Top 5
Although Canada is traditionally a resource-based economy, it is well diversified. Current efforts to expand knowledge-based industries and service sectors are supported by the country’s robust banking sector, which is facilitating the growth of both small and large businesses. With five major national banks and a number of smaller regional players, the reach of national networked banks is wide and has also made Canadians fast adopters of new technology. Following a number of reforms to Canada’s Bank Act in recent years, the sector is showing great regulatory strength in terms of governance, which has been aided by the fact that Canada was not affected as badly as many countries during the financial crisis.
Changes in commercial customer behaviour, which are driven most notably by the confluence of mobile networks, rapid digitisation, customer analytics and cloud-based computing, are transforming the competitive landscape in all industries and prompting reviews of long-held business models and inviting new entrants. This transformation can be seen in banking also, as exemplified by the pace of innovation in the payments space. World Finance had the opportunity to speak with John MacAulay, Head of Canadian Commercial Banking for BMO Bank of Montreal, about changes in the industry, the importance of relationships and how the bank is striving to get more women in the workplace.
We want to target growing and dynamic market segments – we see women entrepreneurs as one of the most vibrant segments
in Canada
Relationship building
The importance of customer relationships is vital for the continued development of the banking sector. “We know that our financial performance as a company is grounded in the day-to-day realities of the people and companies that bank with us”, said MacAulay. “These customers expect their bank to guide and support them, especially when the 24-hour news cycle generates mixed and often confusing signals about what will happen next.”
BMO has a highly involved approach to relationship management with its clients, striving to meet changing needs and preferences. By offering products such as Deposit Edge for scanning and depositing cheques, customers can benefit from faster payments and greater convenience. While PaydPro also saves clients a great deal of time as it transforms mobile devices into debit and credit terminals. “The primacy of the customer is our focus. Nothing is more vital to us. In fact, our bank’s stated vision is to be the bank that defines great customer experience”, said MacAulay.
“In the commercial banking space, that means seamlessly bringing the full value of BMO to every relationship – and growing with our customers.” The bank regularly engages with its customers in order to assess their evolving needs and then provides customised solutions that draw on a full range of products right across the BMO Financial Group. The firm calls the approach “Relationship Management the BMO Way”; through a regular cadence of contacts over the course of a year, a recipe for making those contacts valuable and a commitment to excellence, customers feel assured that they can rely on the service.
Focused approach
BMO Commercial Banking is currently concentrating on industries in Canada that are exhibiting opportunities for growth. For example, the manufacturing sector sees great promise in Ontario and Quebec. With the US economy strengthening, low fuel prices and the low Canadian dollar, experts expect the sector to remain strong for some time to come.
The bank is also making gains among small businesses, again in Ontario and Quebec, where the service industry is benefiting from renewed economic growth and the low dollar. “We are particularly proud of our strength in Aboriginal banking”, said MacAulay. “We have 14 Aboriginal branches and we are one of two major banks with an on-reserve housing loan programme.” BMO is the only bank to have been honoured for four consecutive years with the Canadian Council of Aboriginal Businesses’ Gold Progressive Aboriginal Relations Award.
BMO is also an industry leader in providing customised financial solutions for Canadian farmers. The bank’s agriculture banking specialists focus on understanding the challenges of the industry, its cyclical nature and the need for financial banking solutions that are convenient, affordable and adaptable. “Customers see our commitment to the industry, to their business, and they have confidence that we have the right people in place to help them succeed”, said MacAulay.
Women in business
The bank is also making a vigorous effort on a key growing segment – that of women entrepreneurs, which now represents over half of new small business start-ups in Canada. “It is our goal to be seen as the bank for women in business”, said MacAulay. “We want to target growing and dynamic market segments – we see women entrepreneurs as one of the most vibrant segments in Canada”, he added. To show its commitment, BMO recently announced that it is making an additional $2bn in credit available to women-owned businesses across Canada over the next three years. By having more of the bank’s balance sheet available to women, they are afforded more certainty in terms of credit, which enables them to invest in their businesses, expand their operations and create more jobs for Canadians.
The women in business segment in Canada is indeed vibrant. The number of women in professional roles has grown 35 percent over the past 20 years. Women retain an ownership stake in 47 percent of Canada’s 1.6 million SME enterprises and majority ownership in 16 percent.
“The number of self-employed women is up 17 percent over the last decade compared to a five percent increase for men [see Fig. 1]. And we already know that women business owners feel a significant amount of confidence in the Canadian economy”, said MacAulay. A recent BMO study found that 66 percent of women surveyed have a positive economic outlook for the upcoming year, and nearly half expect their businesses to grow.
BMO’s commercial bankers are observing impressive growth in parts of the economy where small businesses play a vital role, such as knowledge-based industries, agriculture and professional services.
Professional services
Professions that require specialised training is a sector that is quickly becoming recognised as needing specialised expertise from financial institutions. “We know from our own surveys that two-thirds of Canadian entrepreneurs say the professional services sector represents an attractive investment opportunity”, said MacAulay. Those entering the professional services space often require a number of credit facilities in order to function, such as operating lines of credit, term loan financing, as well as acquisition and succession financing. There is also a growing need for finance in terms of equipment, leasehold and real estate in the growing sector. Moreover, many professional services need training in the field and so must consider these costs also.
Through its commercial bankers BMO offers the support required to such industries, including funding for schooling, financing for the business or assistance with succession. “We aspire to be the bank of choice for Canadian businesses from start-up through growth and ongoing expansion. That means having the best bankers on the street, providing top-notch relationship management and the solutions that our clients need to fulfil their goals”, MacAulay explained. With so much growth expected in the areas that are being focused on by BMO’s commercial arm, it seems the bank has placed itself in the best position to seize the favourable opportunities that are currently unfolding in Canada.
BMO Bank of Montreal is winner of the World Finance Banking Award for Best Commercial Bank, Canada 2015
