Total Finance Magazine Spring 2025

SPRING 2025

C A N A D A’ S

M A G A Z I N E

F O R

F I N A N C I A L

E X E C U T I V E S

THE TECHNOLOGY ISSUE

Many Factors Impact Tech: AI Continues to Dominate

ALSO IN THIS ISSUE: ISTOCK/ JAMESTEOHART

❱ Breakthrough Innovations ❱ Collaborating Against Fraud ❱ A Few New Predictions PM40050803

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TALKING POINTS REGULATORY NEWS

TALKING POINTS CIBC has reinforced its commitment to responsible AI by becoming the first major Canadian bank to sign the Government of Canada’s Voluntary Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems.

This initiative highlights CIBC’s dedication to fostering ethical AI practices and promoting responsible innovation within the financial sector.

“At CIBC, we understand the significant impact that artificial intelligence can have on our industry and society,” said Dave Gillespie, Executive Vice-President, Infrastructure, Architecture and Modernization, CIBC. “By adhering to this voluntary code of conduct, we are reinforcing our commitment to responsible AI development and deployment, ensuring that our AI systems are fair, transparent, and accountable.” ◉ The voluntary generative AI code of conduct sets out key principles for the responsible use of AI technologies, including: ◉ Accountability: Establishing robust governance frameworks for AI oversight; ◉ Fairness: Ensuring that AI systems are designed and implemented with the risk of biased outputs mitigated prior to release; ◉ Transparency: Providing clear and accessible information about AI systems and their impacts; ◉ Privacy: Protecting client data and maintaining compliance with privacy regulations.

As set out in the 2024 Sustainability Report, our AI governance foundation is built on our Trustworthy AI Principles, enforced through the CIBC Enterprise AI Framework, and supported by our robust AI Risk Assessment Process (AIRAP). In addition, we have AI governance committees consisting of Senior Executives as well as risk stakeholders across the bank. Our approach ensures that we leverage AI with thoughtfully designed guardrails to support innovation. In 2024, CIBC introduced several GenAI pilot programs, including its CIBC AI platform, its Knowledge Central information hub, and GitHub CoPilot, to enhance productivity and client service.

“Our participation in this initiative is a testament to our ongoing commitment to innovation and accelerating our AI adoption responsibly, to better support our clients and communities,” added Gillespie. “We believe that responsible AI practices are essential for building trust and delivering sustainable value.”

CIBC has 14 million personal banking, business, public sector and institutional clients. Across Personal and Business Banking, Commercial Banking and Wealth Management, and Capital Markets, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world.

$$$ The 2025 Global South Financiers Forum, themed “Illuminating Global South”, was held in March 19-21 in Beijing. Hosted by Xinhua News Agency, the event gathered government officials, financial institution leaders, and experts from over 30 countries and regions.

A consensus on promoting financial cooperation among the Global South countries was released at the forum. The Global South, with combined GDP accounting for over 40 percent of the globe, has contributed as much as 80 percent to global economic growth over the past two decades.

As the world undergoes profound changes unseen in a century, the international landscape has become increasingly complex and challenging. Strengthening financial cooperation has become common aspirations of the Global South, with an emphasis on advancing prosperity for all through collective efforts.

Inayat Hussain, Executive Director of the State Bank of Pakistan, noted that countries in the Global South can better understand the resource constraints and capacity challenges faced by their Global South peers. The South-South cooperation results in more effective coordination and an effective approach to economic and financial development in a manner which is mutually beneficial for all the stakeholders.

Yamile Berra Cires, Vice President of the Central Bank of Cuba, stressed Cuba’s recognition of the need to reform the international financial structure and strengthen financial cooperation among Global South countries based on non-discriminatory treatment and inclusive strategies.

Over the years, China’s financial sector has leveraged diversified services to build interconnected financial bridges, providing strong support for the Global South in advancing high-quality development.

As a specialized medium-to-long-term investment fund supporting Belt and Road financing, Silk Road Fund has invested in 106 projects in more than 70 countries and regions across Asia, Africa, and Latin America over the past decade, with total commitments exceeding 25 billion U.S. dollars, said Wang Dan, executive vice president of Silk Road Fund.

China has actively promoted green development and shared green technologies with the Global South through concrete actions, such as establishing the South-South cooperation fund addressing climate change, and incorporating green development into the eight major steps for the high-quality development of the Belt and Road cooperation.

