The Canadian financial services industry is rapidly transforming. Banks now position themselves as technology companies, and for good reason: They’re part of a global digital evolution.
But banks must reckon with a post-pandemic technology landscape. Decades worth of change occurred in the last few years with the rise of digital work, the shift of workloads to the cloud, and the increase in IT disruptions caused by cybersecurity incidents.This digital expansion left enterprises with more complex IT estates and presented cyber criminals with a broader and more opportunistic front to wage attacks. Add to the mix economic headwinds, geopolitical uncertainty and changing regulations that can necessitate dozens of new projects and millions more in investments, and it’s clear industry leaders will need courage to face the challenges ahead.
The financial services industry must not only continue its digital transformation journey but amplify and accelerate efforts. Digitization is a reflection of the worldwide trend towards greater resilience of technology in the financial space and slowing it down may increase the likelihood of cyberattacks and IT disruptions. Kyndryl’s 2023 state of IT risk report revealed that 92 per cent of organizations experienced an adverse event in the past two years that compromised or disrupted their IT systems.
The institutions that make strategic technology choices today have the potential to shore up, safeguard and deepen their digital footing to prevent these risks. This will solidify their lead in a tightening race with new financial players competing to be the safest choice for customers and their data. Digitization will continue to be part of prominent discussions at the board level as they consider the potential impact it has on brand productivity, reputation, and finances.
The approach by the financial services industry must encompass modernization, innovation and security. As the Canadian leader of a global company, I’ve seen how cloud migration and deploying next-generation hybrid environments can create engaging and secure customer experiences — while also offering a competitive advantage and better cyber resilience. There’s significant value to be unlocked by applying AI to automate business processes, as banks can then utilize data to gain insights that allow them to identify problems before they begin. This new technology also has a machine learning component which allows it to learn from past breaches and safeguard for the future.
To fuel innovation, the financial services industry can welcome collaboration with partners on the cutting edge of technology while strengthening a commitment to skills development. Investing in training and deepening skillsets in agile delivery and data science, for example, is critical as banks continue to modernize. Beyond the mainframe skills gap, the Canadian market’s cloud maturity still lags, according to IDC research, due in part to skills shortages. The financial services industry must also prioritize cyber resiliency as part of a sound security strategy. As threats become more sophisticated and frequent, a cyber resilient approach means anticipating attacks and being able to rapidly recover when they inevitably occur.
When I think about the essential services that technology powers today, our reality often seems closer to a Star Trek episode than daily life. But this overwhelming progress doesn’t depend on a single development. It involves incremental change — with networking, with software, with hardware, with cloud, with AI, and with strong direction from industry leaders.
Looking ahead, as the future of digital banking brings about an increasingly accessible ecosystem, traditional banks may need to broaden the services they provide to customers to stay competitive with large technology companies. We’ll likely see traditional banks integrate with fintechs, neobanks that offer new retail services, and the proliferation of open banking technologies. At the same time, institutions running legacy technologies that invest in the latest systems and tools will be able to launch new products in faster, better and smarter ways. And we can only imagine how AI will factor into — and improve — customer experiences.
We have the chance to actualize digitization that generates real value for financial institutions and powers the economy. Achieving this progress won’t come from a single development, but instead the incremental choices made by the financial industry in the coming years. With the right technology and a forward-thinking strategy, banks can progress their strong track record in digital innovation, helping Canadian businesses and citizens grow and prosper for years to come.