Brian Porter’s Remarks to the Canadian Club of Toronto
Getting the long view right
Address by Brian Porter
President and Chief Executive Officer, Scotiabank
To the Canadian Club of Toronto
February 12, 2016
Thank you, Dany Assaf, for that kind introduction.
And thank you all for the warm welcome.
I’m very pleased to be here.
Early last week, Larry Fink, CEO of BlackRock – the largest global investment manager – wrote a letter to CEOs of the world’s leading companies.
His message was direct and simple:… Instead of focusing on quarterly results, companies and investors should focus on the longer term.
I liked the letter so much, I shared it with our Board of Directors and the entire senior management team at Scotiabank.
Implementing a smart, forward-looking strategy is exactly what we’re doing to build an even better bank.
Long-term thinking is important for all companies.
And, I would also argue that it’s important for all levels of government,… especially during times of economic volatility.
With that in mind, I’m grateful to the Canadian Club for the opportunity to:
Firstly, articulate Scotiabank’s forward-looking vision to build an even better bank, and
Secondly, highlight the need for smart policies that will deliver long-term growth for Canada. Let me begin by setting the scene.
It has been nearly a decade since the world entered the global financial crisis and the global economy is still feeling tremors.
Today, we’re seeing a fundamental disconnect between financial markets and the real economy.
This disconnect is unsettling, and threatens business and consumer confidence.
First, let’s talk about some of the dynamics that are driving markets.
In the case of oil, prices are being driven by geopolitical factors, now more than ever.
This is creating widespread market disruption.
In the case of central banks and governments, they are reacting to sluggish growth in a number of ways, including:
These policies, particularly negative rates, are challenging for commercial banks – which act as an important shock absorber and help to stimulate and support economic growth.
Market uncertainty is also driving a sharp flight to quality, and investors are seeking safety in government bonds, with levels of demand we have not seen in decades.
The combination of these factors has led to significant volatility and very skittish markets.
Business leaders and consumers see all of this, which is then amplified through the media… with dire warnings and pre-mature talk of recession.
This only fuels a negative cycle.
Canadians see oil at 27 dollars a barrel.
They see that the dollar has fallen to the lowest level in the past decade.
Over time, confidence erodes and consumers stop spending.
Businesses don’t invest in new equipment.
They don’t hire new employees.
And because businesses are not taking steps to grow and innovate, economic activity deteriorates.
This slowing growth only fuel investors’ anxiety and thus the cycle continues.
But, here is the interesting thing: the real economy is actually growing, albeit modestly.
You would never know it watching global financial markets in the last two months.
Earlier this week, I met with some of Scotiabank’s customers with operations throughout North America and around the globe.
They told me that their businesses are performing well.
They’re investing in their businesses and in new technology.
They’re hiring new employees.
And on average, they’re feeling optimistic about the future.
There is also evidence that shows that Canada’s economy is slowly pivoting and becoming more diversified.
And there are good things going on in our export economy.
I believe industry and governments can help to accelerate Canada’s economic transition by investing in innovation, spending smartly and boosting competitiveness.
It’s important that we look beyond today’s uncertainty and take action to position our businesses and our country for future success.
At Scotiabank, we are working to position the Bank for success through our own strategic agenda.
Our agenda sets out a comprehensive plan to build an even better bank in the current economy, and over the longer term.
Through the digitization of the Bank, we are reducing pain points to consistently deliver an excellent customer experience.
This is happening in many ways across the Bank, as reflected in our renewed purpose statement.
As part of our commitment to act digitally, we recently unveiled our new purpose statement through an interactive, online discussion with our nearly 90,000 employees.
This statement is a powerful mechanism that galvanizes all Scotiabankers around a common belief:
“We believe that every customer has the right to become better off”.
This strengthened belief is influencing every decision we make.
For example: When it comes to online and mobile banking, our objective is to give our customers the best experience there is, anywhere.
We’re investing in our employees and building a stronger leadership team – one that better reflects the diversity of our customer and employee groups.
We’re making investments in new channels, digital capabilities and productivity improvements, all aimed at becoming low cost by design.
Finally, we’re shifting our business mix to build deeper relationships with all of our customers.
As a case in point, we’ve made very good progress in growing our payments business here in Canada – and the majority of our growth has been with existing Scotiabank customers.
Each of these priorities is critical to our long-term success.
But today, in the interest of time, I will expand on only one: that is, our digital transformation.
The ever-quickening pace of technological development is having a profound impact on all industries and economies.
To keep pace with these developments, we’ve been doing some exciting things at the Bank.
To begin, back in 2012, we had the foresight to acquire ING Direct Canada, which is now Tangerine.
This ranks as the largest acquisition in our corporate history – and I believe it is one of our most important.
It started as a direct savings bank with a small number of products and tremendous potential.
We’re expanding Tangerine to become a direct, everyday bank, with a broad suite of digital products that are innovative and customer-driven.
For example, we’re particularly excited about Interactive Voice Recognition, an innovation that allows us to authenticate our customers simply and quickly, just by the sound of their voice.
In a few seconds of normal conversation between a customer and our contact centre, we can authenticate the customer without the need for banking PINs, passwords or security questions.
At the same time, we reduce the potential for fraud.
Our customers win, and Scotiabank wins.
These kinds of innovations demonstrate why Tangerine is widely recognized for its leading customer experience.
In fact, for the last several years, Tangerine has topped J.D. Power’s ranking in customer satisfaction among all Canadian banks.
I’m pleased to tell you that Tangerine’s reputation for convenient everyday banking extends beyond Canada’s borders.
On a recent European business trip, I overheard a couple of global banking executives talking about Tangerine.
They were discussing how easy it was to open a Tangerine account, and said that they wished their banks were as flexible.