Industry experts believe that deepening financial openness, cooperation, and interconnectivity among Global South countries will foster market integration, optimize resource allocation, and drive economic growth, creating a win-win scenario for all participating countries.

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TALKING POINTS

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CFO CV

FORECASTS

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On the cover

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Finance Forward: 10 Breakthrough Innovations Reshaping the Future of Financial Services Explore how cutting-edge tech will redefine the industry

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Sage Reveals 5 Bold Predictions for Future of Accounting by 2030

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TABLE OF CONTENTS

TECHNOLOGY 19

The financial services and accounting sectors need to use more technology

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Financial Teams Need to Improve Their Technology Usage

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Cyber Resilience for the Financial Sector: Solutions for Current and Emerging Challenges From Ambition to Implementation: Five Ways Canadian Banks Will Scale AI Initiative in 2025 Data Essentials in the Age of Generative AI

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Six essentials you need to know to build your company’s readiness

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Collaborating to Turn the Tide Against Fraud in The Financial Sector

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How to Stay Out of the Headlines: Finding Accounting Irregularities Before They Become Front-Page News

Spring 2025 Volume 4 | Number 1 Publisher / Corporate Sales Steve Lloyd steve@totalfinance.ca Contributors André Gagné, CEO, GFT Canada.

Allison Karavos, Director, Content Marketing, Provenir

Wenzel Ryan Reyes, Senior Director Methodology & Audit Solutions, MindBridge Analytics

Ruchir Kumar, Senior Director Architecture and Protection, ISA Cybersecurity

Rob Woods, Director Fraud and Identity, LexisNexis Risk Solutions

Purnima Meenakshi, Regional Head of North America, Finance & Operations Business Unit Zoho Creative Direction / Production Jennifer O’Neill Photographer Gary Tannyan President Steve Lloyd, steve@totalfinance.ca For subscription, circulation and change of address information, contact: subscriptions@totalfinance.ca Publications Mail Agreement No. 40050803 Return undeliverable Canadian addresses to:

Circulation Department 302-137 Main Street North Markham ON L3P 1Y2 t: 905.201.6600 • f: 905.201.6601 info@totalfinance.ca www.totalfinance.ca Twitter: @totalfinancemag Subscriptions available for $40.00 year or $60.00 two years. ©2025 Lloydmedia Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Printed in Canada.

Reprint permission requests to use materials published in Total Finance should be directed to the publisher.

MARKET TRENDS 32

Holiday Spending Went Down in 2024

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COMMENTARY 34

How AI Could Fix Canada’s Productivity Gap – If We Let It

Made possible with the support of the Ontario Media Development Corporation Ontario Interactive Digital Media Tax Credit

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CFO CV NEWS REGULATORY Toronto Hydro Corporation announces that Baoqin Guo, CPA, CA, CFA, has been named Executive Vice President and Chief Financial Officer (CFO). Guo replaces Federico Zeni, who has been Interim CFO since the departure of Céline Arsenault, the former CFO who left the Corporation in November 2024. Guo brings with her almost 20 years of financial knowledge and leadership experience, including most recently at Rogers Communications, as well as prior roles at Rogers Bank and AGF Management.

Guo has held progressively senior professional and leadership positions within the telecommunications and financial services industries. Guo holds a Bachelor of Commerce (Honours) from Queen’s University and is a Chartered Professional Accountant (CPA, CA) in Ontario and a Chartered Financial Analyst (CFA).

“I am pleased to welcome Baoqin Guo to Toronto Hydro as Executive Vice President and Chief Financial Officer,” said Jana Mosley, President and CEO, Toronto Hydro.

“Baoqin brings considerable financial and leadership experience to the role and I have full confidence in her ability to drive and sustain our company’s strong financial performance. I also want to thank Federico Zeni for his support and contributions as Interim CFO over these past few months.”

Toronto Hydro owns and operates the electricity distribution system for Canada’s largest city. Recognized as a Sustainable Electricity Company™ by Electricity Canada, it has approximately 796,000 customers located in the city of Toronto and distributes approximately 18 per cent of the electricity consumed in Ontario.

