Brian Porter, president and CEO of Scotiabank, addresses the company's annual meeting in Calgary, Tuesday, April 12, 2016.Jeff McIntosh/The Canadian Press
Bank of Nova Scotia's chief executive officer argues that the private sector must drive greater innovation in the economy if Canada wants to close the productivity gap with global peers.
"While governments can create the conditions for innovation to thrive, Canadian companies need to step up to be the primary drivers," Brian Porter said Tuesday at the bank's shareholder meeting in Calgary.
His comments support similar observations by the Conference Board of Canada, which has long argued that the country's mediocre productivity – or economic output based on hours worked – is holding back its standard of living.
But while some studies have focused on a public-policy solution that addresses issues such as taxation and regulations, Mr. Porter said companies must take a leadership role.
He held up Scotiabank as an example of what can be done. He noted that the bank has recently doubled its investment in technology to more than $2.4-billion, as it responds to nimble financial-technology firms, or fintech, and a decreasing demand for traditional branch transactions as consumers increasingly do their banking on computers or smartphones.
By 2020, Mr. Porter said, the bank expects that less than 10 per cent of financial transactions will take place in its extensive branch network, while financial products sold through its digital channels will rise to more than 50 per cent of total products sold.
While other banks are also investing large amounts of money into technology as they beef up their online offerings, Scotiabank is alone among the Big Six in publicizing the size of its investment.
Besides developing technology within the bank, Scotiabank has has also been partnering with outside fintech firms, such as Sensibill Inc., a Toronto-based startup that offers customers an online receipts management tool.
Mr. Porter said the country's productivity can also get a boost from a different approach to higher learning. Even though Canada has a well-educated work force, he argued that there is a disconnect between the skills of many graduates and the needs of their prospective employers.
"We see the effects of this at Scotiabank, where we have a growing need for digitally savvy employees, such as specialized programmers, engineers and data scientists," Mr. Porter said. "More and more companies – regardless of the industry – are chasing this same talent pool."
One solution, he suggested, is for the private sector to develop talent through partnerships at postsecondary institutions. Scotiabank, for example, has helped to establish the Scotiabank Digital Banking Lab at the University of Western Ontario's Ivey Business School, the Scotiabank Centre for Customer Analytics at Queen's University's Smith School of Business and the Master of Technology Entrepreneurship and Innovation Program at St. Mary's University.
Similarly, Royal Bank of Canada announced earlier this month a $3-million commitment to the University of Toronto to develop ONRamp – a collaborative space for entrepreneurial students, graduates and startup companies.
Mr. Porter argued that these sorts of partnerships give banks access to the talent they need, but they also provide opportunities and experience for young Canadians.
"The future prosperity of our bank, and our country, is not a given – it depends on the decisions we make today," he said. "To that end, we are investing in innovation, and we are cultivating a work force that will thrive in the new digital age."
Mr. Porter was asked after the shareholder meeting if strict regulations were posing obstacles to bank innovation.
"I think regulators will respond to this. They know it's driven primarily by the consumer, so I don't envision regulators impeding any progress in this area," he said.
David Berman