Fintech firms could change the future of Canada’s banks
Canada’s banking industry is facing increasing competition has financial technology firms continue to grow in popularity. Coupled with weakening demand for mortgages, with less young people becoming first time buyers, and consumer debt on the rise, the future of the traditional bank is set to face big changes.
The industry has already upped its digital offering by introducing more online services, in an attempt to combat fintech competition, introducing more online services. And despite transitional times, pre-tax profits continue to trend upwards and are predicted to hit over $95 billion this year, according to The Conference Board of Canada's latest Canadian Industrial Outlook: Banking.
The demand for technology has seen the job market for IT related jobs in the sector boom, putting pressure on the industry to supply higher paid positions. However, the resulting productivity gains have been enough to outweigh the negative impact of the shift to higher paid workers.
"The impact of financial technology firms on the industry is growing, and to date this has been primarily beneficial to the industry. Productivity continues to increase considerably and has been a key driver behind its successful financial performance," said Michael Burt, Director of Industrial Economic Trends for The Conference Board of Canada. "Technological advances are also impacting Canada's insurance industry, which is changing the way they do business."
Meanwhile, tougher mortgage regulations and a continual upward incline on interest rates ahead,mean that demand for mortgages are set to drop over the next several years. These changes in the housing market are already being reflected in cities such as Toronto, where recent figures revealed home sales were down 39.5% year-on-year in March.
Furthermore, growth in consumer loans and lines of credit are also expected to remain slow.