From Trump to technology: Canadian bank CEOs weigh in on what's to come

The leaders of Canada's big banks don't speak in public very often, and when they do they tend to be cautious.

But at an investor conference Tuesday in Toronto, several top execs took questions on a wide range of topics, from the impact of Ottawa's new mortgage rules, to the incoming administration in the U.S. and the swift technological changes that could have major impacts on the banking business.

Here are a few things the bosses of Canada's big banks are focusing on.

A political shift south of the border

David McKay, CEO of the Royal Bank of Canada, told people gathered at the RBC 2017 Canadian Bank CEO Conference that his bank expects to benefit from policies that could spark growth in the United States.

"That would be a boost. It would potentially lead to higher [interest] rates which is very good for our franchise in the United States," said McKay, who runs Canada's largest bank.

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Bank of Montreal's Bill Downe cited the deep ties between the Canadian and U.S. economies, saying the Canadian economy "is going to move in lockstep with the U.S. economy."

"Overall a growing economy is good for all the businesses in Canada."

But there was also uncertainty about what a Trump administration might bring. 

"I think that there's some inconsistencies in terms of the messaging about protectionism, good tax policy and good trade policy," said the CIBC CEO Victor Dodig.

"What actually gets implemented, and how it'll look, and what kind of economic benefit that will deliver is yet to be seen. I'm not going to predict where that might go."

Innovation and a push to target younger clients 

Many younger Canadians have turned their backs on the traditional bank branch model, preferring instead to deal with finances online. 

"How are they going to embrace banking going forward?" asked CIBC's Dodig. "I think that the innovation that we're going to see in this generation is yet to come."

TD's CEO Bharat Masrani flagged payment processes as a potential area for disruption.

"Do I see a world where even without a phone you can make a payment? I can," Masrani said, though he didn't fully explain what would replace it.

Banking on artificial intelligence

Artificial intelligence and its potential is something the CEOs are paying attention to.

"It's a fascinating technology," RBC's McKay said. "There's a lot of investment discussion about A.I. creating new capabilities, and it's a tool we're very excited about harnessing within our own organization."

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National Bank of Canada's Louis Vachon said his bank is already using artificial intelligence in the stock trading part of its business, and plans to explore using more in the customer relationship side.

But he also stressed the importance of keeping a human connection.

"We like human expertise, human judgment, human feelings, enhanced by technology — not completely replaced by technology," Vachon said.

BMO's Downe weighed in on finding a balance between enabling customers to serve themselves using technology while still offering human customer service.

"I think the big challenge is going to be maintaining a relationship," Downe said. "When human contact is required to me is the most interesting part of the whole equation."

Big changes at bank branches

Where that human connection happens is also being re-evaluated by some of the big banks.

For example, CIBC is transforming its branches into "banking centres" that it says will be smaller and more advice-based rather than transaction-based.

National Bank's new branches are also significantly smaller than its older locations, and Scotiabank is testing two new models: an express branch with three or four employees and ATMS for day-to-day banking, and what the bank calls a "solutions" branch for larger banking decisions like mortgages and other loans. Scotia also plans to close another 5% of its network of branches over the next few years.

Some things never change — mortgages matter

One of the banks' big business areas is also going through major changes, after Ottawa's new rules around mortgages rolled out in the fall.

Mortgages remain one of the core and most profitable businesses for all of Canada's major banks.

RBC's McKay expects demand from first-time homebuyers to slow, but he still expects his bank's overall mortgage business to remain relatively healthy, citing immigration and other positive trends in household formation.

"We support those policy changes because we want a long-term sustainable market for all Canadians," McKay said of Ottawa's revised mortgage rules.

CIBC, the fourth-largest mortgage player in Canada with $180 billion in mortgages, sees signs of a cooler housing market in some areas. 

"Since the rules have come in place in Vancouver specifically, we've seen our growth slow with the market," Dodig said.