Groupe Touchette announced a significant evolution in its executive leadership, appointing Nicolas Touchette and Frédéric Bouthillier as Co-Chief Executive Officers (Co-CEOs), alongside Egil Moller Nielsen as Chief Operating Officer (COO). These strategic leadership changes mark a new era of transformation as the company focuses on accelerating growth and achieving their best-in-class vision. To drive this forward at speed, key strategic changes to the operating model will be made, ensuring the leadership has both the tools and structure in place to scale and achieve its goals.

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Left to right: Nicolas Touchette, Frédéric Bouthillier, Frédéric Poussard and Egil Moller Nielsen.

As Co-CEOs, Mr. Touchette and Mr. Bouthillier will jointly oversee the company’s strategic direction, leveraging their combined expertise and 15 years at the helm of Groupe Touchette to accelerate innovation, enhance customer experience, and strengthen industry partnerships. “We are excited to embark on this next chapter together as Co-CEOs of Groupe Touchette.

With our combined expertise and strong industry relationships, we are committed to leveraging our collective knowledge to scale the company, drive innovation, and ensure Groupe Touchette remains at the forefront of the industry, delivering value to our employees, partners, and customers.” Said Nicolas Touchette and Frédéric Bouthillier.

Egil Moller Nielsen, joined the team as Chief Operating Officer, he where brings a wealth of experience in logistics, supply chain management, and retail innovation.

He has held leadership roles at companies such as Coop Denmark and The Lego Group in Denmark. His innovative approach has also been recognized with global industry awards in supply chains.

“I am truly excited to join Groupe Touchette at such a pivotal time in its growth. The company has built an incredible foundation, and I look forward to working with the team to enhance operations, scale for the future, and drive innovation. I can’t wait to get started and contribute to this next chapter of success,” Nielsen said.

With his successful track record of managing IT teams and understanding their

pivotal influence on supply chains, Nielsen is well-equipped to help the company reach its long term goals. “We’re thrilled to welcome Nielsen to the team as our new Chief Operating Officer,” said Nicolas Touchette and Frédéric Bouthillier. “We are very fortunate to have someone of his caliber, and we look forward to learning and benefiting from his broad expertise in fostering scalable operations and replicating success.”

Completing this leadership team is Chief Financial Officer (CFO) Frédéric Poussard, whose financial leadership has been key in driving Groupe Touchette forward. With 12 years at Groupe Touchette, Frédéric has shaped GT’s financial strategy, business guidelines, and mergers and acquisitions approach, ensuring the company’s financial stability and long-term growth. His collaborative approach and strong relationships have been pivotal in successfully executing major transactions, while his mentorship and in-depth knowledge of the automotive market have made him a trusted and respected leader within the company.

These executive appointments underscore Groupe Touchette’s commitment to driving growth, operational excellence, and industry leadership. As the company embarks on this exciting next chapter, the leadership team is focused on achieving best-in-class status through a dynamic operating model that fosters innovation, scalability, and long-term sustainability.

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REGULATORY NEWS CFO CV These strategic changes will position Groupe Touchette to support its growth, enhance customer experience, and continue driving value for employees, partners, and stakeholders in the years ahead.

Founded by André Touchette in 1979, Groupe Touchette, the largest Canadian-owned tire distributor, has been recognized for over 40 years for its expertise and superior level of service to manufacturers, car dealers and independent customers. Today, led by Nicolas Touchette and Frédéric Bouthillier, the company headquartered in Montréal specializes in value-added tire distribution services. Groupe Touchette employs over 1,800 people and has a presence across Canada with more than 40 distribution centers. Through its TireLink and DT Tire Banners, Groupe Touchette is servicing car manufacturers, car dealerships and independent tire retailers. The company also serves Canadian consumers under the retail banners Tirecraft, Integra Tire, Signature Tire, Tireland/Ici Pneu, Tire Partners/Pneu Solutions, Pneu Select, MécaniPneu, Pneus Chartrand Mécanique, Pneus Express Mécanique, Pneus Bélisle and Touchette Motorsport.

Graham Taylor

Odd Burger Corporation, a leading vegan fast-food restaurant chain and food technology company, is pleased to announce the appointment of Graham Taylor, a leading expert in the field of Artificial Intelligence (“AI”) as a member of its board of directors effective March 31st, 2025.

