“Banks must collaborate more openly with the fintech community” declared David McKay, CEO of Royal Bank of Canada, at a roundtable in Toronto chaired by RBI editor Douglas Blakey. The debate discussed best practises in the Canadian digital banking environment and featured a number of expert panellists. Alexander Atkins reports
David McKay, CEO and chairman of Royal Bank of Canada, opened the Canadian digital banking debate hosted by RBI and S2C and noted that while Toronto was a growing fintech hub there was a caveat: to ensure future growth, banks would have to build up better relationships with fintech start-ups in the area.
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The high level debate, before a full house, pitted experts from both the banking and fintech communities.
Said McKay: “Toronto can become a major player in global financial technology.”
Talking about the importance of digitisation, he added: “If you look at the fundamental drivers of change in technology, it’s the digitisation of our physical world, the digitisation of knowledge that’s transforming our economy and sectors within that economy.”
However, he continued that it could not be a totally digital future and that instead a healthy mix was needed. “It’s not going to be a solely digital world; it’s going to be a hybrid world for the foreseeable future as customers come in and out of a physical and personal channel and the question is how we build those relationships through that digital journey” he said.
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By GlobalDataRelationship with fintech
The debate then began by talking about the relationship banks have with fintech in Toronto and whether it’s positive or not. Mark O’Connell, CEO of Interac Association and Acxsys Corp, was adamant that there was a healthy relationship and, furthermore, that there has to be especially considering the role of fintech in the financial world.
“You have to be friends with fintech” he explained. “The whole approach should be using disruptive technology to disrupt the disruptors and if you’re not utilising those technologies, you’re going to be left behind.”
Mark Barach, Chief Marketing Officer at Jumio, agreed and explained that with such a healthy relationship, banks and fintech must, while looking to the future, use what they have now to continue to make the customer experience better.
“Looking at everything through the consumer lens is the key. To give our customers what they want, it’s all about constantly making the processes just a little bit better. It’s not necessarily about leaping to the next newest thing, but more about what we have right now and how we can use that.”
Omni-channel
The talk turned to uses of omnichannel. Arguing that the bank branch was still relevant because it was an integral part of a range of channels, Linda Mantia, RBC’s executive vice-president of digital, payments and cards, said: “Letting customers interact with us in any channel is crucial. How you allow them to do what they want on a device or in the branch or meeting a mobile adviser, whichever way they want and making sure that their data is there, that is what we need to strive for, and branches will play a part of that.”
Her belief in an omnichannel approach brought the discussion to mobile usage in Canada, which has some way to go to match adoption rates in other mature banking markets.
O’Connell, however, was positive, stating that NFC technology was widespread throughout Canada and that this, combined with the country having some of the lowest fraud rates in the world and a large amount of goodwill with the merchant community, means that Canada has the potential to have one of the highest mobile usage rates in the world.
Chris Finan, CEO of Manifold Technology Inc, agreed but also stated that, in approaching improving customer experience through omnichannel, banks should never compromise customer trust to do so.
“Yes, improving customer experience is important but you cannot do it in a way that ever undermines trust especially when considering customer data” he said. “Omni-channel means a lot of new threat factors and this is something you have to consider when trying to improve the customer experience in a way that preserves that trust” he added.
Block chain and cybersecurity
The mention of financial security brought the debate onto blockchain and its potential and dangers. Finan was aware of both, saying “Bitcoin has incredible potential as it’s a way to move money around on the internet anonymously and in this sense it’s incredibly empowering technology.”
However, he admitted that for banks, this was not always a good thing. “As a bank, when you’re worried about things like responding to anti-money laundering or bank secrecy act regulations, that anonymity actually hurts you.
“But the main point is it’s important to separate out the open networks like Bitcoin from the underlying technology itself, blockchain, and I think when you do that, and when regulators start to understand the power of this technology as a way to increase transparency and ensure accountability and trust, I think it will be seen much more as an empowering technology” he added.
