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Introduction
The Canadian banking sector is at a crossroads. On one hand, it boasts a global reputation for stability and security. On the other, it faces pressure to embrace rapid digital innovation and keep pace with evolving customer expectations.
To learn more about the shift, I interviewed Nelson De Jesus, SVP and CIO of Personal and Business Banking & Direct Financial at CIBC. With over two decades in the financial sector, Nelson brings a unique perspective on how Canadian banks can balance their traditional strengths with the quickly changing needs of a digital-first world.
Here’s Nelson’s perspective on the four key areas trending in the Canadian banking sector:
Trend 1: The Rise of Experiential Banking
Customers are no longer satisfied with simply completing transactions at their bank. They expect their financial institutions to understand their individual needs, anticipate their financial goals, and offer personalized solutions that seamlessly integrate with their lives. This is driving the shift toward what Nelson calls “experiential banking,” a trend that reimagines the entire banking journey.
“It’s a process,” Nelson explained. “And you know, I think like everything else, you begin with ‘let’s go 100% digital.’ That’s not the right answer.” He believes that the key to experiential banking lies in striking the right balance between digital convenience and human connection. This means offering a hybrid approach that combines the efficiency of digital tools with the personalized guidance of human advisors, allowing customers to choose the level of interaction that best suits their needs.
For example, CIBC’s mobile app now goes far beyond basic account management. It provides personalized financial advice based on individual spending patterns and goals, offers insightful nudges to help customers save more effectively, and even allows you to deposit cheques.
This approach reflects a deeper understanding of how different customers interact with their finances, acknowledging that a one-size-fits-all digital solution simply won’t cut it.
Nelson emphasized the need to understand customer preferences at a granular level, moving beyond broad demographics to create truly personalized experiences. “If you can offer a better experience, people will take it,” he said. Experiential banking is about providing that better experience — one that not only meets customers’ functional needs but also anticipates their desires, reduces friction, and fosters a sense of trust and engagement.
Trend 2: Open Banking’s Slow but Steady Progress
While Open Banking has been making headlines globally, its implementation in Canada has been a more gradual process. Nelson acknowledges the potential of Open Banking to create a more competitive and innovative financial landscape, but he also expresses a degree of caution.
“I’m very positive [about Open Banking], but I’m also very skeptical as to the timeframe,” he admitted. The regulatory landscape in Canada is still evolving, and Nelson pointed to the relatively low adoption rates in other jurisdictions as a potential challenge. “In the UK, client buy-in is sub-20%, meaning 80% of people have not registered to take part in it,” he shared.
Despite the uncertainties, Nelson believes that the industry is moving in the right direction. “To the extent that [Open Banking regulation] obligates us to run a better bank, I think it’s good. I think it’s good for everybody,” Nelson stated.
Open Banking holds the promise of empowering customers by giving them more control over their financial data and enabling them to access a wider range of financial products and services. However, its success in Canada will depend on a coordinated effort between regulators, financial institutions, and technology providers to build a secure, transparent, and user-friendly ecosystem.
Trend 3: Generative AI’s Potential and Challenges
Generative AI is one of the most talked-about technologies, and its potential to revolutionize industries — including banking — is undeniable. Nelson is particularly excited about the possibilities of generative AI, seeing it as a far more transformative force than blockchain or cryptocurrencies.
“With AI, there’s a general familiarity with modeling. So, people understand … what it does. It looks for big patterns of data … and you’re basically testing that hypothesis,” he explained. Generative AI takes this a step further by using those data patterns to create new content, predictions, and insights. Nelson believes that generative AI can fundamentally change how banks interact with their customers.
However, he acknowledges the ethical considerations and potential risks, especially when it comes to “hallucinations” — instances where AI generates outputs that are nonsensical or even harmful. “How do we now prevent those fatalistic scenarios from playing out like once you get to the point where, you know, it is that powerful? Have you crossed the line that makes it too powerful?”
Despite these challenges, Nelson is optimistic about the future of generative AI in banking. He believes that with careful planning, robust governance structures, and a focus on responsible implementation, this technology can enhance customer experiences, improve decision-making, and create new value across the financial ecosystem.
Trend 4: The Evolution of Mega Platforms
The rise of mega platforms like Google, Amazon, and Microsoft is reshaping industries across the board, and banking is no exception. Nelson sees these partnerships as both a significant opportunity and a potential challenge for traditional financial institutions.
He highlights the ability of mega platforms to innovate rapidly and adapt to changing market demands. He pointed to the evolution of Microsoft Teams as a prime example, noting how the company quickly pivoted from the aging Skype platform to create a solution that met the surging demand for video conferencing during the pandemic.
Nelson also emphasized the strategic importance of partnerships, particularly in the field of AI. “Now they’ve signed up with OpenAI; I think it’s been a very fruitful partnership for them,” he observed. By collaborating with specialized AI companies like OpenAI, mega platforms can accelerate their development of new products and services, gaining access to cutting-edge technologies and expertise.
However, these partnerships also present challenges. Nelson questioned whether mega platforms can consistently deliver “commercial-grade” solutions that meet the stringent requirements of the financial industry. “If I’m going to buy this service, then I want to be sure that they’re not going to turn it off tomorrow,” he cautioned.
The evolution of mega platforms will undoubtedly continue to shape the banking landscape. Financial institutions will need to carefully evaluate the benefits and risks of these collaborations, ensuring that they maintain control over critical data and processes while leveraging the innovation and scale that mega platforms can provide.
Takeaway
The future of Canadian banking belongs to those who can strike the right balance between embracing innovation and preserving the trust that customers have come to expect. It’s a delicate act, but one that holds immense potential to create a more dynamic, customer-centric, and ultimately valuable financial ecosystem.
If you found these trends insightful, be sure to tune into the full episode of Behind the Growth for a conversation you don’t want to miss! You’ll hear even more from Nelson De Jesus as he shares his deep expertise and perspectives on the future of Canadian banking.
Link to podcast
Leadership and Innovation in the Banking Sector
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