Graham Taylor received his PhD in Computer Science from the University of Toronto in 2009 and is currently a Canada Research Chair and Professor of Engineering at the University of Guelph. He co-directs the University of Guelph Centre for Advancing Responsible and Ethical

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AI and is a Faculty Member at the Vector Institute for AI. In 2016 he was named as one of 18 inaugural CIFAR Azrieli Global Scholars and in 2018 he was honoured as one of Canada’s Top 40 under 40. In 2019 he became a Canada CIFAR AI Chair and spent 2018-2019 as a Visiting Faculty member at Google Brain, Montreal. Taylor co-founded Kindred, which was featured at number 29 on MIT Technology Review’s 2017 list of smartest companies in the world, acquired by Ocado in 2020. From 2021–2023 he served as Vector’s Research Director and is currently the Academic Director of NextAI, a non-profit accelerator for AI-focused entrepreneurs.

“We are very excited to have Graham Taylor join our Board of Directors,” says James McInnes, CEO and Co-Founder of Odd Burger. “As we continue to build the future of fast food, AI will undoubtedly be a key component of our technology platforms. The leadership that Dr. Taylor brings to Odd Burger in the field of AI will help us to roll out the best technology with the greatest impact to the Company.”

Graham Taylor will replace Michael Fricker, who has served on Odd Burger’s board of directors since January 2022. The Company extends its gratitude to Mr. Fricker for his time and guidance during the past two years.

AI Chatbot Launch The Company is also pleased to announce that it has launched a custom-designed AI chatbot on its website (oddburger. com) so that it can begin the process of automating the Company’s customer support, franchise sales and investor relations activities. The chatbot is expected to help the Company scale more efficiently and provide better response times and resolutions for its customers, investors and franchise partners.

“We are excited to launch our first AI system,” says James McInnes. “AI is shifting the way companies do business, and I believe early movers will have a significant advantage in the marketplace.”

The Company also plans on launching an AI voice agent, which will allow users to get a human-like experience when contacting the Company through the phone.

Odd Burger Corporation is a franchised vegan fast-food restaurant chain and food technology company that manufactures

a proprietary line of plant-based protein and dairy alternatives. Its manufactured products are distributed to Odd Burger restaurant locations through its foodservice line and sold at grocery retailers through its consumer-packaged goods (CPG) line.

Aimia Inc. announced that as part of its commitment to succession planning and good governance, Tom Finke has resigned as Executive Chairman and will be succeeded

by Rhys Summerton who brings 20 years of experience in the investment industry.

“A little over a year ago, I stepped in as Aimia’s Executive Chairman during a period of significant transformation and uncertainty,” said Tom Finke, Aimia’s outgoing Executive Chairman. “At that time the board and management team of Aimia set out to refocus the Company on enhancing shareholder value by improving the operational performance of our core holdings, monetizing value in our minority investments portfolio, reducing Holding Company costs, and reaching a cooperation agreement with Aimia’s largest shareholder.”

Finke added “While I am pleased with our accomplishments over the past year, there is more work to be done to further unlock shareholder value. With that in mind, I have decided that this is the right time for me to hand the reins of the Company to Rhys given his experience and vision for growing shareholder value.

I would like to thank my fellow board members, the management team, and Aimia’s shareholders for the support and encouragement they have provided me over the past year. I look forward supporting the Company’s continued success as a longterm shareholder.”

During Finke’s tenure as Executive Chairman, the Company and the Board prioritized enhancing common shareholder value by focusing on four main objectives: unlocking the full value of Aimia’s core holdings, Bozzetto and Cortland; responsibly monetizing Aimia’s non-core assets; optimizing Aimia’s capital structure; and reducing holding company expenses.

Since Aimia’s AGM in June 2024, the Company’s core holdings have delivered improved financial results and are on track to reach to their guidance target for adjusted EBITDA of $80 to $85 million, the

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CFO CV Company has monetized all of its holdings in Capital A, generating proceeds of $26.5 million, and completed a Substantial Issuer Bid that will generate annual savings of $5.1 million and a gain on the transaction of approximately $54 million. Additionally, the Company’s ongoing Normal Course Issuer Bid has resulted in the purchase for cancellation approximately 3 million shares as at December 31, 2024.

Summerton, founder and investor at Milkwood Capital, became a Director on January 28, 2025 following overwhelming support from Aimia’s investors at the Company’s Special Meeting of Shareholders.

“As an investor, I first became an Aimia shareholder because of my belief that it is an undervalued company with the potential to deliver attractive returns for investors over the long term,” Rhys Summerton, Aimia’s incoming Executive Chair said. “The opportunity to generate these returns will be possible by building on our recent momentum, applying discipline to all capital allocation decisions, and understanding investor sentiment through regular engagement with shareholders.”

