Toronto, Ontario, Sunday, May 31, 2015

Thank you for your warm welcome, and thanks to all of you for being here.

And to those who have travelled to Canada’s financial capital from abroad, welcome!

This annual gathering is a valuable opportunity for you to share ideas and experiences, and to work together for stronger banking institutions and a better world.

You are here to discuss critical issues including the nature of global competition, the role of technology in disrupting payment models, the role of “conduct regulation,” and the importance of culture in driving improved performance.

I’d like to briefly address several of these themes, particularly culture, from basic principles. And I speak of culture not only in the organizations you lead, but in the broader society you serve.

There’s no doubt that we live in a period of profound globalization and rapid change, and the financial sector is no different from any other in its need to innovate and evolve.

Our contemporary context poses challenges, but it also offers opportunities to improve the way we do things. Times of change force us to look inward as well as outward, at our strengths and weaknesses, to see where we can and must do better.

With this in mind, let me briefly pose the question: what is the essence of your business?

One answer is simply: measuring risk.

But there’s a deeper essence to banking, which can be summed up in one word:

Trust.

It’s both a noun and a verb, and there are many shades to its meaning. But let’s work with the most prominent definition: faith or confidence in the loyalty, veracity, reliability and strength of a person or thing. And that person or thing can be pluralized to the persons and institutions you lead.

So you see we’ve gone from a quantitative concept—measuring risk—to a qualitative one—building, maintaining and constantly renewing trust. The essence of banking lies in the quality of trust that exists between banks and the people they serve.

The people you serve.

In an uncertain world, banks and financial institutions will succeed to the extent that they are trusted, and trustworthy.

Part of this trustworthiness flows from the fulfillment of two duties: your fiduciary duty towards your customers, to act honestly and in good faith, and your duty to act responsibly, which means with care, diligence and skill.

As you know, the 2008 global financial crisis resulted when too many people in and around the industry forget these duties.

A lot of individual people and families lost a lot of their hard-earned money in the crisis, and many financial institutions lost something else besides: their credibility with the public.

Along with new technologies, that “trust gap” is now being exploited by your start-up competitors. The social contract between financial institutions and the public has been torn, which is a serious matter because that contract is your competitive advantage in a rapidly-changing world.

Part of that trust has to do with the society you serve, that social contract. Remember that before Adam Smith wrote The Wealth of Nations in Edinburgh in 1776 he wrote The Theory of Moral Sentiments in 1759. Some people in the years up to 2008 forgot the importance of the first book. But Adam Smith did not! While The Wealth of Nations is a powerful explanation and defence of capitalism as an economic system, it is coupled with the moral principles that guide the good society, built on trust.

The good news is that banks have long been pillars of their communities and good corporate citizens, and that reputation, while impacted, endures. Banks are still viewed as generally safe places in which to invest, save and from which to seek credit.

Now let me get a bit personal for a moment. I accepted Bill Downe’s invitation to speak with you tonight because I know each of the Canadian bank CEOs at this table, as well as their immediate and some earlier predecessors. They are among the most admired and trusted leaders in Canadian society. And that is the culture they have personified in their institutions. This integrity is reflected in the institutions they lead. And if you look at any Canadian community – especially the healthier ones – you will see bank managers, supervisors and tellers, disproportionately leading the hospital and community foundations, the charity drives and the soup kitchens. They are generous with their time and their talent.

The close ties between Canadian banks and their communities is one of the reasons why financial institutions in this country emerged from the crisis with their reputations reasonably intact. For the past four years, the Canadian banking sector has ranked as the strongest in the world.

One of the key challenges for financial institutions today is to constantly build and maintain trust with those you serve, while making the necessary innovations to remain competitive in today’s world.

There are many ways to build trust. Those words I mentioned a moment ago can guide us: loyalty, truth, reliability, strength.

There are no shortcuts to what I’ve just outlined, but it is so important that we succeed. And that, of course, is why you are gathered here in Canada today.

I thank you for your commitment to doing the thing right and doing the right thing.

Have a productive and enlightening conference.