Howard: Canadian retail banking transformation in full swing

Market braced for change, as traditional banking sector looks to millennial demands

By Michael McCaw | 11 May 2018

Canada’s developing retail banking sector has acknowledged that digital advances can reshape the market, offering a wider array of services to millennials who expect better customer experiences, says Simon Howard, director of business development UK and Canada, Talkingtech.

However, the rate of change differs across each banking institution and there’s still a lot of development in the offing, he says.

“From our initial meetings with the banks it would seem that each one is on a transformation roadmap however some have developed more than others and overall I believe there is still scope to extend more development into their collection and bill payments operations.

“There is a significant use of first party and third party outsource partners to do a lot of the collection’s activity and still a reliance on the more traditional methods of collection such as phone, letter and even the branch network,” he continues.

Talkingtech, which provides digital communications and payment solutions, works closely with banking, telecommunications, utilities and the business process optimization (BPO) markets to help create a digital roadmap and assist industry leaders with the digital roadmaps. The firm is now preparing to launch its first major project with a large BPO, that Howard says will see the company utilize its SWIPE solution to “contact a vast number of millennials across Canada, to encourage them to make loan payments”. Talkingtech is also embarking on a number of smaller proof of concepts with financial firms, telecommunication and utilities businesses to “demonstrate the value and benefits of our solutions and build a series of case studies,” says Howard.

Howard points to work carried out by Forrester Research into digital and mobile banking that suggests the industry needs to not only exceed customers’ current needs and expectations, but also anticipate future needs while allowing them to improve their financial well-being.

“All the banks recognise that the millennial generation demands a digital experience and there is a wealth of research that indicates this,” he says.

“Younger demographics are twice as likely to already be using mobile payments versus the 35+ demographics, and much more likely to start using mobile payment in the next 12 months. More than two-thirds of Canadians now carry smartphones, and 44% say they have used mobile banking in the last year, up from only 19% in 2012. Interestingly, seven out of 10 Canadians use their bank's app directly rather than accessing the bank's website through a web browser.”

Mobile banking holds a great deal of appeal for both the customer and the bank. For the customer, convenience, speed of execution and the 24/7 availability of a range of banking services at the click of a button as opposed to established ways of banking is an incredibly attractive proposition. For banks, mobile banking isn’t just cost-effective, it allows management to reassess customer service – such as allowing call centre staff to spend more time speaking with vulnerable customers and dedicate greater resources to dealing with complex cases.

However, concerns over Canada’s financial regulatory regime – with rules such as the Canadian anti-spamming law (CASL) - have held the country’s banks back in their transition to mobile banking, compared to areas with less stringent regulations.

“Canada has been slower to adopt SMS for bill payments in comparison to the UK which based on my conversations with Canadian businesses has been due to the fear of failing CASL,” says Howard. “This is where I feel I can lend our experience and knowledge to the Canadian market and show businesses how we have worked with UK banking clients to develop a compliant SMS solution to overcome similar regulation fears.”

And the established Canadian banking community has a great deal of opportunity in the market, compared to other jurisdictions. While there are five major banks in the market, the challenger banking network has not grown as it has in the UK, other than Tangerine (formerly ING Direct Canada and owned by Scotiabank), and Koho, an online lending service that targets millennials and promises better customer experience.

The Canadian Imperial Bank of Commerce (CIBC) is leading the established players, according to Forester, having rolled out in-app search and branch appointment scheduling while also improving its mobile marketing and cross-selling. But there’s significant growth opportunities for banks across the market, and navigating infrastructural hurdles and making sure regulations are complied with will naturally be key for major industry players to evolve with Canada’s huge retail banking customer base. As such, adopting the technology isn’t a short-term project, and using a third party of choice to help make things work is paramount.

“We take a consultative approach with our clients,” says Howard. “And always aim to become a trusted advisor and not just a supplier.” 

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development