Business drives technology

Ashleay: Welcome to the “In Your Interest!” podcast. My name is Ashleay and this week I'm joined, as usual, by our chief strategist colleague Sébastien Mc Mahon, and we are currently with Pierre Miron, Executive Vice President and Chief Growth Officer of Canadian Operations. And we're going to talk about digital transformation for businesses. So hi, Sébastien. Welcome, Pierre.

Pierre: Thank you.

Sébastien: Hello, Pierre. Hello, Ashleay. Pierre, it's great to have you with us. You've been at the forefront of technology, I would say, over the last 40-some years. This is what we've discussed prior to this recording. So maybe if you could tell us a bit about your background just to set the stage here.

Pierre: Yeah. Thank you, Sébastien. I started my career back in 1984. So yes, that’s right. It’s more than 40 years now. I have an IT background with some complements in finance, accounting… what we call a fintech kind of guy. But I started my career with the Quebec cable company Videotron back in 1984. And since 1994, I’ve been deeply involved in the financial industry, especially on the wealth side, on the investment side, by developing a huge amount of technology related to the investment world. And therefore, I became more and more familiar with it, also through some training, some more education on the financial industry. So that's why I can call myself a fintech kind of guy, if you wish.

Ashleay: And Pierre, you often talk about digital transformation for businesses. You were responsible for it in other organizations before you joined iA over five years ago now. What is it all about for you?

Pierre: Well, yes, it's interesting because most people used to think that digital transformation was an IT story. But in fact, yes, IT is a big enabler, but it's not an IT story. It's a business story. It's a business journey. And yes, I've been involved deeply in major transformations, but the funny thing about this, with the digital transformation, is that we do have access to new capabilities because of the IT. But in fact, that forces us to review or to rethink the way we provide services, or deliver products to our customers with more efficient ways of providing those kind of services through this capability with IT, with AI now, and so on. And sometimes a lot of people ask me the question: “What about not doing a digital transformation, not adopting this thing?” So yes, it's an interesting question, but in fact, it's tough to fight against big trends like digital transformation, e-commerce and all those kinds of things. And we've seen some failures in the past, if you wish, by some companies that have not taken the wave, such as Polaroid or the video clubs with now Netflix and all the digital TV. Not so far from us, BlackBerry thought that they were unbeatable with their network, with the security of the network, and they lost the battle to Apple and Samsung with their devices and so on. So, it's an interesting journey to see what the consequences are if you don't adopt this trend. And if you look at the new generation, the way they consume products or services, I mean, it's up to us to take that curve or to embrace those changes. Because, when we look at the Gen Z, for example, their way of consuming services is digital first. So, it's up to us to define our spot in this digital world, if you wish. And that's basically the role that I've been playing over the past several years.

Sébastien: Yeah. And also, for a company like ours, where we provide financial services, clients now are expecting to be served digitally, to be able to access their data anytime, anywhere, make choices wherever and whenever they want. So maybe… How much do you think it would cost our firm, maybe in dollar amount or reputation, to just sit on our laurels and even fall one year behind our peers in terms of digital transformation?

Pierre: It's a huge question, but in fact, when we look at the amount of money that we have been investing since, let's say, 2018, since I joined the company, we're talking about millions and millions of dollars. So, for example, over the first strategic plan between 2018 to 2023, we have invested more than 1 billion dollars in this digital journey. And if we look down the road for the next strategic plan, we're talking about the same order of magnitude in terms of investment. So, the cost not to do it is more heavy than to do it. Because, at the end of the day, like I presented earlier with some examples, if you don't adopt this trend, this wave, you're going to be out of business. Well, maybe I'm being tough, but it's going to be tough to compete against the big players. Look what's happening, for example, on auto and home or the P&C insurance. All the big players are trending towards providing digital services to customers. Easy to consume, easy to get a quote, and so on. So, the price we’d pay to not to adopt it is very high for a company like us. Even if we were a traditional company – I used to say that we were a traditional company – but even a company like us needs to adapt. It doesn't mean that we’re going to move away from providing good services with people and so on. But it means that embracing this wave is quite key for our future.

