Brian Porter Speech - March 31, 2016
Brian Porter’s Remarks to students at Ivey Business School, Western University
Address by Brian Porter
President and Chief Executive Officer, Scotiabank
To Ivey Business School at Western University
March 31, 2016
Good afternoon, everyone.
I want to thank Western University and the Ivey Business School for their hospitality.
And, of course, let me thank each and every one of you for being here, even though Dean Kennedy tells me your attendance is mandatory!
I'm very happy to be with you, and honoured to serve as this year's J.C. Taylor Distinguished Lecturer.
In a few minutes, Professor Haggerty will lead a discussion that connects what you're learning in the classroom to what we're seeing in the real world.
After that, we'd be happy to take your questions.
To begin, I'd like to tell you about the exciting change agenda we have at Scotiabank to make us an even better bank,
And, since many of you will go on to become business leaders, I thought I'd talk about my role, as CEO, in creating the necessary conditions for that change agenda to succeed.
The pace of change in almost all industries is staggering, and it's being driven by many factors, including:
- technology and the power of mobile;
- changing consumer expectations and behaviours;
- moderating economic growth around the globe; and
- intense competitive forces.
Banks are not immune to those pressures.
In fact, there is an entire sub-set of technology players who are making inroads into the traditional banking space.
This group – known as FinTech – is savvy, sophisticated and increasingly well-funded.
My job, among other things, is to define a change agenda that recognizes and responds to these pressures.
Our agenda is focused on 5 critical areas:
- Becoming truly customer-focused;
- Building a stronger leadership team;
- Becoming "low cost by design";
- Improving our business mix; and
- Driving a digital transformation.
To successfully implement our agenda, we need to become much more agile.
And therein lies our challenge.
You see, Scotiabank is a very large and complex organization and, at 184 years old, we're older than Canada itself.
We have nearly $1 trillion in assets and we invest more than $2 billion each year in technology to "keep the lights on", defend against cyber-security, improve the customer experience, and so on.
The Bank serves 23 million customers in more than 50 countries, with almost 90,000 employees.
Our size is not an excuse, but it is our reality.
So, if we want to meet the needs of our key stakeholders, we must change.
Our employees want us to remain an employer of choice.
Our customers expect an excellent experience.
And our shareholders deserve a fair return on their investment.
So, what are the most important parts of my job in driving our change agenda?
To begin with, I had to define a future vision, and get the support of our key stakeholders to carry out that vision.
Those stakeholders include:
- Our Board of Directors;
- Our leadership team;
- Our investors;
- Our 100 or so regulators across the globe; and
- Our employees.
I then have to empower the organization to drive towards that vision.
That means making the necessary resources available,
Giving people permission to do things differently,
Role-modelling the right kinds of new leadership behaviours,
And putting the right leaders in place, and giving those leaders the freedom to make changes as they see fit.
It also means taking more business risk... because transformative change comes with some risks, and we'll certainly make a few missteps along the way.
I'm convinced that we have the big picture right, it now comes down to our ability to execute, and Scotiabank has always been very good at execution.
One of the most important things that we're doing as a management team is adapting the Bank's culture, so that we can achieve our longer term goals.
We have a great culture at Scotiabank, but even healthy cultures must evolve.
It's also critical to set the right cadence for driving our change agenda.
Too fast and we can have some unintended consequences.
Too slow and we lose ground to our competitors.
Finally, we have to strike the right balance between creating long-term value, and delivering short-term results.
This is a challenge for CEOs at all public companies.
Last month, 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 value creation over the longer term.
I've sent that letter to Professor Haggerty, and as future business leaders, I encourage you to give it a read.
We're already seeing many positive changes across the Bank, and I'm confident that we're making the right trade-offs.
This takes me to the digital aspects of our transformation.
In this day and age, we don't separate our digital strategy from the Bank's overall strategy.
Digitizing our customer interfaces, our distribution channels and our internal processes are all critical to delivering on our overall vision.
While we have many efforts underway across the Bank to drive our digital strategy, today I'll touch briefly on three of them.
Companies such as Apple, Amazon and many others have changed the service paradigm for everyone.
They provide consumers with a frictionless experience, and consumers now - rightfully - expect that type of experience from every industry.
We learned about the ever-evolving customer service landscape during several visits to Silicon Valley, last year.
In fact, it was so important to see these changes first-hand that our Board of Directors met in Silicon Valley for two days, last fall.
At Scotiabank, we're embracing the digital revolution to:
- become more customer-centric;
- reduce pain-points for our customers and our employees;
- improve our speed-to-market; and
- achieve greater cost efficiencies.
Let me describe a very real and tangible example.
Just over a year ago, Kyle and Randy led a major innovation effort at the Bank, something we call "Rapid Labs."
The labs are like FinTech incubators within the Bank.
They re-imagine the customer experience by bringing technology and business teams together... side-by-side.
In fact, if you toured one of our Rapid Labs, you might think that you were in a FinTech start-up.
