The ethnic opportunity continues to grow for financial institutions, as well as others, in Canada. Prior to the pandemic, the ethnic opportunity was already equivalent to the size of the population of Quebec. Like Quebecois, ethnic consumers often have a different religion, language, culture, buyer behaviour, food consumption habits, health concerns, media consumption … and the list goes on. This immense opportunity is set to continue to grow. Fueled by a low birth rate, and an aging population, the need for young income earning and tax generating citizens has become an imperative. With the greying of the population and a lower birth rate – immigration is required – to even stay at our existing population levels. Immigration has become a growth strategy for the Government. 2020 was a year when there was less immigration, which resulted in the Government immediately reacting by opening the doors even further in 2021, 2022 and 2023. In terms of immigration, the country simply cannot afford to miss a year and not make up for the lost year of immigration. As such, over the next three years, there will be 1.2 million immigrants arriving as Permanent Residents on our shores. The vast majority will be both economic and family class.
In 2019, pre-COVID, there were 640,000+ International Students studying every year, with an annualized growth rate of 13%. Not only were they the future full-time immigrants to our country, they contributed $6 billion to tuitions – which is half of all tuition fees in the country. Accordingly, if you are doing annual plans between the incoming Permanent Residents and the International Students, there are over a million new consumers arriving yearly.
As a financial institution, there are many ways to reach newcomers or Canada’s large multicultural community. Language continues to be an important factor as 19% of Chinese consumers do not speak English. For many others, it is not their language of comfort. Even amongst South Asians and Filipinos, where the English language is not a barrier, their language of preference and their language at home continues to be a language other than English or French.
In fact, 70% of recent immigrants prefer to speak a third language at home. This increases to 55% for Chinese Canadians. When it comes to financial services, the language preferences are even stronger. The percentage of Chinese Canadian newcomers who use/prefer an in-language advisor is 83% for newcomers here from zero to three years. This does decline somewhat over time – the percentage is 64% for those here four to ten years, and for those eleven-plus years it reduces to 52%. While there is a decline in the in-language preference, 52% continues to be significant.
There is a significant housing opportunity for financial institutions – even amongst newcomers. There is a misconception that all newcomers are immediately moving into rented accommodations, or living with family and friends. This is true for the majority – 64% rent and 18% live with family and friends upon arriving. But 15% are buying a home within the first year. Even those who do not buy a home immediately, they are committed to becoming homeowners sooner than later. Seventy-five percent arrive with savings to help buy a home. It is taking approximately only three years post-arrival for many of them to buy a home. Vividata research supports the fact that owning a home is important, especially to newcomers. Chinese adults are 3.1 times more likely to say they plan to buy a house than the general population. South Asians are 3.4 times more likely to say they plan to buy a house. They consider real estate a simple and effective way to invest their money – 48% for Chinese adults and 46% for South Asians.
Despite the opportunity, research shows that newcomers face many challenges at their first Canadian bank. There is a 20% challenge factor for mortgages. This is related to their credit card history, which is a 24% challenge factor. Getting a credit card is a 25% factor. This is despite the fact that they may have assets back home. The fact that they do not have a credit history in Canada or even a job does not mean that they are not wealthy. In terms of investments, 21% face the challenge of understanding the different investment options in Canada, and 14% have difficulty in understanding Canadian registered accounts, like TFSAs and RRSPs.
When it comes to investing, Chinese adults have a higher participation rate than the general population for TFSAs, RRSPs, mutual funds and slightly more for stocks and bonds. South Asians mirror the general population more closely. This is a missed opportunity for South Asians as it relates to RESPs as they have 2.5 children per household versus the 1.5 average for Canadian households. We also know that both Chinese and South Asian consumers value education for their kids highly.
There are many additional opportunities. Both Chinese and South Asians plan to obtain a multitude of services over the next 12 months across all categories. Stocks and bonds are significant for both Chinese and South Asians (16% and 19%), as well as mutual funds at 18%.
Ethnic consumers are also used to a different type of banking and payment solution back home. Chinese payment habits are dramatically different from Canada, with over 80% of transactions taking place on a mobile phone. That is why they over-index versus the general population on all the various options that are available in Canada. They are also used to a much broader financial ecosystem through AliPay and WeChat Pay. On both of these platforms you can transfer money, pay credit card bills or utilities, buy insurance, take out a micro loan, give to a charity … and the list goes on. WeChat Pay offers virtual currency and real estate purchase and rental mobile capabilities. On AliPay you can do both commodity and future trading, as well as obtain consumer credit. As financial institutions in Canada continue to digitize the banking experience, ethnic consumers from both China and India are more likely to be early adopters.
WeChat is more than just WeChat Pay – it is also a communication tool. It is the fifth largest social media platform on a global basis, and it has great relevance in Canada. Sixty percent of Chinese newcomers use WeChat daily. There are approximately 1.6 million Chinese consumers in the country and more than a million are on the Canadian version of WeChat. There are multiple opportunities to utilize WeChat as a communication source, both with and without an official account. These include both owned media and paid media.
Recently, TD Ameritrade in the United States utilized WeChat to create a rich and fun investment education platform, and a one-stop-shop service. They focused on three specific cultural holidays in their first year. During the Dragon Boat Festival they had a 240% lift, during the Moon Festival they got a 61% lift, and during the Lunar Year a 24% lift. They were able to reach 80+ percent of all WeChat users in the United States, and they drove new followers to their Official Account. Their WeChat campaigns cost less than $20 per new user generated, which on average was $15.75 across all three campaigns.
In a world where brands need to be consumer-centric, you need to speak to them in their language. Warning – Google Translator is not a great multicultural strategy. It can lead to errors. Even if you are relying on accurate translations, it is simply not enough. It is equally as important to be “in-culture” as it is to be “in-language”. You must be certain that your strategy and your messaging are communicated in a context that is relevant to the targeted ethnic community. While it is important to have a diverse representation in advertising reflective of our society, simply putting someone of colour in your ad is only the first step.
There is tremendous benefit to being both “in-language” and “in-culture”. According to a Fall 2020 study by the Alliance for Inclusive and Multicultural Marketing (AIMM), ethnic consumers are 1.5 times more likely to want to learn additional information about a brand that is both “in-language” and “in-culture”. They are 2.7 times more likely to buy from the brand for the first time and 50% more likely to repurchase from the brand.
Communicating to ethnic consumers in “in-language” media is equally relevant. Sixty percent of Chinese are consuming “in-language” media. Even South Asians, where the English language is not a barrier, 51% of their media consumption time is “in-language”.
In reaching ethnic consumers, the marketing arrows in the quiver are similar to mainstream consumers. Content continues to be king and if you are a food brand, recipes can assist in creating cultural relevance. Another important consideration is the role of Influencers. A March 2020 study examined global consumer sentiment and its effect on creating a more positive impression on brands, and it is most revealing. For the general population in Canada it is a 10% factor. For our neighbours to the south in the United States it is a 12% factor. But it is much more significant for our three top immigrant populations – for China it is a 23% factor, for India it is a 30% factor, and for Philippines it is a 44% factor. Both pre-COVID and during this COVID period, one of the significant trends that we have observed as a multicultural marketing Agency is the increased desire by many of our clients to utilize Influencers.
We live in a world where multicultural is becoming mainstream. The communities we refer to as minorities are becoming the majority in many cities. To quote Marc Pritchard, the CMO of Procter & Gamble in the United States, “If you’re not doing multicultural, you’re not doing marketing”.