Brian Porter has attached a figure to Bank of Nova Scotia's annual investment in technology: $2-billion.
Mr. Porter, Scotiabank's chief executive officer, said the amount was used for everything from defending the bank against cyber attacks to improving the customer experience to keeping the lights on at the bank – suggesting that $2-billion is a broad estimate rather than a specific defence against encroachment from financial technology upstarts, tech behemoths and other banks.
Nonetheless, the surprisingly large figure offers a rare glimpse into the budgets of the Big Six banks as they shift resources, and jobs, from traditional branch banking to online services, where consumer expectations are rising and competition is growing.
"Companies such as Apple, Amazon and many others have changed the service paradigm for everyone," said Mr. Porter in a speech delivered to students at the Ivey Business School at Western University on Thursday.
"They provide consumers with a frictionless experience, and consumers now – rightfully – expect that type of experience from every industry" he said.
A number of observers have highlighted the potential threat from fintech competition. A recent report from Citigroup predicts that competition will force banks in the U.S. and Europe to cut 30 per cent of their workers over the next decade; a report last year from global consultancy McKinsey & Co. argued that banks could lose up to 60 per cent of their retail profits to fintech upstarts.
In both cases, the reports suggested that traditional banks wouldn't be helpless victims to disruption if they invested in their own innovative capabilities.
Mr. Porter highlighted some of Scotiabank's innovations in his speech. Tangerine, the digital bank owned by Scotiabank but run as a separate brand, serves 2 million customers with just 1,000 employees – a better ratio than the 21 million customers and 90,000 employees at the parent bank.
"Tangerine acts as our internal 'disruptor' and it is a key part of our digital strategy," Mr. Porter said.
Scotiabank is also building its own Digital Factory in a stand-alone building in downtown Toronto, which will house teams devoted solely to technology-focused enhancements to customer experience, innovation and analytics – and serve as a base for so-called "rapid labs," where technology and business teams work out new approaches to online banking.
"In fact, if you toured one of our rapid labs, you might think that you were in a fintech start-up," Mr. Porter said.
Some of his big bank rivals have taken a similar approach, though, adding another layer of competition as banks vie for customers attracted to strong online capabilities.
Canadian Imperial Bank of Commerce, for example, occupies space at the MaRS Discovery District in Toronto, where teams experiment with everything from new approaches to customer authentication to fast and effortless online mortgage applications.
Teams often complete projects in just three months, with refinements added to completed apps in small increments as they get feedback from customers. The initial rollout is known as a minimum viable product, or MVP.
"We have increased our spend. Over the past several years we have been investing a greater amount to technology," said David Williamson, CIBC's group head of retail and business banking, though he declined to offer a specific number.
"For a period of time, we lagged in our investment in technology. That's the bad news. The good news is that we can now move to where we want to be, as long as we embrace that technological change with some degree of urgency," Mr. Williamson said.
It costs money, though. And at Scotiabank, we now know how much.