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Canadian Banks 2018

Risk Management

Finding the right balance between innovation and risk

Collaborating with fintechs

Balancing risks and opportunities

Canada’s Big Six banks are deepening their connections to fintechs—by way of joint ventures, partnerships and collaboration—in order to foster and benefit from the innovation that startups bring to financial services.

A bank learns from the ability of a fintech to focus on and deliver innovation in specific and scalable areas of financial services. The fintech, meanwhile, benefits from a bank’s substantial resources and customer access, as well as the overall reputation of Canada’s long-established and very stable banking sector.

The trust imperative

Banks operate and are regulated on the basis of a trust imperative that’s central to their core mandates. They usually take a more sequential and measured approach in assessing and adopting technologies, leading to incremental innovation that often evolves at a slower pace. This leaves little room for failure, be it fast or slow. Nor do regulators or banking customers want failures that compromise that trust imperative.

Innovative technologies can provide greater insights into the anticipated needs of banking customers. Adopting these technologies can help banks efficiently manage fraud, reduce losses and deliver the services their customers want. But this means that banks need to be at the innovation table—learning about and contributing to these sorts of technologies within a rapidly changing financial services sector.

But where do banks draw the line between these innovations and customer privacy? The trust imperative has to be paramount.

 



“Banks need to embrace risk. Embrace not only the potential for failure, not only the capacity to celebrate failure — but in this environment, in fact, expect failure.”

Daniel Moore, Chief Risk Officer, Scotiabank

Exploring risk management


National Bank
Risk management

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Royal Bank of Canada
Collaborating with fintechs

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TD Bank
Risk management

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Scotiabank
Risk management

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Innovative uses of technology, such as introducing automation to replace manual processing of spreadsheets, can reduce operational risk. But humans still have important roles to play, for example, in dealing with adjudication exceptions for loan applications.

Support for this sort of progression, stemming from the board and cultivated by senior executives, gives bank managers and their teams the tools, permission and confidence to be more nimble in moving down the innovation path.

Operating within an evolved culture of risk helps bankers recognize signs along the way that signal success on the horizon or that signal when it’s better to stop and move on to something else. Banks that fail to evolve their risk culture will find themselves getting left behind their more dynamic competitors.

For banks, knowing how and when to accelerate their modernization journeys through innovation requires team members who can manage a variety of risks.

In some cases this will require training and upskilling existing talent—adding proficiencies in emerging technologies to the skills they already bring to the job. In other cases, this may require hiring new talent, from Canada or abroad, whose skills can be incorporated seamlessly into the bank’s operations.

Expanding and enhancing the talent pool from which banks can draw in identifying risks and implementing risk mitigation strategies helps them compete in today’s rapidly changing banking sector.

44% of banking and capital markets CEOs globally are implementing—to a large extent—continuous learning and development programs to attract or develop digital talent

PwC’s 21st CEO Survey: Findings in the banking and capital markets industry

Hear more

TD Bank
The innovation agenda

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Scotiabank
The evolution of banking

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TD Bank
Agile in banking

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Contact us

Diane Kazarian

Diane Kazarian

GTA Managing Partner, PwC Canada

Tel: +1 416 365 8228

Jason Boggs

Jason Boggs

National Banking and Capital Markets Leader, PwC Canada

Tel: +1 416 941 8311

Rani Turna

Rani Turna

Partner, Assurance, PwC Canada

Tel: +1 416 869 2406

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