A new report from CenturyLink suggests that some of the highest-level executives at Canadian banks believe their companies may not be ready to meet the mobile banking needs of their customers.
CenturyLink, along with market research firm IDC Canada, surveyed 50 high level or C-suite executives from financial services institutions about how customer needs are changing in light of the digital revolution.
Nearly half – 46 per cent – of respondents said they did not think their company had the IT infrastructure, systems and processes in place to meet customer demands for mobile payments.
And 40 per cent said they didn't think their companies had the IT infrastructure to satisfy client expectations even for core banking services.
The study was based on telephone interviews conducted by IDC between May 1 and 13, in partnership with CenturyLink, a Louisiana-based company that provides communications services and technology.
The entrance of technology companies into the financial services space has been the subject of heated discussion among banking executives in recent months.
Chief executives of some of Canada's biggest banks have commented during their annual general meetings about the need to adapt or risk losing market share to new entrants.
Online peer-to-peer lenders threaten to snatch customers from the banks, while tech giants such as Apple and Google have launched mobile payment processors that could weaken the relationship between banks and their clients.
Royal Bank's chief executive, Dave McKay, has stressed the need to work with early-stage financial technology companies in order to thrive in an increasingly digital world.
TD Bank CEO Bharat Masrani has urged financial regulators to introduce rules governing the new entrants, which are not subject to the same regulations that banks and other financial institutions must adhere to. That gives them an unfair advantage and could threaten the stability of the country's financial system, Masrani said.
Meanwhile, CIBC CEO Victor Dodig has said that reports about technology companies snatching market share away from the banks are overblown.
"Will clients move in droves to these new technology platforms to do their lending? I don't think so. It won't happen that quickly," Dodig said in an interview following his speech to the Empire Club of Canada in June.
Roji Oommen, managing director of financial services at CenturyLink, says mammoth institutions like banks tend to be slow to adapt to change.
"They're very good at very carefully deploying technology, very slowly and risk adversely, over a multi-year program," Oommen said.
"In the mobile space, you need to be able to move much quicker. Your customers are being spoiled by Google and Apple and the like, and the expectation is that you need to adapt very quickly."
Oommen said that if banks don't improve their online user experience, their ability to sell consumer credit products, car loans and mortgages may become diminished.
"To improve customer lifetime profitability, the art of cross-sell is really important," Oommen said. "The risk is that they will be relegated to a segment of the industry where they're handling savings and chequing accounts, which is the low margin stuff."