So far, we've launched Rapid Labs focused on customer on-boarding for key products, such as:
- credit cards,
- day-to-day bank accounts, and
- small business loans.
And, in April, we'll launch our seventh Rapid Lab, to improve on-boarding for our Wealth Management customers.
From our work in the Labs, we are:
- simplifying customer applications and reducing wait times;
- allowing all required documents to be provided digitally;
- reducing or eliminating the need for visits to a branch; and
- providing customers with real-time status updates.
At the same time, the Labs are,
- improving operating efficiency;
- reducing data entry errors;
- lowering fraud risk; and
- improving through-put rates.
The labs also act as a "lighthouse", guiding our efforts to become more customer-focused and performance-oriented.
We're building on the success of our Rapid Labs through Scotiabank's Digital Factory, which we announced last fall.
The Factory will house our Rapid Labs, as well as our teams focused on customer experience design, innovation and analytics, in a stand-alone building in downtown Toronto.
And when the Factory opens later this year, hundreds of Scotiabank employees will be working together, under one roof, pursuing one objective:
To develop digital solutions that will reduce pain points and deliver an excellent customer experience.
I'm very pleased to announce that we have created two summer intern roles at the Factory for Ivey students.
After our session today, Chris Lee - who works in the Factory - will be hosting an information seminar about those positions.
When it comes to offering a world-class customer experience, Scotiabank is fortunate to have Tangerine - our own fully digital Bank - as an important competitive advantage.
Through Tangerine, we offer an outstanding experience across an array of products and services and I'm proud to tell you that Tangerine leads the entire Canadian banking industry in customer satisfaction.
Tangerine truly is our hidden gem, and is a great example of what a bank-of-the-future can be.
In addition to delivering a great customer experience, Tangerine also delivers great financial results: Its business model serves 2 million customers with less than 1,000 employees.
This is impressive when you consider that we serve the Bank's other 21 million customers with almost 90,000 employees.
We're confident that Tangerine will grab an even bigger share of the many millions of "direct ready" Canadians who are interested in banking primarily through mobile or digital channels.
In short, Tangerine acts as our internal "disruptor" and it is a key part of our digital strategy.
The last aspect of our digital strategy that I'll comment on is the importance of strong and innovative partnerships.
We have always believed that relationships are a great way to drive business value, and we are proud of our record in this area.
Our SCENE Loyalty Program, for example, is one of the most successful programs here in Canada, with 7.5 million members and very attractive demographics.
Today, we're focusing on building strategic partnerships in the digital space, and in particular, with FinTech players.
We want to work with FinTech firms, and they want to work with us.
We benefit from their creativity and agility, and they benefit from our stability and base of 23 million customers.
For instance, we're working with Kabbage (that's Kabbage, with a "K") - a U.S. based online small business lender - to dramatically change the way that our customers apply for and access loans.
We've also partnered with Sensi-bill, a Toronto-based start-up that was incubated at Ryerson University's Digital Media Zone.
Sensi-bill has developed a great solution for our mobile banking app that makes it easier for our customers to manage their purchase receipts.
Finally, and one of the main reasons why we're here today, Scotiabank has a long history and a strong relationship with Western University, and the Ivey Business School.
In fact, Peter Godsoe, one of our former CEOs, was Chancellor of this University.
In this digital age, we saw an opportunity to strengthen our relationship to deliver even greater value.
To successfully grow the Bank's digital capabilities, we must:
- foster innovative thinking and research,
- attract the right talent, and
- create opportunities to showcase our digital commitment.
With those factors in mind, I am delighted to announce the new Scotiabank Digital Banking Lab, right here at Ivey.
This partnership involves a $3 million investment by Scotiabank, and is aimed at driving significant value.
This new Lab includes many exciting opportunities:
- It will drive research and case study development on digital banking.
- It will create internships and field study opportunities.
- And it will feature hackathons, a digital Speaker Series and an annual case competition.
More details will be available in the coming weeks, and we're confident that this partnership will create win-win outcomes for Ivey and Scotiabank.
Let me wrap up by saying that this is an exciting time for the banking industry.
It may seem that "getting the technology right" is the hardest part of our transformation,
But as I said at the top of my remarks, the most important aspects of driving our transformation are:
- having strong and committed leadership;
- putting the right people and talent in place;
- adapting our culture;
- setting the right pace; and
- striking the right balance between short and long term growth.
There are tremendous opportunities being created in the digital space that everyone in this room has a chance to participate in.
University leaders and the faculty must continually adapt the curriculum to develop future leaders with the right skill-sets.
As students, each of you must bring the right mindset to actively participate in Canada's digital future.
And we, at Scotiabank, must create the right opportunity-set, so that our customers and shareholders will benefit from the wonderful talent in this room.
If we all do our part, the future will be very bright indeed.
Thank you all for your attention, and my sincere thanks to Western and Ivey for having me.