Scotiabank chases digital innovation as banks battle for fintech supremacy

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Bank of Nova Scotia's announcement that it is opening its own innovation hub for more than 350 employees to focus on digital banking says two things: Scotiabank is making progress in its tech-savvy ambitions and the battle for talent among Canada's big banks is heating up.

Scotiabank's Digital Factory is slated to become fully operational in mid-2016 and will be housed in a Toronto location that is physically – and culturally – distinct from its gleaming head office nearby.

Data scientists, coders, creative designers and engineers are among the key positions, and many of these employees are described by Scotiabank as "no-regret hires," to underline their importance.

They will all operate with a common objective: making online and mobile banking easier, as customers move away from traditional branch banking and expect banks to deliver the same sort of seamless experiences they find on sites such as Amazon.com. "We're delivering solutions that are going to improve the customer experience. To do that, we need the best qualified and trained people we can get," said Kyle McNamara, co-head of Scotiabank's information technology and business systems.

"Some of them will come from our existing employee base and some will come from brand-new people who wouldn't have ever thought of working for a bank in the past."

The Digital Factory is also part of a move by Scotiabank to compete for the right people in an increasingly competitive market: Rival banks have also set their sights on hires who can deliver the skills that can keep the banks looking relevant in an era of tremendous change.

Indeed, as the banks cut costs in traditional banking amid slowing revenue growth, they are redirecting some of these savings toward digital banking – which is where nimble financial technology upstarts, or fintechs, are keen to capture market share.

But that means the hunt is on for the right talent.

"It's extremely competitive," said Aayaz Pira, vice-president of digital channels, retail and business banking at Canadian Imperial Bank of Commerce. "There is a massive gap and a massive challenge."

To fight the talent war, CIBC has sponsored a student co-op model at Toronto's MaRS Discovery District, giving students hands-on experience and also transforming them into ambassadors for the brand.

"My hope is that one of those co-ops goes back to campus and says, 'Guess what I did at CIBC? I got to meet startups, and by the way I got to help on the prototype for the Apple Watch app that got released and I'm wearing on my wrist,'" Mr. Pira said.

CIBC has also created its own technology hub that is blocks away from its head office and is casually known as #digital. It employs about 300 people in an environment that is decidedly un-bank-like.

"I think it creates an environment that balances a social element, a work element and a creative element, and I don't think the location at our head office is conducive to that," Mr. Pira said.

Toronto-Dominion Bank has taken a similar approach. It has a strong presence at Waterloo Region's Communitech hub and has been building an in-house digital team that has its own culture.

"In fact, many parts of the bank are transforming into what feels more like a startup – enabling the talent we recruit, like designers – to collaborate and co-create industry-leading digital solutions," said Jeff Martin, chief investment officer of direct channels technology solutions at TD, in an e-mail.

The approach even extends to the way jobs are described. Scotiabank recently posted advertisements on LinkedIn that avoided all mention of the bank as the employer. Instead, it described itself as a Stealth Innovation Hub and tantalized readers with its 20 million users and "giant user research budgets."