Boston-based Forrester Research says that a new crop of retail bankers is emerging in Canada.

Forrester says initiatives such as Charles Schwab Canada’s move into the banking business will catalyze the unraveling of Canada’s Big Five banks.

Schwab Canada’s suite of banking services will be known as Schwab One, and will offer a full portfolio of cash-management services such as chequing, debit and credit cards, and online bill payment. It will offer a conversion-assistance package that will redirect automatic debits to the customer’s Schwab account, eliminating the hassle associated with switching banks.

The firm will buy bank services on a white-label basis from B2B Trust, and brand them as its own.

“In the last year, major Canadian retailers and non-bank financial institutions have begun to offer cash-management services to their customers. This trend will contribute to significant structural change as consumers shift assets away from their existing banks,” says Forrester analyst Jordan Kendall.

The firm says that it believes that Schwab Canada, Sympatico-Lycos, Investors Group, and Loblaws will be able to leverage their well-known brands. “By backing their new cash-management services with their formidable brand reputations, these nascent bankers gain instant credibility with consumers despite their lack of experience in the space.”

It suggests that providers of white-label banking infrastructure, such as B2B and Amicus, will make it cheap for new players to get started by imposing few upfront fees. “This variable-cost entry model limits the downside risk of getting into the banking world, while freeing up capital to fund aggressive marketing and customer acquisition efforts.”

Forrester says that Schwab hopes to convert 10% of its brokerage clients within the first year, which is what it needs to achieve profitability. Unlike the banks, these branding players will use these services to build customer loyalty rather than as a real profit engine.

In response, Forrester says that large banks must replace their “all things to all people” approaches with targeted retention strategies.

It recommends that the Big Five should develop formal loyalty programs rather than perks doled out at the discretion of individual branch managers; and that they need to cultivate co-marketed affinity programs that allow them to pool customer information and gain deeper insight into preferences.

“Rather than just co-locating in Sobeys stores, TD Canada Trust should cosponsor Club Sobeys and exchange mutual customer data with the grocer.”