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EXCLUSIVE: Will Canadian Banks Lead The Industry Standard In The Future?

EXCLUSIVE: Will Canadian Banks Lead The Industry Standard In The Future? | Fintech Finance

– Bobby Suman, Fintech Finance

CIBC. Scotiabank. TD. The Bank of Montreal. The Royal Bank of Canada. Whether they know it or not at this moment in time, Canada’s top 5 banks are strongly positioned to drive value and opportunity in the banking space. Safety and security in Canada’s banking system is world-renowned, that’s for sure. In fact, Global Finance magazine’s annual rankings of the world’s safest banks included 5 Canadian banks within their top 30 for 2021 – representing around 16% is very impressive! These financial institutions show a lot of promise in disrupting current industry hegemony. 

The trust within Canadian banks no doubt translates into providing optimal customer experiences, with the implementation of cloud computing reducing the risk-compliance risk, improving traceability of data, and enhancing virtually all tiers of an application without performance degradation. With Canadian banks like BMO partnering with AWS, CIBC with Microsoft and RBC with Azure, trust in their execution will only be strengthened.

This confidence in Canada’s top banks bodes well for the future of their ecosystem too, since their framework could very well advance the world of Open Banking; where clients securely share their financial information with financial service providers to improve customer access to products and services that match their unique needs. 

Canada’s Advisory Committee on Open Banking reported that the concept is achievable for the country by the end of 2022, offering a $10 billion opportunity for Canadian banks.  For comparison, it is estimated that Open Banking will provide a $9.2 billion financial industry opportunity for fintech and other financial services disruptors in the UK.

A key factor in making this achievable is the custodianship of data, which Canadian banks are clearly best positioned to execute given how we’ve already established the trust that their consumers place in them, and the smart decision-making when it comes to sourcing partners for cloud-native operations.

Some may criticise that Canada has been acting too slow in this process, but after already mastering the trust and security of data, the future is surely bright. In March this year, Canada appointed Abraham Tahijan as its Open Banking lead in order to renew urgency on the matter. Furthermore, IBM has been working with Canadian institutions on Open Banking transformation, as both a technology and strategic partner to guide Canada through questions on standards implementation, compliance, artificial intelligence and much more!

One question looms over the banking industry; how can banks do more? We’ve seen waves of challengers come in and go beyond the traditional offerings that were expected of a back. With that, consumers demand more, and banks have to meet that expectation to avoid becoming the dinosaur of the financial world. Canadian banks understand this as they are clearly adaptable to support the unique needs of their customers. 

Scotiabank and YMCA announced a $2.15 million partnership to help increase school graduation among the vulnerable youth. Traditional suspensions from schools are missed opportunities not just for students, but for their families, the school itself and the wider community at large. 

The investment looks to support the YMCA Alternative Suspension (AS) program to act as a catalyst for positive behaviour change, helping students stay in school, graduate and hopefully live life to their fullest potential as a result. Scotiabank’s partnership with YMCA Alternative Suspension is a signature program within ScotiaRISE, the Bank’s 10-year $500 million initiative that aims to promote economic resilience among disadvantaged groups. 

The RBC Future Launch also represents how Canadian banks are proactive in supporting the next generation. In research obtained from the Youthful Cities Real Affordability Index, it was clear that Canadian cities are simply not affordable for young people, with a key barrier to affordability being that salaries are not keeping pace with the cost of living, even when in full time employment. This is where the RBC Future Launch steps in, a decade-long commitment of $500 million to empowering Canadian youth for the jobs of tomorrow, with investment in areas like skills development and mentoring.  

This may not seem like much to some readers, but it really is. Why? It’s reducing friction points and solving a dilemma that has evolved over time; at last, banks are becoming a strong digital service, whilst also maintaining that traditional, welcoming and supportive nature of an old fashioned manager. Consumers want to feel cared about, and who is doing it better than Canadian banks right now?

Despite these positives, Canadian banks have come under scrutiny regarding their ESG behaviours in recent months. Whilst lenders like Barclays and HSBC have set proactive targets in the race for net-zero and to reduce their emissions, 2030 targets for reducing their absolute emissions, Canadian banks have seemingly doubled their financing for heavy-polluting oil sands projects in the last year, based on research from the Banking on Climate Chaos report. 

However, it would be ignorant to isolate this as a criticism towards JUST Canadian banks. 

After all, the top 4 banks for financing fossil fuels globally from 2016 to 2021 were JP Morgan Chase ($382B), Citi ($285B), Wells Fargo ($272B) and the Bank of America ($232B). These are some of the most sophisticated, prestigious banks we have. Just like Canadian banks, they too have a responsibility, and in this issue it’s best to look at the industry as a whole so everybody can strive towards a greener future together. 

Furthermore, Canadian banks are showing evidence of change. Just last month, CIBC was named the country’s greenest employer. When it comes to ESG, Canadian banks are now working from a new playbook.

Could Canadian banks cement themselves as the undisputed industry leaders for the future? Or is there more work to be done than meets the eye? 

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