This experience reminded me of Tangerine’s strategic importance to Scotiabank.
It also shows why Tangerine – a bank that already has two million customers – is poised to grab an even bigger share of the some 12 million Canadians who are ready to do their banking primarily through digital channels.
Another exciting development is the launch of Scotiabank’s Digital Factory.
Scotiabank already has developers, user experience designers, engineers and data scientists creating digital solutions to reduce friction points in key customer areas.
We’re aiming to deliver the best on-boarding experience and service in the market, bar none.
In the case of online credit card applications, we have significantly improved the process to on-board new customers, which we can now do in just 2 minutes.
What’s more, our customers already have access to a much wider array of features to manage their credit cards, including:
When our new Digital Factory opens this spring, hundreds of our employees from all parts of the Bank – including technology and our business units – will be working side-by-side under one roof, pursuing one objective:
That is, building digital solutions that deliver a world-class customer experience.
Finally, we’ve been busy building several important partnerships in the digital space.
We know that collaboration is essential for driving success and evolving with our customers’ expectations.
That is why we were very pleased to recently launch the Scotiabank Centre for Customer Analytics, in partnership with the Smith School of Business at Queen’s University.
Scheduled to open this month, the Centre will be a key asset for Scotiabank in developing world-class analytics capabilities.
I am confident that this innovative partnership will produce great solutions for our customers.
Many people talk about digital as being disruptive.
At Scotiabank, we’re embracing the digital transformation to:
The bottom line is this: Scotiabank has a longer-term strategy.
It’s the right strategy.
And we will continue to do what’s necessary to build an even better bank.
In the same way, I would encourage political leaders to articulate and implement longer-term growth plans to build an even better Canada.
In particular, to boost economic growth, the government should develop a forward-looking industrial strategy.
This strategy should focus on free and open trade, reinforced by smart investments in economic infrastructure and productivity.
Trade has contributed to Canada’s rise as a great and prosperous country.
Free and open markets help to create high-paying, high-quality jobs and provide businesses with opportunities for growth.
That is why we were very pleased by the news that Minister Freeland had signed the historic Trans-Pacific Partnership agreement.
The agreement will link Canadian goods, services and investments to more than 800 million consumers.
It will also help to solidify Canada’s advantageous position within the NAFTA supply chain.
As Canada’s international bank, Scotiabank already has operations in 9 of the 12 TPP countries, with a particular focus on the Pacific Alliance.
It is in Canada’s national interest to ratify the TPP quickly.
And when the agreement is implemented, Scotiabank will be able to help our Canadian and international customers take full advantage of the TPP marketplace, and grow the Bank’s services across the trading bloc.
A strong trading network is an economic imperative, but without the proper infrastructure, Canadians simply cannot take full advantage of it.
Put another way: What good are open borders if we can’t get some of our goods and services to other countries?
That’s why we support the Trudeau Government’s commitment to make sizeable investments in infrastructure.
And during this time of slower economic growth, we would encourage the government to boost the amount and timing of these investments.
However, careful thought should be given to selecting which infrastructure projects merit an investment.
The government should prioritize projects that will safely move people, ideas and our abundant natural resources – projects that are environmentally and socially responsible.
Projects that will create jobs and serve Canadian families and communities for years to come.
One such project is the Energy East pipeline: An entirely Canadian project that is good for all Canadians.
According to a recently released economic impact study by the Conference Board of Canada, Energy East would create tens of thousands of jobs.
It would generate billions in tax revenues and inject tens of billions into the Canadian economy.
And it would also help to address Canada’s startling lack of energy infrastructure in an environmentally responsible way.
At a time when the price of oil is low, conversations about pipelines might seem counter-intuitive.
But, in fact, these conversations are long overdue… and as timely now as ever.
I’m reminded of the example set by the Right Honourable C.D. Howe, one of Canada’s most successful Cabinet Ministers who helped to transform our economy, post-World War II, and position Canada for future prosperity.
In that time, debate raged over the construction of the Trans-Canada pipeline, until one day, C.D. Howe stood in the House of Commons, and explained that the pipeline was, and I quote: “truly national [in] scope, which we must either launch now or see languish for years to come.”
Shortly thereafter, construction on that pipeline began.
As it would happen, a portion of that pipeline could be converted for use in the Energy East project.
Just as C.D. Howe argued then, we must make global market access for Canadian energy a national priority today, and then make it a reality.
Finally, a comprehensive industrial strategy must address productivity.
As I’ve said, Canada’s strong trading network creates enormous opportunities for Canadian businesses.
It also opens Canadian firms up to greater competition, which can make us all stronger.
While this is good news for consumers, it will present challenges for firms that have been slow to innovate.
To boost Canada’s productivity, government, industry and researchers must work together, and also do their share.
Governments should do what they can to create an attractive environment for investment.
That means keeping taxes competitive, supporting R&D and reducing “red-tape”.
But governments can’t do everything, nor should they try.
The private sector must step up, take business risks and invest in innovative solutions for the longer term.
At the same time, colleges and universities must collaborate with industry.
They should look at new and better ways to train Canadians for highly-skilled jobs.
Our partnership with the Smith School of Business is a good example.
I’ll close with this: I have the good fortune of regularly travelling across our Bank’s footprint and beyond.
And when I travel, I proudly represent two brands: I am a Scotiabanker and I am a Canadian.
I can tell you that both brands are very highly regarded around the world.
This is not an accident. It’s also not a given.
I can assure you that Scotiabank is committed to building an even better bank…for the benefit of our customers, our stakeholders and the communities we serve.
I would encourage the federal government to do all that it possibly can to maintain Canada’s strong reputation and position for the benefit of all Canadians.
Once again, I want to thank you, Dany, and the entire Canadian Club team for the opportunity to be here, and thank you all for your attention.