Since 2014 Summerton has held the position of founder and investor at Milkwood Capital, a long-term, value oriented, global investment company, based in Windsor, UK. Summerton is currently on the board of Nasdaq-listed Nexxen International and other public and private companies where he has demonstrated a proven track record in driving shareholder value through cost rationalization, decentralized and thoughtful capital allocation. Mr. Summerton is a Chartered Accountant, articling through Ernst & Young.

Consistent with the Board’s efforts to reduce Holding Company costs, the Company also announced that Tom Finke, Linda Habgood, James Scarlett, and Yannis Skoufalos have resigned as Directors effective immediately. Steven Leonard, Aimia’s President and CFO, has been appointed as Director effective immediately. Leonard, CPA, has more than 35 years of finance and executive leadership experience and has held progressively senior positions with the Company since joining Aimia in 2010.

With a reconstituted Board and a more streamlined decision-making process, the work of the Strategic Review Committee

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will be assumed by the board. Aimia’s Board remains committed to pursuing all options which will to maximize the value of its core holdings, non-core investments, and tax losses in order to drive shareholder value.

Aimia Inc. (TSX: AIM) is a diversified company focused on enhancing the growth potential of its two global businesses, Bozzetto, a sustainable specialty chemicals company, and Cortland International, a rope and netting solutions company.

Headquartered in Toronto, Aimia’s priorities include monetizing its non-core investments, enhancing the value of our core holdings, and efficiently utilizing its loss carryforwards to create shareholder value.

Tucows Inc. nominated five new individuals for election to its Board of Directors’ slate at the company’s Annual Meeting of Shareholders, as outlined in the 2025 Proxy Statement. The newly-nominated directors — Dr. Sandra Matz, Laurenz Malte Nienaber, Allen Taylor, Jeffrey Tory, and Stephan Uhrenbacher — bring a breadth of experience across finance, technology, marketing, and entrepreneurship, and are eager to help guide Tucows through its next chapter of growth and innovation. They join the roster of returning director nominees: Marlene Carl; Lee Matheson; and Elliot Noss.

“We are excited to welcome these new members to the Board,” said Elliot Noss, President and CEO of Tucows. “Each brings unique expertise and a shared commitment to Tucows’ mission to build a better internet and stronger digital infrastructure for all. This refresh of our Board reflects the next stage in Tucows’ long-term growth plans. Several of our long-serving directors felt this was the right moment to pass the torch. This transition is a natural progression for our company.”

Dr. Sandra Matz is the David W. Zalaznick Associate Professor of Business at Columbia Business School and Director of the Center for Advanced Technology and Human Performance. A leading voice in data-driven behavioral science, Dr. Matz specializes in understanding how psychological traits influence consumer behavior and business outcomes.

Laurenz Malte Nienaber, Founder and Managing Director of LMN Capital GmbH, has deep experience in investment

strategy, technology, and governance.

Based in Munich, Mr. Nienaber brings analytical rigor and a hands-on approach to board leadership.

Allen Taylor, President of GTD Partners and former CFO of Trisura Group Ltd., brings a seasoned background in private equity operations, financial turnarounds, and strategic investments. His leadership across Brookfield Asset Management and advisory roles equips him with broad financial and operational insights.

Jeffrey Tory serves as Chair and Portfolio Manager at Pembroke Management Ltd., where he has spent nearly four decades investing in North American growth stocks.

A CFA charterholder and adjunct professor at McGill University, Mr. Tory’s investment expertise and commitment to governance are well-aligned with Tucows’ long-term vision.

Stephan Uhrenbacher is a serial entrepreneur and investor with deep tech and sustainability credentials. As Founder of Density Ventures and Sustainable Aero Lab, he has been a driving force in mentoring breakthrough startups globally.

Mr. Uhrenbacher also brings senior leadership experience from companies including Qype, 9flats.com, and DocMorris.

Tucows helps connect more people to the benefit of internet access through communications service technology, domain services, and fiber-optic internet infrastructure.

Alok Ajmera, president and CEO, Prophix.

