Alterna Savings: digital banking with a social purpose
Describing himself as a ‘career banker’, Rob Paterson has been in financial services for almost 30 years. From building a bank in Vietnam to working for names such as JPMorgan Chase and CIBC, his latest role is President and CEO at a Canadian Credit Union that is developing a truly digital experience from the foundations of a century old legacy. Founded in 1908, Alterna Savings offers services across a network of 35 branches in Ontario – not counting its digital offering, Alterna Bank, which is available nationwide. Alterna, Paterson believes, can be David taking on Goliath in the banking world, all thanks to digital transformation and disruption of the status quo.
“I’ve grown up around the world,” Paterson comments. “I’ve always been looking at technology and the evolution of banking on a universal and global scale. At Alterna, it’s helped me take on this organization that’s 110 years old and use my knowledge and relationships around the world to start looking at the next 110 years. In the last three years, we’ve shown we can reach every province. Canadians really resonate with our unique digital banking experience and our philosophy of being the ‘good in banking’. We’re very much focused on trying to help Canadians reach their home ownership and retirement needs, and doing it with a social conscience,” he adds.
The bank’s ethos has been omnipresent through its digital journey, with Alterna leveraging the latest technology to create the best possible experience for the customers and communities it serves. “We wanted to see if we could take our cooperative background, modernize and transform it into the digital banking world.” Rather than tempting new customers in with teaser rates and gimmicks, Paterson is keen to highlight that Alterna maintains high rates on deposits and low rates on lending.
A fully digitalized experience
A key achievement for Alterna has been delivering the first ever fully end-to-end digital mortgage in Canada. Paterson argues this didn’t happen in spite of Alterna’s relatively small size, but because of it. “As a unique small institution, we were able to do something that none of the Big Five banks had been able to deliver: the ability to purchase your home completely on mobile or tablet, without having to come into a branch or even get on the phone.” Throughout this process, Alterna applied its strong principles by ensuring it was as informative as possible, and only gathered necessary data from clients without overreaching.
Even those who do not apply for a mortgage are still offered useful insights. “We can help you be a better informed customer around how much debt you should take on, neighborhoods you want to live in, choosing a realtor and finding the home of your dreams. That’s a win for us.” Keeping customers and communities informed about their money is paramount to Paterson and to Alterna. “We’re trying to be stewards of what banking used to be, which is something that helps promote the wellbeing of its customers and the communities they live in. A bank should be a catalyst to the growth of Canadians and their communities.”
Creating jobs for Canadians
With this community focused drive, Alterna took on the mantle as one of Canada’s only ‘cannabis banks’ – a venture Paterson says none of the Big Five would support. “The cannabis companies were licensed and legal, right?” he argues. “We didn’t have the right to say no: these are organizations that will employ Canadians. It’s a growing sector of the economy. We really took it on as a cause because we felt this was what was wrong in banking: the Big Five could say no because they had other interests globally or in the US. Three years later, we’re proud of that. We’ve helped some of these companies grow into some of the biggest Canadian corporations, creating employment in areas where it was badly needed.” This is where, for Paterson, being a ‘David’ pays off yet again. “We don’t have the SVPs and EVPs of ‘no, you can’t do that’. We don’t have all the politics and bureaucracy that goes with big corporations.”
Growth through partnership
As the bank grows to compete with the Big Five, Paterson is keenly aware that Alterna can’t do everything by itself. Now, the bank is renowned for its collaboration with startups as well as larger software giants. “We’ve built a tremendous reputation in the industry with fintechs, both domestically and globally,” he comments. “They see that we are advocates for them. We’re not like the larger institutions that say: ‘If you deal with us, you can only deal with us exclusively in the Canadian marketplace.’
“We realize it has to be a win-win and we don’t overcomplicate agreements. This allows us to get to market quickly on things that are going to create less friction in the banking experience. That has become a core strength. For our staff, it’s fantastic to have the experience of working with other agile, innovative companies,” Paterson adds, noting that the company is approached proactively by fintechs on a regular basis.
