Canadian banks are embracing financial technology, but there are two lenders who are the most active in the area: Royal Bank of Canada (RBC) and Bank of Nova Scotia, according to a new report from the International Data Corporation (IDC).
The IDC measured five areas: innovation, taking steps to change culture, funding external fintech research, establishing digital development hubs, digital focus on revenue, and overall readiness rating. The two aforementioned banks scored the highest overall ranking, Bloomberg highlights. RBC performed especially well in acquiring expertise, funding external fintech research, establishing a research organization, and focusing on artificial intelligence and big data, as you can see in the chart inserted below.
“Canadian banks are at a threshold of deciding how to continue to support their legacy systems,” Robert Smythe, who wrote the report along with Jason Bremner, said in a telephone interview. “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.”
Toronto-Dominion Bank, Bank of Montreal and Canadian Imperial Bank of Commerce or CIBC scored just two checkmarks in the overall five-point scale.
TD responded to Bloomberg to say it hasn’t seen the IDC report, but did mention it has 11 million digital and 5.9 million mobile customers across North America, while also ranked first among Canadian financial services in mobile engagement according to ComScore.
RBC, Canada’s biggest lender by assets, has increased spending on artificial intelligence and machine learning, as the CEO of the bank sees these technologies as the most transformative for this industry.
Big banks are facing disruption from ‘fintech’ companies, as robo-advisors such as Wealthsimple take away online investing from incumbents. BMO launched their own robo-advising service called SmartFolio to compete with fintech companies.