RFi Group Insight - Canada: Winning the Customer of the Future

During September, RFi Group hosted the second Global Digital Banking Conference in Toronto. Speakers from around the globe shared their wealth of knowledge regarding all things digital, ranging from Fintech to Big Data to Customer Experience, and everything in between. For those of you that were not able to attend the day, I would like to share what were, in my humble opinion, some of the key learnings from the day.

Our first speaker was Ali Razavi, CIO of Tangerine Bank. While Ali covered a range of topics, a couple stood out for me. The first was on the nature of ‘digital’, and how it applies to banking. Like many of you, I tend to think of digital as means of improving the efficiency of processes and streamlining the customer experience; however, these improvements can only take you so far, and those that truly wish to innovate will need to leverage digital to create customer value that didn’t exist before. And for us in the banking sector, this change cannot be ignored. To quote the speaker, “Change is inevitable. Complacency is not an option”.

Our second speaker was Jesse McWaters, Financial Innovation Lead at the World Economic Forum. RFi Group has a great relationship with the WEF, and it has been our privilege to have Jesse speak at numerous RFi Group events. Jesse talked about the progression of the relationship between Fintechs and banks, and what the future holds for both incumbent and newer players in the financial space. One of the key messages from Jesse’s session was the potential and threat posed by platforms that allow consumers to compare and receive recommendations for financial products, and risk disintermediating customers from the banking product providers.

Next on the agenda was Adam Nanjee, SVP, Digital Banking at Zafin. A talented and effortless speaker, Adam enlightened us about what exactly makes a company a Fintech, how successful Canadian companies are in the Fintech space, and what it takes to really make a successful Fintech city. The most surprising stat from Adam’s session was concerning the recent Finovate conference in the US. Among those companies demonstrating their CVPs, 25% were Canadian companies; 3 of the top 5 of those demonstrations were Canadian companies, and a Canadian company won overall Best in Show. Overall, there are now around 450 Fintech companies in Canada, where as little as 12 months ago that figure was closer to 300. Truly, Fintech in Canada is booming, and banks need only look to their doorstep to find cutting edge innovation.

Following Adam, RFi Group’s own CEO, Charles Green, took to the stage to share insights regarding consumer trust. What stuck with me most about Charles’ presentation was the growing trust consumers have with tech companies such as Google and Facebook. While traditionally these companies have had little to no consumer trust when it comes to banking, that narrative appears to be shifting, with potentially significant ramifications for incumbent players in the financial sector.

That brought us to the first panel of the day, which featured both traditional financial institutions and digital-only direct banks discussing the role of the branch, and whether were even necessary. Unfortunately, that question wasn’t answered here, but it was fascinating to hear both sides of the topic from speakers so close to the source. By the end of the session, it appeared we had landed somewhere in the middle; traditional FIs noted that customers were being forced into branches too often, and many of the tasks currently being performed in branches could potentially be digitized, while the Direct banks noted that customers, particularly older ones, would never accept a digital-only bank and the human interaction is necessary to engage with customers beyond early technology adopters.

"Traditional FIs noted that customers were being forced into branches too often...while the Direct banks noted that customers, particularly older ones, would never accept a digital-only bank and the human interaction is necessary to engage with customers beyond early technology adopters."

Our second panel looked specifically at Fintechs. While too many topics were covered for me to report on them all here, one that featured heavily was the ‘pivot’ in the Fintech space from B2C to B2B. When Fintechs first emerged several years ago, many pundits predicted that they would revolutionize the retail banking space; however, recently the focus has shifted to the B2B space, with many previously B2C companies transitioning to B2B, where they have found considerable success. This fits into the wider story regarding banks and Fintechs, which Jesse began talking about in his earlier session; while banks and Fintechs were previously seen as competitors, more recently the focus has been on building partnerships, with banks leveraging Fintechs to drive innovation in their own processes and systems.

Next up, we had Phil Barrar, founder of Mylo. Phil’s talk was incredibly interesting as it provided a first-hand look at what it takes to start and maintain a Fintech. Mylo, an app that helps customers save by rounding up their purchases to the nearest dollar and putting the ‘round-up’ in an investment account, as well as providing tailored AI-driven financial insights. While the app looks fantastic, and I am sorely disappointed that it is not available for Android yet, one particular quote struck me: “There is no such thing as an overnight success in fintech”. Having a great idea is one thing, but the amount of determination and hard work required to actualize that idea is simply mind-blowing.

Following Phil we had a presentation by Dennis Nilsson, Head of Advanced Analytics at TD Insurance. Dennis spoke to us about Big Data, and analytics are now poised to revolutionize every step of the customer journey. Dennis gave two fantastic examples of how this could look. The first, TD’s MyAdvantage app, utilizes customers own driving data to provide a driving score; those with a perfect score get a discount off their premium. The app also gives drivers advice on how they can be better drivers and increase their score, and represents insurance companies moving from protection to prevention. The second example occurred in the wake of the devastating Fort McMurray fires in 2016; customers had lost everything, but assessors were not able to access the town due to the ongoing fires. Data from satellite imagery was used to perform remote assessments, which resulted in disbursements reaching customers far sooner than if they had needed to wait for an assessor, a move that was received overwhelmingly positively by customers.

Our last speaker of the day was Amelia Young, Principal, Upside Consulting Group. Amelia gave us a captivating talk on robo-advice, and the convergence between banks and wealth management that is occurring as we speak. In terms of financial advice, Amelia called out the disconnect in the market between day-to-day finances and wealth management, and how this was changing as more apps (such as Mylo) began to combine elements of both. We are now seeing apps that combine the best elements of PFMs, savings tools and wealth management, and whoever can truly meld the three together seamlessly will have a winning proposition.

"We are now seeing apps that combine the best elements of PFMs, savings tools and wealth management, and whoever can truly meld the three together seamlessly will have a winning proposition."

Our final panel session spoke of the bank of the future. A few of the key themes of this session included leveraging AI to provide pre-emptive customer insights, leveraging customer data to provide more personal and safe security verification, and integrating financial services with ‘smart home’ devices such as Alexa. To close the day, we ended up coming full circle and talking about using digital to create new customer value.

A huge thank you to all our speakers, partners and sponsors for helping to make the day such a success. This roundup just scratches the surface of the insights and lessons that were shared on the day, and I cannot wait to see what next year has in store.

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