February 2, 2017 / 2:04 PM / a year ago

Scotiabank targets further cost cuts from digital initiatives

TORONTO, Feb 2 (Reuters) - Bank of Nova Scotia, Canada’s third-biggest lender, said on Thursday that the introduction of new digital technologies would enable the bank to lower its operating costs and increase profits.

Scotiabank is investing in new digital technologies in response to customers transacting far less in branches and using mobile banking apps much more. The bank has said it plans to cut 5 percent of branches in the next two years.

The bank said last year a cost efficiency program would deliver a 200-250 basis point improvement in its productivity ratio by 2019. It said Thursday the changes are expected to result in additional 100 basis point improvement beyond 2019, giving it a productivity ratio of about 50 percent by 2021.

The majority of the additional efficiency improvements relate to lower operating costs, and progress made so far have increased its confidence in its ability to meet its medium-term financial targets, the bank said, adding that the changes should contribute to improved profitability in the medium term.

Scotiabank, which has the biggest international presence of Canada’s banks, is planning to focus on introducing new digital technologies not only in Canada but in its key overseas markets of Mexico, Peru, Colombia and Chile.

The bank last week announced it had opened new facilities to develop technology such as blockchain and artificial intelligence as it looks to position itself ahead of rivals in the hotly competitive fintech sector.

Reporting by Matt Scuffham; Editing by Nick Zieminski

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