The coronavirus pandemic has been a jarring setback for banks, driving up potential loan losses and eating into profits. But for Cameron Fowler, the timing has a silver lining.
Mr. Fowler is Bank of Montreal’s chief strategy and operations officer, a sweeping role created in late February that puts him in charge of speeding up the bank’s efforts to do more of its work digitally. Since then, public-health measures to enforce physical distancing have rapidly altered many customers’ banking habits, pushing them online and away from branches.
That presents an opportunity that he intends to seize. For years, BMO has been battling to improve its efficiency metrics – which measures expenses relative to revenue – where the bank has lagged its peers, partly by stripping out costs. Mr. Fowler sees the potential to save hundreds of millions of dollars more from a plan across the bank to automate more products and processes, so that many of them won’t need a human’s touch at all. “It will take time and it will take investment," he said in an interview – but perhaps less time than he had expected.
Early in the pandemic, the rate of digital adoption among BMO’s customers nearly tripled, payments by e-transfer are up 40 per cent since February, and cash withdrawals are down 15 per cent. Yet the surge in digital use has started to ease, while attendance at branches is picking up again, and Mr. Fowler wants to make sure some of the new habits stick.
He also plans to embed new digital tools across BMO’s divisions, from wealth management to capital markets, through its middle and back offices, and down to the bank’s core technology systems.
“In some ways, I couldn’t be happier to be doing this type of role at this particular time,” Mr. Fowler said. “It’s been a terrific opportunity to see where we can push harder and go faster.”
Mr. Fowler started his current job, reporting to chief executive officer Darryl White, less than three weeks before Canada imposed some of its most severe measures to control the spread of COVID-19. Even before the pandemic, his mandate was to speed up the rate of change at the bank. He was given oversight of digital initiatives, partnerships, innovation programs, marketing, real estate, social impact and procurement, and asked to knit them more closely together to make BMO more efficient.
Banking “has not been significantly digitized relative to other industries," Mr. Fowler said. In-person appointments at branches, paper forms and manual inputs by employees are still often necessary to complete routine tasks. And although banks everywhere have embarked on ambitious digital overhauls, it has not proven easy to modernize vast companies with aging infrastructure.
Most banks reported similar surges in customers embracing online banking in the early months of the crisis, when digital registrations surged by nearly 40 per cent. But in recent months, as pandemic restrictions eased, digital adoption has levelled off at several large banks.
BMO has made strides by upgrading its apps and online systems. Although just 60 per cent of its Canadian retail customers regularly use the bank’s online tools, its mobile app for commercial clients is being used five times more frequently than a year ago. More than 90 per cent of basic tasks such as deposits, transfers and bill payments, as well as high-value payment among commercial clients, are now done online or at an ABM. The bank has also fast-tracked upgrades to BMO InvestorLine, its do-it-yourself trading platform, as account openings are up 36 per cent and self-directed trades have risen 57 per cent from a year ago.
The next, more challenging phase of BMO’s digitization is to spread digital technology through the bank and its back-end systems, so that signatures can be electronic instead of ink on paper and customers can be issued new credit cards, lines of credit and investments without human input. The bank has also begun using machine learning and artificial intelligence to track activity and the flow of funds, including one tool that monitors customers' cash flow to predict shortfalls and provide advance warning, which was launched this year.
The threat of COVID-19 has made many consumers more willing to receive an array of services digitally – from grocery delivery to health care – and Mr. Fowler expects many of his customers are similarly ready to bank more online.
If he’s right, there will be few people going to the bank’s 1,400 branches in Canada and the United States. After reaching a low point in April, some branch traffic has come back. Over time, BMO’s branch network in Canada “will be smaller, but not radically," Mr. Fowler said. More commonly, branches will be revamped to cater to customers who need advice on major decisions such as financial planning or buying a home.
But earlier this year, the bank closed about 30 U.S. branches – or about 5 per cent of its network in the country – as it focuses on signing up U.S. customers through digital-only accounts, reaching outside its core Midwestern market.
The pandemic has also made BMO rethink what a branch employee can do. As the bank scrambled to set up thousands of call-centre staff to work remotely, it routed some calls to branch staff to ease a backlog. That experience has shaped Mr. Fowler’s efforts to rethink the way employees will do their work in the future, how much office space BMO will need and how often to steer customers to fully digital tools.
About 90 per cent of BMO’s non-branch employees – tens of thousands of the bank’s 44,000 full-time staff – are now working remotely. Mr. Fowler expects the bank will ultimately adopt a “hybrid model, where few people work permanently in a BMO office every day of the year, yet few people work permanently from home every day of the year.” But he is less willing to make those decisions hastily, for fear of upsetting the bank’s culture.
“Those are really important things to have a clear understanding of before you go resetting the entire organization,” he said.
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