Prophix, a global leader in financial performance management, is starting 2025 with unmistakable velocity. From new product capabilities and global expansion to industry recognition and community impact, Q1 was a showcase of purposeful growth and forward progress. “The first quarter of 2025 reflects the energy, commitment, and vision that drives our

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CFO CV team forward,” said Alok Ajmera, president and CEO, Prophix. “We’ve strengthened our platform, deepened our partnerships, and remained focused on helping finance teams lead with clarity and confidence.”

This quarter, Prophix introduced Prophix One™ FP&A Plus, a new application within the Financial Performance Platform that accelerates analysis, planning, and decision-making for finance leaders navigating increasing complexity.

The company also launched the Solutions Marketplace, a new hub of pre-built templates, workflows, and data connectors to help finance teams get up and running faster with Prophix One. Prophix continued to earn global recognition in Q1 across customer satisfaction, product excellence, and industry innovation: Customer Review Platforms: Prophix was named a top product in G2’s 2025 Best Software Awards and received multiple Q1 Enterprise badges, including Best Meets Requirements and Highest User Adoption.

TrustRadius also honored Prophix with a Top Seller Award, reflecting strong user feedback across value, capabilities, and customer relationships.

Analyst & Industry Highlights: From the Dresner Applications Innovation Award for financial reporting, to ISG Research’s recognition of FP&A Plus for enabling agile decision-making, Prophix was repeatedly cited for technical excellence and usability.

Prophix also ranked #1 in recommendation rate in the BARC Survey 2025 for small and midsize deployments, with 100% user satisfaction and 10 leading positions across two peer groups, further cementing its leadership in cloud-based consolidation.

Partner Success: As Deltek’s Marketplace Partner of the Year, Prophix helped clients like Boulay Group achieve measurable forecasting improvements.

In January, Prophix acquired Forest Grove, one of Australia’s top financial analytics firms. On July 1, the team will officially transition to Prophix Australia, reinforcing Prophix’s long-term commitment to regional expansion and global alignment.

In partnership news, UHY and Prophix joined forces to expand CFO advisory services and help more finance teams improve performance through technology.

Moreover, the company is hitting the road

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in 2025 with a global series of in-person events across North America, Europe, and Australia. Customers and partners can expect hands-on sessions, product deep dives, and valuable networking.

Purpose in Action Giving back to the community continues to be a key priority for Prophix. In Q1, Prophix employees raised $3,360 for Black Women in Motion, a nonprofit supporting Black survivors of gender-based violence. Prophix matched the full donation as part of its Corporate Matching Program.

Through Prophix’s continued partnership with Kiva, the company has now lent more than $98,000 to over 5,400 borrowers across 15+ countries, supporting underserved entrepreneurs.

Prophix also continues its tradition of quarterly “Purpose Projects”. Before the end of April, Prophix employees will determine which one of three nominated charities will receive a $50,000 donation.

Q1 set a strong pace for the year ahead, fueled by bold product moves, customer wins, and continued recognition from the market. As Prophix moves into Q2, expect new capabilities, expanded partnerships, and even more ways to propel the Office of Finance into the future.

Designed for growing finance teams, Prophix offers a complete suite of financial performance management solutions that scale with you. From planning and budgeting to forecasting, reporting, reconciliation, and consolidation, Prophix brings it all together in one intelligent platform.

MCAN Mortgage Corporation was named one of Canada’s Most Admired™ Corporate Cultures for 2025 by Waterstone Human Capital. The award celebrates organizations with high-performance, values-driven cultures that align with their vision and purpose.

“Our people are our greatest asset,” said Derek Sutherland, President and CEO of MCAN. “This recognition reflects their dedication to living our culture and driving shared success — for our team, clients, and communities.”

Waterstone’s Canada’s Most Admired™ Corporate Cultures program recognizes organizations that leverage culture as a competitive advantage. MCAN’s inclusion

underscores its commitment to embedding its DRIVE values (Diversity, Resilience, Imagination, Vision, and Enthusiasm) into everyday practices, ensuring every team member contributes to the company’s future.

“These awards recognize the very best in corporate culture — those leaders and organizations that have built and nurtured performance-driven cultures and that are at the forefront of culture best practices,” says Marty Parker, President and CEO of Waterstone Human Capital and Chair of the Canada’s Most Admired™ program. “This year’s winners actively craft high-performance cultures and serve as an inspiration for others who want to do the same.”

