Running a 150-year-old company that remains one of Canada’s most financially successful as if it’s a startup might seem counterintuitive, but it’s become integral to the way CIBC conducts business.
The Canadian Imperial Bank of Commerce, whose predecessors opened in 1867 and 1875 before merging in 1961, has been nominated in the Large Private Sector transformation category of ITWC’s Digital Transformation Awards for pursuing a digitally-driven agenda, best illustrated by last year’s launch of CIBC Live Labs, a digital innovation hub designed to operate like a tech startup.
Though nominations for this year are now closed, we’ll be covering every nominee that we’ve received in ITBusiness.ca ahead of the big event.
The seed that would germinate into Live Labs is a familiar one: “Like many banks, digital at CIBC had been run as another service channel alongside branches, ATMs, and telephone banking, contributing two per cent of sales to the bottom line just three years ago,” CIBC digital channels consultant Sam Li writes in his nomination form.
Now, however, “the explosive growth of digital and its potential to significantly change the traditional way consumers interact with their bank, along with the emergence of fintech, have created an urgent need for strong leadership to drive a client-focused digital agenda,” he adds.
Two projects in particular have demonstrated the positive impact of digital transformation for CIBC executives, he writes: Live Labs, and Mobile Quick Release, a product-centric mobile development team that ships new features to clients every 60 days.
Encouraged to experiment, test, and develop ideas that may sound less than profitable according to conventional measures, thus far the Live Labs team has developed such projects as an Apple Watch banking app (“within weeks instead of months,” Li notes), and the CIBC Hello Home mortgage app, the first product of its type to reach the market.
Like any initiative, there have been challenges, Lee writes, noting that the majority of banks especially are risk-averse given the number of official practices they have developed alongside laws created to govern them over their long histories.
“Balancing client experience and risk appetite, CIBC modernized our risk appetite statement, updating our definition of ‘acceptable’ levels of risk and enhancing sound principles, policies, and practices for managing these risks,” Lee writes. “Through our digital transformation, we continue to evolve robust governance, to enable nimble responses to an evolving technological and regulatory environment.”
Yet overall, the impact has been positive: other recent digitally-driven changes have included an expanded mandate for the digital team that includes an enterprise-wide transformation of CIBC into “the bank of the future”; regular town halls in which leaders from the digital team have collaborated with other executives on product and service prototypes; and strategic partnerships with fintechs – “a significant departure from the previous strategy of building capability internally,” Li notes.
More importantly, he writes, digital services and innovation have become key to CIBC’s business model, which retains the goal but not the method of its 2014 counterpart: becoming number-one among Canada’s banks when it comes to client experience.
“In an age of disruption from non-traditional competitors and new entrants, innovation can be a real differentiator,” Li writes. “Whether it’s a new digital product, new technology, or new business model, Live Labs approaches challenges with this in mind.”
But does it pay?
For those wondering about ROI, Li notes that since embarking on its digital transformation journey CIBC has experienced:
- Increased digital sales contribution from two per cent or less to 12 per cent, with a target of 20 per cent by 2020;
- Growth in digital transactions to 85 per cent of day-to-day banking;
- Increased digital product and service sales from 250,000 in 2014 to a forecasted 1.1 million units in 2017; and
- Grown the CIBC digital team from 50 team members to over 250, with Live Labs instrumental in positioning CIBC as a leader in innovation, and a prime destination for technically inclined talent, he says.
Along the way, CIBC has also become the first bank to offer such innovative solutions as:
- Electronic cheque deposits;
- CIBC banking for Apple Watch;
- CIBC Hello Home mortgage app;
- The ability to open digital cart accounts using a mobile device; and
- Natural language voice search for mobile banking.
Finally, as a result of the digital team’s work, CIBC has earned the following awards, Li writes:
- Top scores for online and mobile banking functionality by Forrester;
- Best overall mobile banking in Canada by Surviscor;
- Canadian fintech FI innovator of the year;
- Silver for most innovative organization at ACT Canada’s IVIE awards.
And on June 14, it hopes to add an ITWC digital transformation award to that shelf.