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As a potential economic slowdown approaches, Canadian banks are getting ready for a new set of challenges. Banks need to consider what capabilities they need to fund and develop to support growth now and in the future, while ensuring they meet shareholders’ expectations for returns. With the right strategy, banks can take advantage of new opportunities to create value, build resilience and emerge stronger.
In this Transformation Talks video, PwC Canada’s Fabrice Lebegue and Rani Turna discuss the path forward for Canadian banks in the face of continued uncertainty in 2023. They explore how banks can navigate the challenges ahead as they balance the need to create efficiencies while investing in long-term growth and harnessing the power of their people to help deliver sustained outcomes.
Rani: An economic slowdown is approaching and banks will face a new set of challenges, but with the right strategy, banks can emerge even stronger and take advantage of new opportunities to drive value. Joining me today to discuss how banks can navigate these uncertain times is Fabrice Lebegue. Thanks so much for joining me today.
Fabrice: Thank you, Rani. I'm happy to be here.
Rani: To start things off, what are some of the issues and challenges that Canadian banks are facing at the start of 2023?
Fabrice: What has changed recently and what is emerging as a set of challenges is, I would say it's economy, but also broader than that. I mean, inflation, high interest rates, everybody's talking about recession or light recession. Combine that with what's going on in Europe with the geopolitical instability. And so that drives banks now to manage costs more carefully. It's really about freeing up resources, capacity, to fund that mid to long term growth while still being able to drive efficiencies and honor their commitments to their shareholders.
Rani: So Fabrice, those are very interesting points that you've raised and certainly things that we're seeing are top of mind for our clients. Having said that, what are some of the things that Canadian banks should be focused on to remain resilient and to generate shareholder return?
Fabrice: What we've seen is actually that leading companies that have been able to navigate the tough times are companies that typically have kept on investing in high priority areas of growth, while still being able to drive some cost efficiency and freeing up capacity to invest in mid to long term growth.
Looking at the whole portfolio, not necessarily going after all of the projects that were initially planned, but really focusing on the ones that are high priorities. Also, the ones that you actually focus to ensure that there's delivery of value and identifying the capabilities required.
Rani: What are some of the ways that banks can make the most out of this strategic reassessment that you've described?
Fabrice: The key challenge, even after reprioritizing where you're investing, in the end, it's about value delivery. And what we've seen is the key factors that tend to undermine value delivery typically are around people. So do we have the right talent, the right capabilities, the right skill sets deployed in the right place? The second element or factor I would say is data.
As we know, we often have big tech projects, but a big driver of costs and driving often over budgets and undermining the business case is actually the ability to access data. And then finally, the third one is really around change.
Everyone is talking about agility, for instance, and deploying agile across the organization. But that cannot be done without embedding change management from the top down. And finally, I would say what we're noticing not to be underestimated is great to have big project, great to have the right people, but when there are times of crunch and when banks are taking on lots of initiatives, there's always a risk of burnout.
Rani: Fabrice, those are really insightful comments that you've made. I'd be interested in your perspective on how the things that you've talked about could lead to sustained outcomes for our clients.
Fabrice: Addressing value delivery and ensuring that those initiative drive value is definitely critical. Now, what organizations need to do is develop that discipline muscle. So when we're talking about reassessing portfolio, looking at supply versus demand, it's not just about dollars, it's also about people. When we are identifying a project and initiative, very often it's just the dollars, the business case, but will we be able to deliver it?
Rani: Can you talk a little bit about how this may impact customer and employee experience?
Fabrice: It's really not just about transforming, yes, transforming the customer experience, but at the same time rethinking the employee experience from the front office all the way back into operation. The benefits of that, it's obviously driving better customer experience, but at the same time driving efficiencies across the organization, within the organization, and at the same time, making it better for employees.
Rani: Fabrice, thank you so much for joining me today.
Fabrice: Rani, thank you very much for having me.
Rani: I'd also like to thank our audience for joining us for this episode of Transformation Talks. If you'd like to learn more about how to navigate through these uncertain times, please reach out to us at any time.
"Leading companies that have been able to navigate the tough times are companies that have kept on investing in high priority areas of growth, while still being able to drive some cost efficiency."
Fabrice Lebegue is a partner at PwC Canada who leads our banking and capital markets strategy and transformation practice. His focus includes working with large global financial institutions and technology companies to develop and implement technology-enabled and data-driven strategies that create long-term impact.
Rani Turna is a Partner and Financial Services Risk Assurance Leader at PwC Canada. While she has spent most of her 30-year career in the accounting field at PwC Canada, Rani also served in a senior executive role as Chief Compliance Officer at a large Canadian financial institution.