Nichola Saminather

TORONTO (Reuters – Canada’s largest banks began fiscal 2022 with a massive hiring spree. They added staff despite a weak labour market and especially in order to improve digital capabilities.

They could see their growth in the face of inflation rising, which would be detrimental to profitability margins. Higher interest rates also impact on loan volumes.

“It’s a Catch-22,” said Avenue Investment Management portfolio manager Bryden Teich. You don’t want them to aggressively increase their costs during this period of the economy cycle, if they are looking at short-term profitability.

However, not increasing staff in the face of clients who are looking for more information and customized solutions would lead to slower growth over time.

According to Reuters, five of the largest banks in Canada had raised their full-time equivalent Canadian positions to a record 171,730 by the end of the first quarter fiscal 2022. That’s an increase of 4.3% over the previous year and is the fastest rate in three years.

In March, Canada’s finance, insurance, and real estate sectors saw a record-breaking 1% unemployment rate, which was the lowest among all industries.

Carolyn Hamer is a partner in Deloitte who specializes on issues relating to workforce. She said that banks have been trying to fill the digital gap they identified during the pandemic, and they are becoming more aggressive to compete against large tech companies.

She said that even in tight labor markets, banks are able to turn to gig workers and contractors, especially if employees want more flexibility.

The Bank of Montreal’s Canadian workforce increased by 7.5%, which is the highest rate of growth among the major lenders. Karen Collins, chief talent officer, stated that the bank has been increasing its technology operations as well as personal and commercial banking.

The digital channel accounts for over a third now of all sales and 90% of self service transactions are done outside branch offices. Collins explained that BMO plans to enhance technology infrastructure and replace traditional branch services with advisory offerings.

BMO provides remote flexibility for technology workers when their jobs allow.

Royal Bank of Canada’s growth in employees peaked during the third quarter of 2020, however, it is expanding its technological workforce. After adding nearly 2,000 new jobs last year (about half of which were external), Helena Gottschling was chief human resource officer.

She stated that it is more difficult to find these critical skills because employers are not all hiring. Also, we get fewer applicants than 3 years ago.

She said, “In a competitive talent market compensation always rises at the top as an essential lever.” We know our top talent and we reward them accordingly.

While this could boost labor costs more than expected, rising margins from higher interest rates could offset this, said Jason Boggs, Canadian banking and capital markets leader at PricewaterhouseCoopers.

Toronto-Dominion Bank has announced that it will add 2000 technology jobs this year.

Anna Zec is the senior vice president of human resources for Bank of Nova Scotia. She said that Scotiabank’s hiring spree reverses a decline in staffing.

According to her, Scotiabank saw the second highest growth. She said that Scotiabank plans to increase its Canadian banking, wealth management and digital capabilities.

Customers are asking for digital solutions more frequently… “I don’t think our demand for tech talent will slow down any time soon,” she stated. I believe 2022 will be another challenging year for talent.

(It has been updated with the correct title for BMO chief Talent Officer)