The Canadian Scotiabank increased its year-over-year tech spend by 9% to $372 million during the first quarter to support business growth as the bank adjusts to recent staff reductions and prepares for economic uncertainty in the year ahead. 

WHY IT MATTERS: The $1 trillion bank has committed itself to “purposeful capital allocation,” President and Chief Executive Scott Thomson said during Tuesday’s earnings call, as the bank had previously cut tech staff while making digitization a priority. 

Due to rising interest rates, the bank is looking to reduce spending in non-critical areas moving forward, Thomson added. 

“Higher personnel costs and spend on certain technology projects primarily drove the expense growth in the quarter. We will be even more thoughtful about expense control across the bank for the remainder of the year,” he said. 

BY THE NUMBERS: Scotiabank posted in Q4:

• Active digital users increased 7% YoY to 8.8 million;  
• Active mobile users grew 12% YoY to 7.8 million; and 
• Total revenue fell less than 1% YoY to $7.9 billion. 

MARKET REACTION: Behind lower-than-expected revenue, Scotiabank’s stock opened Tuesday at $51.50 per share, down 2% from Monday’s closing price of $52.70. 

FLASHBACK: In Q3 2022, Scotiabank added 150,000 new members to its mobile app rewards program Scene+. 

The program, launched in December 2021, allows members to earn points through the bank’s mobile app by making purchases with their bank debit or credit cards, according to Scotiabank. 

In addition to Scene+, the bank launched Scotia TranXact during Q3 2022, which allows business clients access to real-time payments via APIs. 

FUTURE LOOK: Scotiabank is planning to exercise greater expense control in the year ahead while maintaining a “digital-first mindset,” Chief Financial Officer Raj Viswanathan said during the call. 

Keeping a digital-first mindset will allow for “better customer and employee experiences at a lower productivity ratio,” Thomson added during the call. 

Editor’s note: All amounts have been converted to USD. 

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