BMO Bank of Montreal has won Celent’s Model Bank 2017 Award for process automation, thanks to its digital account-opening capability. Robin Arnfield talks to Niti Badarinath, BMO Financial Group’s head of North American channels, to find out more about how the bank’s digital initiatives are progressing
BMO Bank of Montreal is in the midst of a digital transformation as it celebrates its 200th anniversary.
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By GlobalData“Our FY2017 digital investments in Canada are focused on key strategic objectives: making it easy for customers to join BMO and open accounts, enhancing our digital [mobile and online] capabilities, and building a new mobile experience that makes it easy for our customers to bank,” says Niti Badarinath, BMO Financial Group’s head of North American channels.
In addition to its Canadian retail banking operation, BMO owns BMO Harris Bank, which is headquartered in Chicago.
“We’re now working on a new mobile experience that we’re co-creating with our Canadian customers, with new features allowing them to make recurring bill payments and transfers, and deposit cheques.
“The new user experience will also give customers greater control of their finances by offering credit card alerts, card controls – lock or unlock cards, report lost or stolen cards etcetera – and the ability to view pending credit card transactions.”
Digital onboarding
BMO Canada has introduced a service allowing customers to open an account in minutes using their smartphone, without having to go to a branch or download an app.
The bank partnered with GMC Software and Vasco Data Security’s eSignLive by Vasco unit to develop the digital account-opening platform, which has been in full production since December 2016 across its Canadian branches.
“Celent gave BMO the Model Bank award for process automation in its Digital Transformation in Personal Banking initiative, as it has automated and streamlined the customer on-boarding process,” says Celent senior industry analyst Joan McGowan, author of Celent case study BMO: Digital Transformation in Personal Banking.
“BMO has introduced an enterprise-wide e-forms and e-signature shared services platform for personal banking accounts, that lets anyone with a smartphone onboard. The new digital account-opening platform can be used by any business line across BMO Canada. For example, BMO is rolling the platform out across its Canadian wealth management business.”
Benefits
“BMO claims that it takes eight minutes to onboard a new customer using a smartphone, including customer validation and verification and e-signing of documents,” McGowan says.
“The process efficiency that BMO has brought about is very significant, as it went from siloed, highly paper-based processes to fully digital onboarding.
“BMO’s personal banking sales force is saving 15-30 minutes in processing forms for new product sales due to the digital account-opening platform, which creates efficiencies and increases revenues for the bank.
“Also, the reduction of paperwork means an 80% efficiency increase in the audit process, and makes the audit trail easier for bank compliance officers.”
According to McGowan, other benefits include an up to 80% reduction in errors and irregularities in the personal banking account-opening process, and an approximately 40% increase in process efficiency around personal banking on-boarding. BMO Canada has seen a C$12m ($8.96m) increase in revenues from digital account-opening, she notes.
Common IT platform
Canadian Banks’ Digital Transformation & Maturity Level, a February 2017 report authored by IDC Canada analysts Robert Smythe and Jason Bremner, found that Royal Bank of Canada and Scotiabank are the two Canadian banks most focused on
financial technology.
The two banks came joint first with very high levels of digital readiness, while BMO, CIBC and TD came joint second.
“While BMO CEO Bill Downe has spoken about digitisation on a number of occasions, BMO hasn’t been a leader in terms of public statements about digital,” says Smythe. “Scotiabank has been very public about its digital plans.”
“BMO’s strategy has been to centralise IT support for its Canadian and US operations, and to have a single IT platform for banking in North America,” Smythe says.
According to the IDC report, BMO’s policy is to integrate all its applications through a connector grid that brings together over 1,400 applications across the bank.
It also has a “build once” software-development policy, with over 1,000 reusable software-based services employed to create applications quickly and easily, the IDC report adds.
Mobile payments
“We’re building foundational mobile payment capabilities to enable simple and convenient ways to pay,” says Badarinath.
“In the US, we’ve followed up our 2015 Apple Pay launch by delivering Android Pay and Samsung Pay mobile payment capabilities for Android and Samsung customers in January 2017.”
BMO also launched the BMO Harris Bank MasterPass digital wallet in the US in January 2017.
In May 2016, BMO announced that it supported Apple Pay in Canada. “In Canada, we’re working on going beyond just ‘pay by phone’, exploring several value-added services that focus on both pre-purchase and post-purchase aspects of customers’ payment journeys,” says Badarinath.
Emerging technologies
Asked about BMO’s plans for emerging digital payments such as blockchain, mobile peer-to-peer (P2P) transfers within social media apps, and mobile ATM access in Canada, Badarinath notes: “The bank approaches everything through the ‘customer experience’ lens. What will make it easier for customers to bank with BMO and manage their payments?
“BMO is actively exploring several emerging technologies across social media, mobile P2P and mobile cash,” he says. “In the near term, our social media teams are already engaged in brand and marketing activities on Facebook, Twitter, YouTube and Instagram.
“In January 2017, we launched the PeoplePay mobile P2P capability in the US within the BMO Harris Mobile Banking app, with continued investment in P2P capability in Canada through Interac eTransfer enhancements this year.”
Interac eTransfer is an email- and cellphone-based P2P payment service offered by Canada’s banks, which can also be used by businesses for bulk payments. Through an automated file-transfer process, businesses can send multiple payments in a single file upload, without the need for the recipients’ personal financial information.
In March 2017, BMO announced free Interac eTransfer transactions for all Canadian chequeing and Premium Rate Savings accounts that are part of a banking plan. BMO also now offers Interac e-Transfer bulk disbursement to its commercial customers.
“Our Mobile Cash service, which was launched in March 2015, allows our US customers to stage and make cardless ATM withdrawals via their smartphones,” explains Badarinath.
“We’re exploring ways of bringing this mobile ATM capability to our Canadian ATMs. In the longer term, we’ve been actively learning about and identifying potential applications for blockchain and distributed financial technologies. Our selected partners in the blockchain and distributed financial technology space include R3 and Ripple.”
Digital trends
Badarinath sees several key catalysts that will impact the digital experience. They are:
- Voice – the concept of using ‘my voice as my keyboard’ to simplify data entry and queries
Biometrics – the concept of ‘me as my password’ to reduce or remove the need for passwords, tokens, etcetera
Social – leveraging customers’ social media circle to enable insight for financial decisions, and the use of peer influence in decision-making
Artificial intelligence – using machine learning and data to complete tasks for the customer, including chatbots driving conversational banking.
Adoption
BMO said in its first-quarter 2017 earnings call on 28 February 2017 that its Canadian customers’ digital adoption rate has increased to 49%, with 16% of sales now originated through digital channels. Also, mobile transactions are up by 54% in each of the last two years, BMO added.
“A good way to measure how we’re focusing on our customers’ digital banking needs is to look at digital adoption – the percentage of our customers who bank online or via mobile,” says Badarinath.
“We’ve grown over 20% year-on-year in Canada and over 10% in the US. Another measurement is digital usage, which is the percentage of bank transactions that are now done digitally. This grew by 27% in Canada and 13% in the US for BMO.
“An interesting data point is that currently over a third of all core banking transactions at BMO are done via mobile devices
in Canada.”
BMO at a glance
- Over 900 branches in Canada
- Almost 600 branches in the US
- Total assets of C$719bn
- Deposits of $488bn
- Over 45,000 employees
- Around 50% of BMO’s Canadian customers are active digital users, with 16% of product sales completed digitally, and over 30 million mobile transactions this year.
