By Robert Levy
‘Business as usual’ is perhaps becoming an antiquated term.
Amidst the downturn in the Canadian economy and the ongoing headlines in the financial press on the impact of the energy sectors decline on corporate Canada and the Canadian labour market, there is one particular story developing that impacts each and every Canadian business and business owner and that is the changing landscape of Canadian financial institutions and daily banking activities. ‘Business as usual’ is perhaps becoming an antiquated term as one paramount challenge for small business is keeping up with changes in technology. Relating the changes to finance entails, but is certainly not limited to processing and receiving payments in order to keep operations both timely and cost efficient.
It’s very interesting as the stories in the financial press are often framed from a more market dictated approach of job or spending cuts. Recent examples are National Bank of Canada cutting 400 jobs (or 2.3 per cent of its workforce) and taking a $64-million restructuring charge as TD announced taking a $337-million dollar charge in their second quarter, mostly related to cost-cutting. Also in the mix is CIBC looking to trim $600-million by 2018.
The degree at which the job cuts continue for Canadian banks is yet to be determined; however, it is the shift and the cost of adapting to tech heavy investments that is moving them forward. As National Banks CEO discussed, this “IT transformation” doesn’t allow banks enough time to simply retrain employees, unfortunately they are cutting some jobs and rehiring people with specific skillsets.
It’s no secret the six main Canadian banks stronghold over Canadian business environment provides them with a unique advantage from a competition standpoint. And this is not criticism of the Canadian banking model, which in 2008 proved superior to many Western Nations including the US.
But a quickly developing and advantageous factor for consumers, particularly at the business and commercial level are disruptive technologies, like Bitcoin or Apple Pay, which may not be an end solution, but are nonetheless forcing innovation. And as different solutions for advancing finance avail themselves, banks risk losing control.
Ultimately, the question is what does this mean for businesses, and the answer at this point seems twofold. First, the traditional relationship or correspondence that is associated with banking such as service at their branches is taking a back seat. As so much of traditional banking is now down online or via mobile a clear trend is that fewer resources are going into serving customers face to face. This seems only likely to continue.
Second, the question arises of how long the big 6 banks control over Canadian commerce can remain in place? Hopefully, for the foreseeable future, as businesses and retail customers benefit from the regulations that govern Canadian institutions to ensure stability in our financial system. It is important though, that the drastically changing demand of businesses will force the banking industry to offer the most technologically advanced solutions and continue to force innovation for the ultimate benefit of the end consumer. And with that businesses, like the banks, will continue to face the pressure to adapt.
Robert Levy is the Managing Director of Border Gold and a financial commentator on CKNW Radio. firstname.lastname@example.org