The recovery for the financial services industry looks optimistic
By ATB Financial 8 April 2021 3 min read
To understand how Alberta’s economy will recover from the pandemic, it’s important to not only watch what businesses are saying, but also what businesses are doing, says Jon Horsman, Senior Executive Vice President, ATB Business and CEO, ATB Capital Markets.
As our clients and businesses in Alberta eagerly await a reopening of the economy, ATB and MNP have partnered in a comprehensive content series to deepen insights around the challenges and opportunities of recovery first discussed at The Alberta Economic Recovery Summit. The series will share local perspectives on how to address challenges across key sectors, including agriculture, aviation and logistics, energy and cleantech, technology and data, tourism, petrochemicals and financial services.
When the pandemic hit, the financial services industry stepped up to quickly support Alberta’s businesses. Now, the industry is focused on how trends like digitization, environmental, social and governance (ESG) principles, and evolving insurance models will impact Alberta’s economic recovery.
How financial services responded to the crisis and recovery
When the pandemic hit in 2020, Horsman recalls acting swiftly to support Alberta businesses in two key ways.
First, ATB worked closely with its customers to identify ways to help them through a period when revenue would be effectively shut off and they may not have enough liquidity to pay their bills. In addition, teams helped companies figure out how to create safe workplaces for employees and customers. Along with the rest of the industry, ATB turned off principal and interest payments for its clients in an effort to help reduce the fixed costs so they could survive lockdown.
Second, we joined a Canada-wide working group of financial institutions brought together by the Federal Government. The purpose of the group was to distribute the government’s economic relief programs, such as the Canada Emergency Business Account (CEBA) and the Business Credit Availability Programs (BCAP).
“I’m really proud of ATB and the industry as a whole. We all came together and found a way to deliver massive financial impact quickly and at scale. ATB built and launched its CEBA program in less than five days and so far, we’ve reached almost 17,000 businesses with it,” Horsman says.
The Alberta Economic Recovery Summit: Digital and ESG are shaping the future
At the Alberta Economic Recovery Summit, two key topics emerged for the future of the financial services industry.
The first is the evolution of the digital economy and the opportunity that presents for financial services and the technology community, such as open banking and payments modernization. Horsman believes a few foundational capabilities are required to unlock this economic potential for Alberta. These include the establishment of personal data rights, data protection, and data privacy as well as revising regulations to ensure they are right sized for the risks of entrepreneurs, retail investors and other capital providers.
The second is how capital is being consumed and deployed based on ESG principles. While Canada has always been a global leader in this arena and will continue to be, says Horsman, the financial services industry is looking more closely at ESG impact by layering in the sustainability risk of a client along with the financial risk.
"As an emerging field, we’re developing quantitative criteria that can help us discern between a business that has practices that are long-term sustainable and a business without such practices. One should have a better access to capital and better costs of capital than the other."
Senior Executive Vice President, ATB Business and CEO, ATB Capital Markets
Industry leaders and business owners should expect capital to continue to become more sophisticated and disciplined when it comes to ESG.
Financial services and the wider economy have reason to be optimistic
When it comes to economic recovery, Horsman prefers to look to indicators of what’s actually happening in the economy instead of listening to speculation.
For example, he is very encouraged by the recent reference in Alberta’s Fiscal 2021 Budget to explore enabling legislation for captive insurance based in Alberta. This is an important development as there is a growing need in Alberta’s core industries and business for effective risk management solutions, he says. The insurance industry is a foundational element of a vibrant financial service industry, so the idea of growing this capability in Alberta presents immense opportunities.
Horsman anticipates the post-pandemic economic recovery will be robust. He points to the liquidity built up in businesses and consumer bank accounts as a source for optimism in respect to the resilience of the Alberta economy.
“The underlying demand is still there. We are emerging from economic stasis caused by the need for pervasive health measures in society. The main catalyst we are watching is the vaccination roll out progress, as this will determine when we expect to move back into a normal economic environment—or more likely—an expansionary economic environment similar to the conditions of the roaring 1920s,” he says.