WHY ARE CANADIAN INSTITUTIONS OFFERING UP SILICON-VALLEY STYLE PERKS? TO WOO TECH TALENT.
INSTITUTIONS REALIZING THEY MUST ADAPT TO PRESERVE THEIR POSITION IN A DIGITAL WORLD
Nish Samantray isn’t your typical banker.
He graduated from the University of Toronto with a bachelor’s degree in mechanical engineering, and is a self- taught coder who in just two years founded and built a software startup and sold it back to his alma mater.
After the acquisition, he wasn’t sure what he wanted to do.
But after a chance meeting with a Bank of Nova Scotia executive, who pitched him on the storied institution’s digital transformation, his interest was piqued.
Now he’s one of more t han 200 employees who have already set up shop at the bank’s new 70,000- square- foot “digital factory” in downtown Toronto, which was officially unveiled late last month.
The new office is five blocks away from Scotiabank’s 184-year-old head- quarters, but it terms of atmosphere it is a world apart.
With a bright, open- concept workspace, a fitness studio, even a bowling alley, the hub is aiming to emulate the perks that Silicon Valley companies offer to lure people like Samantray.
The goal is to provide a dedicated campus where the bank’s data scientists, artificial intelligence researchers, and other tech and science mavens have the room to work and play, and, they hope, develop the technological keys to the bank’s future prosperity.
It is one of the boldest signs yet of the deepening relationship between finance and technology in this country, and that Canada’s staid big banks realize they must adapt — and quickly — to preserve their comfortable position in an increasingly digital world.
It is also an acknowledgment that the battle to recruit talent could decide who ultimately emerges on top.
Scotiabank says the Toronto hub, which is one of five it is launching around the world, has already hired workers with experience at Google, Microsoft and Facebook, and plans to hire another 150 employees as it ramps up.
“We’ve got a half a dozen, director- level, unbelievable star leaders from places like Netflix that are moving back from the Valley right now,” says Shawn Rose, Scotiabank’s executive vice president of digital banking who oversees the five new factories, and who is a Silicon Valley veteran himself.
Rose and Scotiabank, however, aren’t the only ones hiring.
Toronto- Dominion Bank brought some 2,000 people into its technology group last year and plans to add another 1,000 in 2017.
Meanwhile, t he Royal Bank of Canada recently snapped up a Canadian pioneer in artificial intelligence, University of Alberta professor Richard Sutton, as an adviser for its Alberta Machine Intelligence Institute. Gabriel Woo, RBC’s vice president of innovation, says the bank is also in the market for several hundred tech “rock stars” — including data scientists and researchers.
These moves are all part of the big banks’ push to confront what then- National Bank analyst Peter Routledge in 2015 called “a longterm and dangerous competitive threat” posed by new financial technologies and the upstart companies that are pursuing them.
A report by global consulting firm McKinsey in 2015 argued that some 20 to 60 per cent of bank profits in five business lines will be at risk by 2025, with consumer finance — including mortgages and retail payments — the most vulnerable.
The banks’ strategies for the way forward are varied, but one thing is clear: all aspects of their operations, from the inner- workings to customer- facing applications are on the table.
Artificial intelligence, for example, can potentially be used to learn customers’ spending patterns and predict fraud, according to a recent Deloitte report.
Machine learning can also power chat bots to help customers do transactions such as money transfers (which Scotiabank is working on).
The banks are investing heavily, and banking that if they build it — whether it’s state- of- the- art facilities, labs to facilitate research or opportunities to work with the latest technology — the talent will come.
“At the end of the day, we’re all trying to figure out ... what are the expectations of the types of talent that we all think we’re going to need to help build these new capabilities that will enable and transform our companies in the future,” said RBC’s Woo. “Whether it’s startup companies with their casual sort of urban environments or the approach that we’ve taken, which is to allow people to pursue research.”
RBC’s AI lab is being built in Edmonton to have access to Sutton and other experts at the University of Alberta. The institute has between eight and 10 researchers, many of whom have already turned down offers from Silicon Valley, Woo said.
Of the 2,000 people TD hired f or i ts technology group last year, three quarters had niche technology skills, said Jeff Henderson, the bank’s executive vice president and chief information officer.
In 2017, the bank is aiming to hire another 1,000 — including data scientists and artificial intelligence experts — of which roughly 65 per cent will come from places other than a bank, he said.
Banks, relative to other industries, are behind, Henderson said in an interview.
“If I have a choice to choose somebody who has experience in technical or delivery experience or data mining, I would rather pick up that expertise and teach them banking than taking somebody f rom another bank who is no f urther ahead than we are,” he said.
TD doesn’t have plans to build a separate campus, but is aiming to transform the bank’s existing towers over the next three to five years to “up our game,” Henderson said. That means breaking down walls to create an open, fluid workspace with less assigned seating to encourage movement and collaboration.
It’s a format already in place in their Waterloo office, which TD opened in 2015 in part to access available talent from places like BlackBerry as it downsized, he said.
TD is also changing up its recruitment tactics. It is posting jobs via social media, while also taking out ads to highlight technology projects, he said. It is hosting “social events” for groups of applicants instead of the traditional structured interview to suss out candidates.
“It’s all driven to change our recruiting brand. That if you’re in technology and you want to work on cool things, banks like TD, and specifically TD, can be a cool place to go,” Henderson said.
Whether the banks can offer enough cash and cachet to attract and retain star talent is still an open question.
The lure of Silicon Valley and the array of opportunities that other companies in the technology ecosystem can offer down the line are hard to compete with, says Nashid Shariar, who is doing his doctorate in computer science at the University of Waterloo.
“Those kinds of opportunities are a little bit limited here, currently, but it’s very vast in Silicon Valley,” he said. “You can switch to any other company after you get experience.”
Banks must also contend with offers from startups and the potential payouts that can come with them.
Rose said Scotiabank is highly competitive when it comes to salary, but the “monumental exit” for early employees is one area that is “lacking.”
“Are we going to be bought by some other big thing, and is that going to be some multiple of what our existing share price is? No, no it’s not,” he said. “That’s really the only area where we’ve had any obstacles.”
Most of the banks say, however, they can offer the opportunities and flexibility of a startup with the backing and stability of a big organization, as well as access to real world data sets from millions of customers.
“The best thing we can offer is real- world use cases,” said Michael Zerbs, executive vice president and cohead of technology at Scotiabank. “Because they’ve got great ideas, but it’s very hard for them to get data that allows them to test out their ideas and further develop them.”
The Canadian Imperial Bank of Commerce also has digital offices away from Bay Street, which have a casual work environment and collaborative spaces, said Aayaz Pira, the bank’s senior vice president of digital.
CIBC is aiming to hire as many as 75 people for its digital division this year, including tech engineers, data scientists and digital analytics, he said.
“You can have the greatest environment, you can have the coolest digs. But if you don’t have the right people, the right culture and have them working on work that inspires them to do their best, I don’t think it matters,” Pira said. “And I think that’s what we’re really focused on here.”
THEY’RE BANKING IF THEY BUILD IT, TALENT WILL COME.