The smell of flames is in the air as Canada's leading banks rush to be the first out of the gate to market a digital wallet. "We're almost there; it's close. It's going to be out in the next 3 or 4 weeks," RBC's Dave McKay told Reuters recently.
This announcement comes just months after CIBC and Rogers announced their partnership to create a digital wallet that uses Near Field Communication (NFC) technology.
As the competition among the big five banks heats up, Canadian consumers are warming to the idea.
First of all, buy and hold is a dynamic concept. The answers lie in your risk tolerance and lifestyle. And these should be assessed and adjusted according to your financial situation on an on-going basis. I spoke to Rowena Chan, Vice President of Business Development at TD Waterhouse to find out how investors can manage their investments not only during tumultuous economic times, but as well as times of economic stability.
In terms of general customer satisfaction, credit union customers are Canada's happiest bankers, according to a Financial Post article based on a poll of more than 2,000 adults compiled by Forum Research in March. The poll shows that 74% of credit union members are "very satisfied" with their institution.
Among the big banks, Bank of Montreal has the highest percentage of happy customers, with 72% saying they are "very satisfied" with the service they receive. But not all banks perform so well.
Canadian investors are in luck: our home stock market is predicted to chalk up some of the best returns in the world this year amid continued economic struggles in Europe and the United States and political turmoil in the Middle East.
"Relative to the U.S. or east Asia, Canada's equity market carries more insurance against a worsening geopolitical climate in the Middle East, in the form of a larger basket of energy stocks and safe havens like gold shares," Avery Shenfeld, the chief economist at CIBC, says in an economic report.
He says that while a diversified investment portfolio is always wise, this year it looks like Canadian stocks will offer you some of the best growth opportunities.
"The recovery in Canada is proceeding slightly faster than expected, and there is more evidence of the anticipated rebalancing of demand," Canada's central bank governor Mark Carney said in a statement Tuesday.
The good news is that Canadians are starting to take better care of their finances. Benjamin Tal, deputy chief economist at CIBC, said household credit, once adjusted for inflation, rose by only 0.27 per cent in November. Meanwhile, data for the third quarter of last year showed that household credit rose at its slowest pace since 2001. The number of unpaid credit card bills has also stabilized at below one per cent.
Despite the improvement, Mr. Tal says there are still some concerning developments in Canada's debt situation.
However, the experts say rates will likely rise in the coming months as the central bank attempts to prevent a crippling rise in personal debt.
According to a Reuters poll, Canada's leading interest rate strategists all expect the benchmark interest rate to remain at 1 per cent this week, allowing the economy more time to adjust to the last rate hike in September at a time when the U.S. economy -- Canada's biggest trade partner -- is still struggling to create jobs and recover from recession.
The central bank last raised the benchmark interest rate in September following quarter point rises in June and July. Prior to that, the key interest rate had sat at a record low 0.25 per cent for 13 months to ease the impact of recession on the economy and encourage the flow of money through the almost stagnant financial system.
Things have been on the mend for the Canadian economy and conditions are going to continue to improve this year, Canada's Big Five bank economists say. Even so, economic growth will likely creep along at a slower pace than in 2010, meaning there will be no quick return to the boom times that preceded the recession of 2008-2009.
"Exports remain challenged by a strong loonie, and domestic consumption growth will be moderating, either through rate hikes or other measures, as Ottawa attempts to slow the climb in household debt," says CIBC economist Krishen Rangasamy.
While there is no doubt that the Canadian economy will continue to grow in 2011, economists are divided on exactly how much. Some experts, such as at Scotiabank and CIBC, foresee a slow 2.2% pace of growth in 2011 largely due to the high Canadian dollar, weak exports and struggling foreign economies. Others, such as RBC, have a much stronger outlook.
At the end of its first week of trade for the new year the Canadian dollar was buying about US$1.01, 78 euro cents and 65 British pence -- all stronger than average levels. But what is driving this strength in the loonie?
Canada's economic strength compared with the rest of the world has attracted a lot of private investment in Canadian denominated assets. But Avery Shenfeld, chief economist at CIBC, says there is more to the high exchange rate than meets the eye. Mr Shenfeld says central banks around the world are also very interested in Canadian dollars in a bid to diversify their assets at a time when the U.S. dollar has lost purchasing power. This additional demand for the loonie may be overheating its value and crippling the Bank of Canada's ability to raise interest rates and curb rising consumer debt levels.