BANKS RAISE STAKES IN BATTLE FOR TECH TALENT
Canadian lenders compete with Silicon Valley for top minds
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 than 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 headquarters, but in 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, the 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 long-term and dangerous competitive threat” posed by new financial technolo- gies 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.
RBC’s AI lab is being built in Edmonton to have access to Sutton and other experts at the University of Alberta.
The institute now 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 for its technology group last year, three-quarters had niche technology skills, said Jeff Henderson, the bank’s executive vice-president and chief information officer.
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 co-head 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 Toronto’s financial district, 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.
“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.”
We’ve got unbelievable star leaders from places like Netflix that are moving back from the Valley right now.