Ashleay: And Pierre, maybe can you give an example of a successful digital transformation?

Pierre: I have two in the back of my mind. The first one was in my previous role at the Caisse de dépôt et placement du Québec, which is the major pension fund for the Quebec government. I was there from 2010 to 2018 before joining iA and my role was not only IT, but I was also responsible for the financial operations as well as being responsible for the globalization of this company, because this company doubled in terms of the way they were investing money because of the size of the assets under management. But one thing that we did was, let's say, simplify the overall business processes by simplifying the overall IT landscape. But the jewel of this transformation was something that we are very proud of. It was the ability to assess quickly any kind of event that occurred in the world and be in a position to determine what the impact would be on the overall portfolio, what we call the exposure, for those of you that are familiar with the investment world. So let me give you an example to illustrate the point: When the tsunami hit Japan, the question that was asked by the all the portfolio managers was: “So, what would be the impact on our portfolio with the slowdown of this specific economy?” So, we’ve been able, with math, with data scientists, with a huge amount of data, with IT staff, to develop AI algorithms to be in a position to assess very specifically what would be the impact of such an event within the portfolio exposure. So that's basically an outcome of digital transformation, but very useful because sometimes you have to react quickly to what's happening in the market. So that's a good example of the success of a digital transformation. Closer to us, look what we did during the pandemic. We were able to convert all the people over a weekend to make sure that we preserved business continuity because of all the work that we had done on the desktop previous to the pandemic. This is a specific portion of the digital transformation that we went through. But a year before the pandemic, we decided to invest heavily in changing the way we provide services to our employees, and here we go! We've been very powerful! We've been ranked top 10% in North America in companies that were the most effective in managing this specific crisis. In that sense, that's a good example of a success of digital transformation.

Sébastien: Yeah. Two very interesting examples. And in both cases, it's not just about companies subscribing to a new software or just buying a magic box that you just install and everything's done. There are some challenges to installing something like that.

Pierre: Yeah. It's interesting because this question raised the point about what's the most important challenge when you face a program like a digital transformation. I would say that depending on the nature of the company, it varies from company to company, but on our side—and we're not so different from the rest of the traditional companies that need to go over a… let's call it an optimization of business processes and so on—the most important thing is to take care of the change with your people, with your customers for all the things that you need to do to implement or change the way you provide your services or your product to your customers and to your employees as well. It's a bit different when we look at the other companies that have been built digitally. I'm thinking about Amazon or Netflix, for example. It's a good example that we know exactly what they've done, because the nature of their business is digital first. So, everything has been built around digital everywhere, which is not the case for a traditional company like us, or a different company. We're not alone in that space. But basically, the shift towards digital is quite complex compared to a new company like the ones that I mentioned earlier. So, change management is key in that transformation.

Ashleay: And Pierre, what are the main issues a company needs to address in order to carry out such a program?

Pierre: Yeah, this is basically what I just said about change management and taking care of all the employees. Your business processes, for example: you need to think differently when you have to design digital process in a digital world versus the way you were conducting business prior to this transformation. So yes, technology is a big enabler, like I said earlier. Infrastructure needs to be there. However, changing the way we provide services, the way we act is the most challenging thing, I would say.

Ashleay: Great. Well, thank you so much, Pierre and Sébastien. This is all the time we have today. But we're happy to tell you that Pierre will be with us again next week to continue our discussion on digital transformation and its impacts on businesses. And thanks also to our listeners. Please don't hesitate to contact us if you have any questions, and we will see you next week. Loved this podcast? Want to know more about economic news? Follow our “In Your Interest!” podcast, available on all platforms, visit the economic news page on ia.ca or follow us on social media.