A recent report from research firm International Data Corp (IDC) has ranked RBC and Scotiabank as the top Canadian banks focused on embracing FinTech strategies and initiatives.
IDC’s report assessed Canadian banks on a five-point scale to determine maturity and readiness of the banks when it comes to embracing FinTech, based on their public statements and actions. IDC also analyzed how each major Canadian bank views the important and urgency of moving to digital banking.
Bloomberg reports RBC and Scotiabank scored the highest overall ranking (four checkmarks out of five) in areas such as their willingness to tackle FinTech issues, and establishing digital development hubs.
“Canadian banks are at a threshold of deciding how to continue to support their legacy systems. The banks have no option but to continue to focus on FinTech investments.”
RBC received the highest ranking for acquiring expertise, funding external research, establishing a research organization, and focusing on artificial intelligence and big data. The Toronto-headquartered bank has recently announced several initiatives to affirm its move towards digital banking, including a face-to-face video banking feature that allows its enterprise clients to connect with RBC. Last month, RBC’s CEO Dave McKay said RBC wants to spend at least 40 percent of its overall tech budget on innovation such as AI and blockchain.
In October 2016, RBC Insurance became LEAGUE’s first partner to underwrite its offerings of a new suite of insurance products. The bank also collaborated with the University of Toronto to launch a new accelerator, ONRamp, to provide more space for incubating startups.
Similarly, Scotiabank has also been striving to embrace digital banking, through initiatives like its Digital Factory, an incubator dedicated to finding solutions for digital banking experiences. In December 2016, Scotiabank became the first Tier 1 bank to leverage Sensibill’s receipt management platform; the startup announced today that it raised $17.3 million.
Last month, Scotiabank partnered with AI startup DeepLearni.ng to change the way the bank receives payments when clients miss a credit card payment.
While banks like Scotiabank and RBC are making moves in FinTech, IDC’s report indicated that other Canadian banks are lagging behind. The report stated that Bank of Montreal, Canadian Imperial Bank of Commerce, and Toronto-Dominion Bank each scored two check-marks out of five.
In order to survive, Canadian banks have to shift from brick-and-mortar institutions into fully digitally-driven banks using global networks, software, and services, the report said. IDC said that adding digital platforms on top of traditional operations instead of fully embracing digital technologies is a “clear indication of a culture that is placing lipstick on legacy system pigs.”
“Canadian banks are at a threshold of deciding how to continue to support their legacy systems,” Robert Smythe, a co-author of the report, told Bloomberg. “The banks have no option but to continue to focus on FinTech investments, and they have to find a way to reduce the costs to maintain their legacy systems.”