Neil Parmenter, the new president and CEO of the Canadian Bankers Association (CBA) in Toronto, admits that his resumé reads differently than those of previous heads of the CBA. Although his predecessors may have had deeper policy or public-sector experience, Parmenter’s background is firmly rooted in the delivery of crisp, clear messages.

“At times, [the CBA] has been a little quiet, and it hasn’t been particularly visible,” says Parmenter, who took the reins of the banking industry’s advocacy group in May. “In 2017, whatever walk of life you’re in – the government, a bank, a large corporation, a community organization – transparency and visibility are critical.”

Parmenter most recently spent 15 years with Toronto-Dominion Bank (TD), where he became senior vice president of corporate and public affairs and chief communications officer, as well as head of the bank’s government relations team. Before TD, Parmenter worked at Royal Bank of Canada, at a payments technology firm and at a public relations agency.

The CBA’s change in outlook comes at a critical juncture for the banking industry. Canada’s big banks, known for their stability and caution, are grappling with fundamental change. Among other challenges, customers are being tempted away by new and nimble digital competitors with low overhead and sometimes lighter regulatory burdens.

As a result, banks are scrambling to adopt new technologies and ways of doing business to avoid the fate of slow-footed incumbents in other, already disrupted industries. At the same time, Canada’s banks remain accountable to regulators to prove they’re fulfilling their obligations as the backbone of the country’s widely admired financial services system.

Perhaps the CBA’s biggest immediate challenge, Parmenter says, will be managing the digital transformation. In September, the CBA issued its submission regarding the Department of Finance Canada’s second consultation paper reviewing the financial services sector.

The CBA’s submission recommends that banking legislation be updated to give banks greater flexibility to partner with financial technology (fintech) firms. Says Parmenter: “The technology exists; the will among the banks [to adopt it] exists. But, sometimes, our members are just held back [by] the legislative framework.”

To get the word out about the priorities of the CBA’s 64 member firms – the Big Five, other domestic banks and foreign banks’ subsidiaries – to customers, employees, shareholders and the government, Parmenter has a packed speaking schedule that extends to the end of the year.

“What we’re trying to do here is share our stories where we can,” he says. “I think the industry does a lot of good. But, at the same time, we need to be available to take tough questions.”

Tough, uncomfortable questions arose earlier this year, when a major media outlet alleged that front-line staff at Canadian banks felt undue pressure to sign up clients for products. Ambushed by the negative publicity, banks responded that they follow strict codes of conduct and that internal investigations had turned up only isolated instances of irregularities. Still, the allegations stung an industry that prides itself on earning the trust of its clients.

“I’ve heard from many people working in the industry, coast to coast, that the stories [published] this past spring were painful,” he says. “They have committed themselves to the best interests of their customers and clients, and hearing these allegations hurts.”

The media storm prompted the federal government to hold hearings on the matter this past summer, with senior executives from the big banks defending the integrity of their sales practices, but saying they would step up oversight nonetheless. The CBA still awaits reports on the issue of bank sales practices from both the Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada, Parmenter says.

Safeguarding customers’ trust will remain paramount as banks adopt new technologies and offer digital services. Customers demand new, convenient digital ways to deposit, borrow, save, conduct transactions and invest, and they expect accountability when things go wrong. Balancing digital innovation while providing security and customer recourse will be the key to navigating this move to digital business platforms, Parmenter says.

“It’s one thing if I use a fintech to send you $25 and there’s a problem,” he says. “Well, what if it’s your house? What if it’s your mortgage? Your life savings? Your investments? You want assurances that you’re dealing with an institution that’s heavily regulated and, frankly, that has sophisticated control systems and personnel in place to ensure everything is being done securely – and that there’s an effective mechanism for recourse.”

As noted above, the CBA’s submission to Finance Canada asks the government to modernize legislation that significantly limits banks from working with fintech firms. Rules currently prevent banks from investing in companies that engage in commercial, non-financial services activities. For example, if a fintech firm’s main business is providing a payments service, but the firm also has a secondary, non-banking business, such as food delivery, a bank would not be able to invest in that fintech firm without obtaining government approval.

However, banks can be given greater latitude to partner with fintech firms safely, Parmenter says. If such updates are not made, the domestic banking industry runs the risk of falling behind its global peers.

“The last thing we want, as a country,” he says, “is to stifle innovation; to stifle investment in the digital space; to allow other jurisdictions to capture that investment, to grow the base and then to dictate what the new global standards are going to be.”

At the same time, the CBA is counselling the government to exercise caution as it considers the merits of “open banking,” a term used to describe the ability of third-party firms to access client data from a client’s bank to facilitate transactions.

Open banking has been adopted in limited ways in some foreign markets. The CBA counters that in the Canadian market, financial services firms are better able to meet these type of customer needs on their own.

“From the [CBA] members’ perspective, there’s clarity today about all the data they own, their accountability and the risk that they’re assuming by housing all those data,” Parmenter says. “The view is ‘If you’re asking us to open that and share the [data], it’s very opaque – very grey – [regarding] where the accountability ends’.”

The CBA also supports the government in its efforts to bolster cybersecurity by seeking co- ordination among industries and law enforcement agencies.

“This is not just a static issue,” Parmenter says, “Tactics are being evolved constantly by the bad guys. We need to stay in absolute lockstep with them, and get ahead of them where we can. That requires huge investments in technology; but, just as important, it requires significant collaboration.”

Parmenter acknowledges that technological change and innovation are having a significant effect on the makeup of the bank’s overall workforce, with traditional transactional positions being eliminated in favour of new hiring in technology-related positions, compliance and certain lines of business such as commercial lending. Parmenter says employment levels have remained flat over the past five to 10 years, but adds: “The nature of work and employment at Canadian banks is unquestionably changing, and changing at [a rapid] pace.”

Parmenter says he relishes the chance to lead the CBA through this period of change: “I just view it as an exciting time to have a front-row seat and to influence where the industry goes next.”

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