A big Canadian bank gets started on innovation via startups

I still remember the first time I was awed by mobile point-of-sale technology. I was in San Francisco (of course) and my cabbie had just pulled up to the airport. I was expecting one of those ancient credit card imprinters, but instead he handed me a tablet using Square technology, which took my credit card payment and automatically emailed me a receipt.

Can you remember the last time you were awed by your bank?

We haven’t seen a lot of innovation in the financial services sector because it hasn’t been “disrupted” yet.

Take content. When Apple decided to move into this space and launch the iPod, the content industry was completely disrupted. And no one saw it coming. (Well, maybe Apple did.)

“Retail and banking haven’t been disrupted yet,” says Jeff Nesbitt, vice-president of enterprise and innovation with Communitech, a technology hub in Waterloo. Sure, we’ve seen the early stages of disruption, but it’s nowhere near the mass disruption that we’ve seen in other industries.

TD has clearly seen the signs and has signed a five-year with Communitech to “explore innovation,” with a focus on the customer experience. The idea is to collaborate with local startups and work alongside tech companies to explore new technologies for the financial services sector.

TD, after all, is not only up against its traditional banking competitors. Tech firms can either be an enabler or a competitor, says Nesbitt. And there are all sorts of non-traditional players entering the market in areas such as mobile point-of-sale and digital wallets — from mammoth tech firms like Apple and Google to newer entrants such as Square.

So, for TD, it’s both an opportunity to develop ICT and a chance to scan the marketplace for non-traditional competitors.

“Let’s face it, TD is not a startup, so this gives us an opportunity to be right in the heart of some startups,” says Jeff Martin, senior vice-president and CIO of direct channels with TD Group.

As part of the agreement, TD has access to a rapid prototyping lab at the hub. “It opens up that community to us in a different way,” says Martin. “We can find startups before they get really big.”

There is, of course, a big focus on the mobile space, so a customer will get the same experience on their mobile phone as they do from other banking channels (an omni-channel for the financial services sector, so to speak).

“The goal is to be in an environment where not everything has to go to market — it’s about exploring ideas and technologies that can better the customer experience,” says Martin.

Even if an idea doesn’t go to market, it could be shaped into something different or bigger or better. “It’s a low-cost way to try stuff and fail,” he says. “When you’ve got an environment like this, it’s OK to fail, because failure isn’t really failure — it’s learning.”

And while mobile is an obvious “win,” and TD has a mobile dev team at the hub, it’s important for banks to keep an open mind — because we just don’t know where this is all heading.

“Is it a wearable? Is it an embedded solution? Is it IoE? You want to remain open in prototyping to explore different areas,” says Nesbitt.

After all, in this industry, it’s better to be the disruptor than the disrupted.