CCC Staff in
National Bank World Mastercard Lounge

The National Bank World MasterCard Lounge at the Montréal–Pierre Elliott Trudeau International Airport

While big banks like CIBC, RBC and TD Bank are going after new Canadians, National Bank is looking to grow its credit card business by targeting Canada’s richest. While the average Canadian household has much of its net worth tied up in real estate, wealthy Canadians typically have substantial investible assets.

Canada’s sixth largest bank has put much of its focus behind its World Elite credit cards and it looks to be paying off. National Bank reported its net profits grew by 10 per cent in the third quarter, helped by growth in its wealth management and financial markets services. The big bank reported net income of $441 million, up from $402 million in the same period last year.

Going After High-Net Worth Individuals

In the hotly-contested credit card market, National Bank has taken the unique approach of focusing much of its attention on high-net worth individuals.

“Our focus has not been on smaller, less wealthy holders of cards that will increase their credit card balance,” says National Bank president and CEO Louis Vachon. “All our focus, most of our focus, has been on premium, platinum and World Elite cards so we’re very happy to see that paying off.”

The numbers don’t lie – National Bank had a strong third quarter. The big bank saw credit card revenues increase by $17 million (six per cent), helped by growing profits from interest income, foreign exchange revenues, interchange revenues and annual fees revenue.

National Bank has been putting a heavy focus on credit cards, investing a lot of marketing dollars to attract wealthy individuals. The bank’s president and CEO credits the bottom line boost to a number of marketing campaigns National Bank has been running as part of an effort to attract non-clients and those from its wealth management division.

Taking Credit Card Rewards to the Next Level

National Bank has taken credit card perks to a whole new level. If you thought free movies, travel rewards and cash-back rewards were great, you haven’t seen anything yet! National Bank has a pay-per-use “Red Carpet” lounge located at Montreal’s Dorval airport. The exclusive lounge is located near gate 53 in the international jetty.

Regular cardholders have to pay to use the lounge, but National Bank World and World Elite MasterCard cardholders enjoy free access with a guest by simply flashing their premium credit card. The trendy lounge is the perfect place to unwind while you’re waiting for your next flight. Lounge guests enjoy perks, including complimentary refreshments (drinks and snacks), free Wi-Fi, and a wide range of international newspapers and magazines.

“We’ve not invested a lot in upscale marketing for platinum and world elite types,” says Vachon. “So I’m very happy to see increased income because we saw the increased expense for that lounge for the last 12 months.”

As we mentioned in the article, How to Spot Unrewarding Credit Cards, it’s important to choose a credit card with rewards you’ll actually use. If you’re not a frequent flyer or you haven’t been to Montreal’s Dorval airport in years, chances are you’re better off with another credit card.

Banking Customers for Life

The big banks, National Bank included, are focused on winning banking customers for life. The bank’s hope is that once you taken out a credit card, you’ll apply for other products like car loans, lines of credit, and mortgages.

One of the major roadblocks in the Aeroplan deal between CIBC and TD Bank was clients with other banking products. TD Bank gained nearly 550,000 cardholders as part of the deal between CIBC and TD. Meanwhile, CIBC held on to thousands of cardholders with previous ties. It’s TD Bank’s hope it can sign up these new cardholders for other lucrative products.

The Bottom Line

With the other big banks going after new Canadians, National Bank is taking a different approach by going after Canada’s richest. This seems like a sound strategy, especially since high-net worth Canadians have a lot more investible assets compared to the average Canadian household.

If you’re a wealthy Canadian looking to enjoy the good life, the National Bank World and World Elite MasterCard may be the credit cards for you!