The debate considered the question of whether banks should be cooperating or competing in the area of cybersecurity, a highly controversial topic in the UK at the moment. Mantia asserted that it should be a mixture of both.
“In terms of collaborating, you need to do it, because keeping the bad guys out of the system is incredibly important. I think where we do compete and we’ve always competed, is in how the security experience is for the customer,” she said.
O’Connell was in agreement: “Yes you can have differentiators on how you execute in your different fraud departments on top of that but collaboration should definitely continue when it comes to cybercrime.”
The culture of start-ups
The conversation then moved on to whether established banks like RBC can really re-create the culture of start-ups. Mantia believed it could as long as you have a client first mind-set when building innovation.
“If we look at the technology that is now available to improve that client experience and you stay focused on that, when our team comes up with what say blockchain can do to really drive that real time experience with all of the data you need, we will do it because of this client first mind-set.”
Co-founder of innovative start-up Kasisto, Dror Oren, gave his opinion saying: “Looking from the other side I completely agree. As start-ups, we also make a decision when we wake up in the morning to decide who we’re working with. And for us we always tell ourselves every time we do a proof of concept, what are we proving? We don’t want to be an innovation play to showcase because it’s sexy; we actually want to prove something to the bank because we want to get across to the consumers.”
Barach, however, reminded the debate of how important it was to identify the up and coming market that may define the future of the financial industry.
Barach added:”I think the risk is to think about consumerism as one thing. There are different segments – there always were. But what is happening now is that it is the more advanced and forward leaning consumer, who tends to be younger, who is adopting new technologies, and then a whole chain of events happens.
“A perfect service is then built for that constituency like Uber which brings in massive investment from venture capitalists and with this comes the ability to expand into new segments.”
Admitting that the way customers act was changing led to a discussion on how they had changed in the last few years. Oren believed that things were heading back towards Natural Language Interaction (NLI).
“In this digital world, if I want to increase my limit on my card or report a lost card, spending my time looking for specific buttons doesn’t make sense. What really makes sense for me is to talk to the bank but not to a person because I don’t want to have to be polite or wait in a line, I just want it done and the issue resolved no matter whether I am on the train or on my way to work.”
He added “Yes the human interaction is very important but it doesn’t necessarily mean interaction with another person. Instead it means I interact as a person with the bank in the most convenient way.”
He further illustrated his point by stating that a bank should not force you to choose one particular channel to do something but instead should be available to the customer in the best way possible for the situation that the customer is in.
Regulation
Regulation was another subject touched upon by the panel, looking at both banks and start-up’s relationships with the regulator and whether the regulator is a barrier to fintech growth.
Barach believed that through a healthy relationship, companies can and have been working with both the regulators to find solutions saying: “The most effective thing is to find those companies who have a real problem to solve and work with them to advance a solution that we think would be good for our client, as well as for their customers, and then with their power and knowledge, they work with the regulators, both internal and external, to figure out if these solutions are going to be within the frameworks of these regulations.”
Yet Linda Mantia believed there were still some major barriers in easing regulation in Canada: “I would say that the most obvious problem that we have is that in Canada we’re one of the rare jurisdictions that regulates the players as opposed to the activity”.
She continued: “It is hard because we’ve seen some players come in, we know that they are risking the financial system, we know that at the end we’re the underwriters, like with cards, we’re the ones who give insurance to the entire payments system. It’s not that it’s unfair, it just not right that the activity isn’t what we’re protecting if we’re trying to look after the clients and the merchants and the environment.”
Finally the debate came around to areas in which Canada is a global leader of in terms of fintech.
For Mantia, it is payments, as she explained that Canada has a unique payments system that even some of the top payments solutions coming out of the US are not aware of.
“We really lead in building the rails, we lead in putting good rules around some of these rails and that’s something we are really proud of and we do talk about, at RBC in particular, because we were the first to do host card emulation,” she added.
