TORONTO — CIBC is wading into the fintech space, with plans to launch new services such as free cross-border money transactions and an online lending platform aimed at small businesses.
The bank is planning to launch a service within the next few weeks that will allow its customers to move money from Canada to 35 different countries for no cost from their phone, their computer or a bank branch.
“We think it will be a bit disruptive, because currently it does cost money to make a wire payment,” said David Williamson, the head of retail and business banking at CIBC.
CIBC (TSX:CM) says it has partnered with a fintech company for the service, but didn’t name the partner Wednesday.
The bank said it is also partnering with an unidentified fintech company to explore online, algorithm-based lending for small businesses — a space that is currently dominated by startups such as U.S-based OnDeck Capital.
Online lending — also referred to as marketplace lending or peer-to-peer lending — is a burgeoning industry that uses a multitude of data sources, including social media profiles, to determine how likely would-be borrowers are to pay back their loan.
By using a multitude of data points — OnDeck says it uses roughly 2,000 — online lenders are able to asses the credit worthiness of a small business, even if it hasn’t been around long enough to provide the two years of financial statements required by most financial institutions.
Banks have faced criticism in recent years that they are slow to innovate and risk losing market share to new, more nimble entrants if they fail to meet the changing needs of young, tech-savvy consumers.
During CIBC’s first investor day in five years, chief executive Victor Dodig said the bank has a plan that will allow it to compete with “the disruptors that will play a role in the financial ecosystem.”
“We believe that our plans will increase the growth profile of CIBC so much so that you’ll start viewing us not just as an income stock,” Dodig told investors.
CIBC also announced that it will take a restructuring charge of up to $200 million in the fourth quarter of this year but provided no further details on the charge.
The bank is aiming for $600 million in cost savings by 2019 through digitizing some of its processes, standardizing its data and re-evaluating its real estate portfolio.
“Some of this will fall to the bottom line as we improve our operating base, but a large part of it, certainly in the earlier years, will be reinvested into the business to transform the way we do business,” chief financial officer Kevin Glass told investors.
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Alexandra Posadzki, The Canadian Press