A key partner for Alterna has been Backbase, one of the premier UX interfaces for mobile and web, with which the company enjoys “a phenomenal relationship”. “Our partnership with Backbase has helped us to form an understanding of how to develop a more dynamic digital and online front-end,” says Paterson. Backbase’s widget concept provides a holistic digital channel platform that supports the evolution of specific products and services, and allows businesses to be part of an ecosystem that drives digital operability. Through the partnership, Alterna will deliver the first multi-tenanted instance of Backbase in Canada. “Backbase really understands the importance of the cooperative system in Canada, and has really openly partnered with the credit union space here to allow us to accelerate our digital capabilities,” says Paterson.
Meanwhile, Sensibill is a domestic Canadian fintech transforming the way businesses and consumers deal with receipts. “They’ve taken what a lot of people would view as a non-tech category and developed it into a real value-added solution.” Alterna has branded Sensibill’s solution for its own members as MyReceipts. “It allows you to keep track of your spending,” explains Paterson. “Whether you’re a small business owner or an individual consumer, you have the ability to digitally capture any receipt for any of your purchases through your smartphone’s camera.” Paterson enjoys a long-standing relationship with founder Corey Gross, who he came into contact with through various Money20/20 and Finovate conferences – together, the pair are working to evolve and develop Sensibill’s solutions. “Corey has worked with us on an endless cycle of feedback and support,” he comments. “We view him as a great Canadian success story.”
Alongside innovative startups, reliable global organizations such as software provider Salesforce are also key in helping Alterna build scale. “The Salesforce ecosystem allows us to be bigger than we are,” Paterson explains. “It allows us to plug in partners at a much easier rate. When we developed Canada’s first digital mortgage, we tried to enrich our understanding and knowledge of our members and customers – Salesforce was a great agile partner with an endless series of tools.”
In addition, Salesforce was able to help Alterna connect with other companies. “We were able to have conversations with those peers about their digital journeys,” says Paterson. The relationship with Salesforce serves to highlight how businesses look for more than just a piece of software from their partners. “Technology in and of itself isn’t the end state. The ability to get access to thought leaders, an ecosystem that will be co-developed by hundreds if not thousands of individuals across the globe, and to be able to see where they’re going in the future – you can’t put a price on that.”
A digital culture
“When we started talking about going digital and building out the bank globally, you naturally worry that people will be concerned about leaving the legacy business behind. Within our organization, there was actually extreme excitement,” Paterson reflects. “Our employees saw this as a great way to stay relevant.” Alterna has gone to great lengths to develop a positive and forward-thinking culture among its staff, celebrating such wins in 2019 as being named one of National Capital Region’s Top Employers (in Ottawa), and scooping the Platinum level status on the Aon Best Employer list.
Paterson is also keen to highlight the impact of technology in the office. “We’ve gone through digital training and education for all our staff – now, they can learn on a mobile device anywhere at any time. We’ve changed the physical aspects, moving people into open, tribe-like settings of working with their fellow team members, building in electronic desks so they can elevate work surfaces at different times of the day.” The CEO is also keen to highlight the positive impact social media has had on his staff, making himself available to answer questions on Twitter – even on weekends. “It makes everyone feel good that when they have a question, they can ask it, and they’re going to get an authentic, honest response.”
Building on success
Having unlocked the cannabis market, developed the first digital mortgage and scooped a plethora of awards, Alterna shows no signs of slowing down. Over the coming months and years, the bank will continue to transform the way it serves its customers. “The big focus for us going forward is to really build out our CRM capability so we can create more intimacy. Then we want to deliver better content. We want to improve on the digital dialogue that can happen with the customer in terms of chat capability.”
The bank will also remain true to its strong principles throughout its journey, striving to have honest conversations with customers. “It’s not so much how much debt you can afford, but having the right amount of debt so you can live your life,” Paterson emphasizes. “We don’t want you to take out the biggest mortgage you qualify for if that means you can’t take the family on vacation, care for a loved one or buy your kids their new bikes.” Despite – or perhaps because of – technology transformation, this is something that won’t change. “We want to have that conversation with you digitally.”