CIBC sees digital shift from COVID extending to mortgages

Canadian Imperial Bank of Commerce expects the massive shift to digital and virtual banking to continue after the coronavirus pandemic subsides and even extend into the crucial — and often relationship-based — mortgage business.

While routine transactions have been moving out of branches for years, the pandemic has accelerated the trend. CIBC has seen a 42 per cent increase in digital transaction volume compared to two years ago, and about 92 per cent of its transactions are performed digitally. It now has more than three million active mobile users, up 23 per cent.

Laura Dottori-Attanasio, who leads CIBC's personal and business banking in Canada, said those customers aren't likely to return to branches post-pandemic.

In fact, the experience may have made them more open to virtual formats for products like mortgages, which she says are one of bank's least digitized offerings.

Her own household's adaptation to the pandemic shows the challenges and opportunities CIBC will face in meeting customers' preferences, she said. While remote learning has shown her how much her children benefit from in-person instruction at school, she's also seen that doing some tutoring sessions online works well and saves hours of driving.

“Banking is in some ways no different than that,” Dottori-Attanasio said. “We figure out what we like to do remotely or digitally versus in person. For clients, we're trying to be contextually relevant to them and serve them how they want to be served.”

Even with more business moving online, Dottori-Attanasio doesn't see large-scale branch closings ahead because the company had largely completed an overhaul of its network before the pandemic.

CIBC closed 101 banking centres in four years including fiscal 2019 and shut another two in its most recent fiscal year. It now has 1,022.

The bank has also converted about 20 per cent of its locations into “advice centres,” which focus on more specialized services rather than traditional tellers.

The total number of branches may continue to decline, but not at a “dramatic” rate because all of the bank's locations are currently profitable, she said.

Next year, clients that stockpiled cash amid economic uncertainty may release some pent-up spending, particularly in the services sector, as the pandemic subsides and the economy strengthens, she said.

In 2021, it's likely more buyers will seek larger dwellings in suburban areas and the downtown Toronto condominium market will remain soft, she said.

CIBC investors will be looking for further improvement in the bank's mortgage business.

The company had about C$221.2 billion in residential mortgages at the end of its most recent fiscal year, up six per cent from a year earlier.

Gains in the business helped CIBC's Canadian personal and commercial business boost earnings last quarter.

CIBC's shares are up 3.6 per cent this year, the best performance in the S&P/TSX Commercial Banks Index. The eight-company index has slid 1.7 per cent this year.

Despite early successes, Attanasio-Dottori sees more work before the mortgage business reaches its potential. The company has strengthened its sales force to bring in new clients and deepen its relationships with them, she said.