Canadian Economy—The strength of the Canadian economy since the beginning of 2017 will boost the banking sector, which is already performing well. The industry GDP is expected to increase by over 5 per cent for a third consecutive year.
Interest Rates—The Bank of Canada raised its policy rate twice since July, from 0.5 to 1.0 per cent. These moves will prove a double-edged sword for the industry, lifting banks’ interest incomes on the one hand, but weighing on housing affordability and the demand for new mortgages on the other hand.
Fintechs—Facing competition from emerging fintech firms, the Canadian banking sector has responded with numerous initiatives to fuel digital innovation in the sector, partnering with fintechs themselves to enhance the banks’ product offerings, and collaborating with universities to stay on top of and leverage the latest technologies in their operations.