Bank of Montreal announced January 26, 2026 its exit from AIR MILES to build proprietary rewards, a shift analysts project will slash the coalition program's Canadian market share 15-25% by 2027. The departure follows a global pattern where major banks—from HSBC in the UK to Santander in Europe—are terminating third-party loyalty partnerships to capture 100% of customer data and economics.
Diversified Royalty Corp owns AIR MILES through AM Royalties Limited Partnership, collecting royalties on transaction volume. BMO's dual role as both participant and financial guarantor makes this exit materially damaging. Fewer BMO credit card swipes and banking interactions directly reduce royalty payments in a model where partner exits force remaining sponsors to compensate or accept margin compression.
Coalition loyalty programs face existential pressure worldwide. While platforms like Nectar (UK), Payback (Germany), and AIR MILES (Canada) once dominated through multi-sponsor scale, financial institutions now calculate that proprietary infrastructure costs justify direct customer control. BMO joins Canadian peers TD and RBC in this strategic pivot, accelerating a consolidation wave that began in 2020.
The January 26 timing coincides with multiple AIR MILES partnership amendments filed the same day, suggesting emergency contract restructuring as the program loses an anchor sponsor. Air Miles Loyalty Inc operates program infrastructure while AM Royalties holds intellectual property rights—a structure that leaves Diversified Royalty Corp exposed to revenue declines without operational control over retention strategies.
Investors should track Q1-Q4 2026 earnings for AIR MILES segment metrics: program enrollment trends, redemption volumes, revenue per active member. Quarterly monitoring of BMO customer migration rates will test whether the 15-25% impact estimate holds. Fast migration accelerates revenue decline; slow migration provides time to secure replacement partnerships.
The loyalty market now shows clear bifurcation globally: large financial institutions building walled-garden ecosystems versus retailers and regional banks relying on established multi-sponsor platforms. AIR MILES' ability to weather BMO's departure will signal whether coalition programs can survive when major financial partners exit for proprietary alternatives.
Sources:
1 Globe Newswire, "Tech Entrepreneur Yanik Guillemette Publishes Strategic Analysis of Canada’s Regulatory Framework an" (March 22, 2026)
2 Yahoo Finance, "Kraft Heinz to Invest $250 Million in Montreal’s Mont Royal Factory to Strengthen Canadian Manufactu" (March 20, 2026)
3 Globe Newswire, "Diversified Royalty Corp. Announces Fourth Quarter and Year End 2025 Results" (March 19, 2026)
4 Globe Newswire, "Diversified Royalty Corp. Announces March 2026 Cash Dividend" (March 04, 2026)
5 Nasdaq, "AI-Driven Fear Slashed Toast Stock by 43%, Even as Free Cash Flow Hit Records" (March 23, 2026)