Mark O’Connell believed their strength lay in partnerships. “Whether it is this Canadian demeanour or something in the DNA, Canada and Canadian companies have a world leading capability of fair partnering and knowing which technologies to choose, and these partnerships with technology companies or process companies or whatever are going to be crucial,” he said.
Finally, the debate was closed with upbeat comments from Jennifer Tory, the head of personal and commercial banking for RBC.
“We’ve got a good track record of having done a good job with innovation in our industry in Canada and taking a collective approach to some of that innovation,” she said.
However, she also noted the challenges faced by Toronto’s growing fintech industry adding: “We have a very strong regulator which is very helpful and we’re good at working with them but we need to figure out how to incorporate some of the innovation into their thinking so they understand how to help us to help our consumers.”
All in all though, the debate showcased Canada’s fast growing fintech community and potential for future growth, something that will flourish with collaboration between the regulators, the banks and the fintech community.
The Panel:
Linda Mantia
Executive Vice President, Digital, Payment and Cards, RBC
Linda is the Executive Vice President of Digital, Payment and Cards for RBC. She has global responsibility for the strategic direction of RBC’s Personal and Business Credit Cards, Rewards and Partnership Programmes, Merchant/Staregies/Moneris, online and mobile banking as well as the enterprise Retail Paymehnts Strategy and Innovation.
Linda joined RBI in 2003 as the SVP of the Innovation & Process Design teams. She then moved to the UK as COO of Global Private Banking. Most recently, Linda was Head of Enterprise Services and Chief Procurement Officer, accountable globally for Acquisition Integration, Procurement, Corporate Real Estate, Lean Six Sigma, Global Consulting, Business Process Outsourcing and Enterprise Program Management Office.
Prior to joining RBC, Linda was an Associate Principal for McKinsey based in Canada, the US and Australia and prior to that, was a partner at Davies, Ward & Beck, specialising in corporate and securities law.
Marc O’Connell
President and CEO Interac and Acxsys Corporation
Mark is president and CEO of Interac and Acxsys Corporation which together operate an economical world class debit system that allows Canadians to access their money through 66,000 ATMs and 879,000 POS terminals across Canada.
Mark oversees the operation of INTERAC, Canada’s leading payment brand and only domestically run, coast-to-coast debit payment network.
Mark has extensive experience in the payment card and banking technology industries and was previously Executive VP, Finance Market at Energis Inc (now Telus). He has held other senior positions at NCR and IBM.
Dror Oren
VP of Product and co-founder Kasisto
Dror has over 10 years of experience in software engineering, marketing and product management. Prior to starting Kasisto, Dror was an executive director in the SRI Ventures team at SRI International, where he focused on commercialisation of technologies in information and computer sciences and helped spin out companies such as Tempo, ai and Desti.
Before SRI, Dror worked in product marketing and management at VMware and NICE Systems, where he led a technical product line.
Marc Barach
Chief marketing officer, Jumio
Marc leads Jumio’s worldwide marketing efforts and brings over 20 years of marketing, innovation and operational experience in emerging technologies and the financial sector to Jumio. Previosuly, he served as CEO of mobile applications company Emotive, CMO of enterprise search SaaS pioneer Marin Software and and CMO of Ingenio, where he sparked creation of pay-per-call technology; a multi-billion dollar adtech product which led to Ingenio’s acquisition by AT& T in 2007.
Chris Finan
CEO and Co-Founder Manifold Technology
Chris is CEO and co-founder of Manifold Technology, a Silicon-Valley-based start-up that provides a private blockchain platform for compliance asset liquidity. Chris previously led business development for Impermium, a cybersecurity start-up that was acquired by Google.
Prior to that, Chris was the product director for Plan X, a Department of Defense cyber warfare research and development programme at DARPA.
Douglas Blakey
Editor of RBI and Group Editor, Retail & Private Banking, Timetric
