Despite a tight labor market, Canada’s largest banks started fiscal 2022 on a hiring binge, adding personnel to bolster digital capabilities.
Their expansion in the face of rising prices might put profit margins at risk, especially when higher interest rates put downward pressure on lending volumes.
“It’s a Catch-22,” said Bryden Teich, portfolio manager at Avenue Investment Management. “You don’t want them aggressively raising their costs at this point in the economic cycle,” says a short-term profitability expert.
However, he continued, not expanding employees when clients are looking for more assistance, customized solutions, and improved digital services would damage long-term growth.
According to reporters’ examination of the banks’ disclosures, the top five banks boosted their Canadian full-time equivalent positions to a record 171,730 in the first quarter of fiscal 2022, up 4.3 percent from a year ago and at the quickest rate in at least three years.
In March, the unemployment rate in Canada’s banking, insurance, and real estate industries hit a new low of 1%, the lowest of any industry.
According to Carolyn Hamer, a partner at Deloitte who specializes in labor challenges, banks are attempting to close the digital gaps identified during the epidemic and are becoming more aggressive as they compete with huge technology firms.
Even in a tight labor market, she added, banks can turn to contractors and gig workers, especially if employees want greater freedom.
According to Karen Collins, the bank’s head of personnel, Bank of Montreal has been increasing its technological operations as well as personal and commercial banking in Canada, the fastest among the big lenders.
BMO wants to upgrade technological infrastructure and replace ordinary branch services with more advising products, Collins said. Digital channels now account for more than a third of sales, and 90 percent of self-serve transactions take place outside branches, primarily online.
If their roles allow, BMO offers remote working freedom, particularly to technical personnel.
Employee growth at Royal Bank of Canada peaked in the third quarter of 2021, but the bank is still growing its technology workforce, having added 2,000 technology roles last year, roughly half of which were external hires, according to Helena Gottschling, chief human resources officer.
“It’s more difficult to find those crucial abilities since we aren’t the only firm hiring, and… (we receive) fewer applications than three years ago,” she explained.
“Compensation usually climbs to the top as a key lever in a tight talent market,” she noted. “We know who our best talent is,” says one executive, “and we compensate them accordingly.”
While this may increase labor costs more than projected, improving margins from higher interest rates may balance this, according to Jason Boggs, PricewaterhouseCoopers’ Canadian banking and capital markets head.
This year, Toronto-Dominion Bank aims to hire 2,000 new IT employees.
Scotiabank’s hiring increase, according to Anna Zec, senior vice president of human resources at Bank of Nova Scotia, “reverses a significant decline in recruitment.”
She told reporters that Scotiabank, which had the second-highest growth, intends to continue to strengthen Canadian banking and wealth management, as well as its digital capabilities.
“Customers are increasingly demanding digital solutions… I don’t think the demand for IT talent will ever ease down “she stated “I believe 2022 will continue to be a difficult year in terms of talent.”
