Bank bosses talk up tech spending amid financial sector ‘arms race’

The leaders of the biggest banks in Canada said Tuesday that they are still spending billions on transformative technologies as the financial sector’s digital “arms race” shows no signs of abating.

“Quite often I say that we’re in the technology business, and our product happens to be financial services,” Brian Porter, Bank of Nova Scotia president and chief executive officer, told the audience at the RBC Capital Markets Canadian Bank CEO Conference in Toronto.

Porter said his bank increased its spending on technology last year by 14 per cent — to $3.1 billion. Of that, he said, 60 per cent was to help run the bank, and the other 40 per cent was tapped for “change-the-bank” and “aspirational”-type projects, including those involving blockchain, the digital ledger that supports bitcoin and other cryptocurrencies.

Royal Bank of Canada president and chief executive officer Dave McKay said RBC is spending about $3 billion a year on technology, and has increased the share devoted to transformative projects to about 30 per cent from 20 per cent.

“I think we’re still in the early stages of seeing the benefit from that, and deploying these technologies, but they’re coming and they are making a difference,” McKay told the conference, which saw chief executives from the country’s top lenders each take a turn discussing their businesses.

The spending on the development of new technologies comes as the banks are still enjoying strong earnings, but are also dealing with the rise of decentralized and digital currencies, fintech upstarts trying to cut into their businesses, and the migration of customers towards mobile and online banking platforms. There is also the once-unthinkable prospect of direct competition from a tech giant, such as Amazon.com Inc. or Apple Inc.

“The arms race is definitely heating up,” said Darko Mihelic, research analyst at RBC Capital Markets, to open the conference.

Hours earlier, TD Bank Group had announced its purchase of Toronto-based Layer 6 Inc., a “world-renowned” artificial intelligence company, for an undisclosed price.

“We think it can accelerate our journey using artificial intelligence, which we feel is critical in delivering evolving customer expectations as we go forward,” said TD president and chief executive Bharat Masrani.

A few years ago, only around 25 per cent of the bank’s spending on technology was on changing-the-bank-type investments, while the rest was earmarked for ensuring systems were up to date and other operational aspects, he said.

“We’ve been able to shift that, to now where 40 per cent of our spend is geared towards changing the bank through innovation, new functionalities using various new technologies such as artificial intelligence, to connect with our customers,” Masrani said.

The RBC conference also came a day after Canadian Imperial Bank of Commerce unveiled a new innovation banking business that aims to serve North American technology clients “from start-up to IPO and beyond.” To that end, CIBC also announced it had bought Toronto-based Wellington Financial, a privately-held venture fund that targets early and mid-stage tech companies in Canada and the United States.

“CIBC wants to be seen as a relevant bank in the technology and innovation sector broadly speaking,” Victor Dodig, CIBC president and chief executive, told the conference.

Dodig also said that CIBC has been consistently spending around $1 billion a year on tech, but is not spending blindly.

“What really matters? What really moves the dial forward on earnings, client satisfaction, client growth, and what is simple another shiny object?” Dodig said. “We’ve become disciplined about where those shiny objects are and really disciplined on where we invest in that regard.”

While the digital evolution continues, the banks are not yet ready to untether themselves from the bricks-and-mortar branches they operate throughout Canada and the U.S.

Asked if Bank of Montreal would consider an online retail bank in the U.S., BMO chief executive officer Darryl White downplayed expectations of the lender making a “big splash” with a digital-only acquisition.

“Anything’s possible, never say never, but we don’t want to disenfranchise the customer franchise that we have right now,” he said.

White also said that BMO increased their tech spending by 13 per cent last year, and would “probably” increase it again by double digits this year, though not without losing focus on growing earnings.

“It’s not a ‘let’s-increase-our-tech-spending-and-take-an-earnings-holiday,’” he said.

gzochodne@postmedia.com
Twitter: @geoffzochodne

At least six dead in Southern California flooding, mudslides

LOS ANGELES (Reuters) – At least six people died and thousands fled their homes in Southern California on Tuesday as a powerful rainstorm triggered flash floods and mudslides on slopes where a series of intense wildfires burned off protective vegetation last month.

H-1B visa extensions for workers waiting on green cards are safe for now

 The Trump administration appears to be creating distance between itself and rumors that it might end the practice of extending H-1B visas during the green card application process. The rumored change would have a large impact on foreign tech workers in the U.S., but the United States Citizenship and Immigration Services (USCIS) is offering assurances that no such policy change is underway. In… Read More

GOP senator says she’ll vote to restore net neutrality rules

A Democratic effort to reinstate net neutrality rules has won support from a Republican senator and could pass in the Senate if just one more Republican breaks with the GOP.

A Congressional Review Act (CRA) resolution from Sen. Ed Markey (D-Mass.) to reverse the Federal Communications Commission’s net neutrality repeal would need votes from all Democrats and two Republicans in order to pass through the Senate. Sen. Susan Collins (R-Maine) today became the first Republican senator to pledge support for the repeal reversal.

“Senator Collins does not support the FCC’s recent decision to repeal net neutrality rules, and she will support Senator Markey’s legislation that would overturn the FCC’s vote,” a spokesperson for Collins told The Hill and other news outlets today.

Read 7 remaining paragraphs | Comments

Salvadorans say going home not an option after U.S. axes protection

RED BANK, N.J. (Reuters) – Three decades after fleeing civil war in his native El Salvador, Luis Munoz has built a life for himself in the New Jersey coastal town of Red Bank, working as a mechanic and raising three children with his wife.

Deadline of Feb 1 for Nominations for Public Interest Registry (.ORG Operator) Board of Directors

Would you be interested in helping guide the future of the Public Interest Registry (PIR), the non-profit operator of the .ORG, .NGO and .ONG domains? If so, the Internet Society is seeking nominations for three positions on the PIR Board of Directors. The nominations deadline is 23:00 UTC on Thursday, February 1, 2018.

More information about the positions and the required qualifications can be found at: https://www.internetsociety.org/pir/call-for-nominations/

As noted on that page:

The Internet Society is now accepting nominations for the Board of Directors of the Public Interest Registry (PIR). PIR’s business is to manage the international registry of .org, .ngo, and .ong domain names, as well as associated Internationalized Domain Names (IDNs).

In 2018 there are three positions opening on the PIR Board. Two directors will serve a 3-year term that begins mid-year 2018 and expires mid-year 2021. One director will fill a vacant seat as soon as practical and serve until mid-year 2020.

If you are interested in being considered as a candidate, please see the form to submit toward the bottom of the call for nominations page.

The post Deadline of Feb 1 for Nominations for Public Interest Registry (.ORG Operator) Board of Directors appeared first on Internet Society.