TORONTO -- Scotiabank (TSX:BNS) says it will be partnering with fintech startups and launching a "digital factory" in order to boost its technological offerings to clients.
The digital factory will be located in Toronto and will house more than 350 tech jobs, including user experience designers and data scientists. More than half of these will be newly created jobs, while the remainder will be positions that already exist within the bank being brought under one roof.
The bank says it plans to have the facility fully operational by mid-2016.
Kyle McNamara, co-head of information technology at Scotiabank, said the digital lab will provide a more dynamic work environment that will not only give existing employees the freedom and flexibility to approach problems in more creative ways, but will also help the institution attract top tech talent.
"We have very, very interesting problems to solve," said McNamara. "We want to make sure people who are excited about them but not necessarily excited about working in the traditional bank environment get an opportunity to work on these super-interesting problems."
One of the teams that will be brought under the digital factory umbrella, called "Rapid Labs," has been working on improving mortgage applications. The process designed by the team is currently being tested at some of Scotiabank's branches.
Meanwhile, Scotiabank's Tangerine, formerly ING Direct, is looking at ways of incorporating facial recognition technology into banking.
With a number of nimble tech companies wading into the financial space in recent years -- from online lenders to digital portfolio managers to mobile wallets -- the banks are facing pressure to innovate or risk losing market share. Critics have accused the lenders for being slow to innovate, as they are bogged down by legacy structures.
A number of financial institutions have begun partnering with financial technology upstarts in hopes of better serving the needs of increasingly tech-savvy consumers.
At Royal Bank's (TSX:RY) annual meeting last spring, chief executive Dave McKay said the bank will need to work with early-stage companies -- "even the ones trying to disrupt us" -- in order to adapt to an increasingly digital world.
RBC recently launched voice biometrics technology that negates the need for passwords and can identify clients contacting its call centres by the sound of their voice.
And at its investor day last week, CIBC announced that it had partnered with a fintech startup to launch an algorithm-based, online lending platform.
The bank also has a digital lab at Toronto's Mars Discovery District, a space that houses early-stage companies and other tech innovators including Airbnb, Etsy and Facebook.