MCAN’s success is rooted in its commitment to its people. By prioritizing employee development, diversity, and inclusion, the Company ensures that its team members are equipped to reach their full potential. This approach not only strengthens MCAN’s internal culture but also enhances its ability to deliver exceptional service to clients and partners.

“Our culture is built on valuing and supporting our people,” said Michelle Liotta, VP of Human Resources. “This award validates that when we invest in our team, we achieve extraordinary outcomes.”

As MCAN evolves, its culture remains central to its strategy—redefining opportunity for Canadians through innovation and community impact.

MCAN Mortgage Corporation d/b/a MCAN Financial Group is a public company listed on the Toronto Stock Exchange under the symbol MKP and is a reporting issuer in all provinces and territories in Canada. MCAN also qualifies as a Mortgage Investment Corporation (“MIC”) under the Income Tax Act (Canada). MCAN is the largest MIC in Canada and the only federally regulated MIC that issues term deposits eligible for Canada Deposit Insurance Corporation deposit insurance.

MCAN’s primary objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages, including residential mortgages, residential construction, nonresidential construction, and commercial loans, as well as other types of securities, loans, and real estate investments.

Reimagining opportunity to drive growth for Canadian communities.

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CMMC CANADIAN MUSEUM MARKETING CONFERENCE June 6, 2025 Canadian Canoe Museum, Peterborough, On ATTEND: This newly-minted Conference’s mission is to expand and enhance the ability of Canada’s museums, galleries, historic sites and cultural organizations to meet the challenges in today’s sector.

If you’re looking for ways to increase membership, multiply visitor numbers, offer more visual or digital and virtual exhibits, sign partnerships with local and regional sponsors and business partners, ramp up merchandise sales, get more brand exposure in press, social media, radio, TV, YouTube and more…be sure to bring your team to this Conference. Plus…we have special rates for team registrations and appropriate rates for both volunteer-run or skeleton-staffed facilities.

Opening Keynote Speaker: Olivier Carré-Delisle, Vice-President, Digital, Public Affairs and Commercial Operations, Ingenium Added opportunities: • Hands-on marketing and communications skills building • Plus a behind-the-scenes tour of the new museum • Outdoor camping skills workshop with Canoe Museum guide • And much more. Full details to be revealed shortly.

sponsored by:

To Register or Get More Information ATTEND FOR AS LITTLE AS $150.00 (for volunteer-run facilities).

ATTEND AS A GROUP & SAVE YOUR BUDGET SPECIAL RATES FOR SMALLER MUSEUMS, GALLERIES, CULTURAL CENTERS, ATTRACTIONS…Find out how you can save as a duo or group registration.

See the full speaker roster and sign up now to save with Early Bird Registration discounts for single, dual or team registrations.

REGULATORY NEWS

Finance Forward: 10 Breakthrough Innovations Reshaping the Future of Financial Services

Explore how cutting-edge tech will redefine the industry 12

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FORECASTS REGULATORY NEWS

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BY ALLISON KARAVOS

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he past twenty years have seen incredible advancements in technology of all sorts (do we even remember life before the smartphone?) — and the world of financial services is no exception. But innovation is far from over. The financial sector stands on the edge of even more cutting-edge technology, with increasingly sophisticated tech emerging that will enhance decisioning accuracy, improve operational efficiency, and ensure maximum customer satisfaction and engagement. What’s ahead for financial services providers? While it’s impossible to predict exactly what the next twenty years will look like, we’re looking forward to what may be in store in the near future, based on the tech innovations and market-shaping forces in play today.

1. Evolution in Ways to Pay, Borrow, Lend and More There’s a variety of tech advancements on the horizon that could reshape how we pay for things, how we borrow money, and the landscape of financial services and products in general.

Some of these include:

Biometric Payments: Payments authenticated through biometric data including fingerprints, facial recognition, or retinal scans, enabling a seamless (and secure!) way to pay.

Voice-activated Payments: Payments initiated through voice commands via smart speakers or other voice-enabled devices, greatly enhancing convenience for users.

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FORECASTS Invisible Payments: This includes transactions that occur automatically in the background (one level up from our automated payments for subscriptions for example), with IoT-enabled purchases that reduce friction.

Peer-to-Peer (P2P) Lending: These lending platforms will continue to evolve, using blockchain for transparency and security On-Demand Loans: Instant, micro-loans available on-demand via mobile apps, tailored to individual needs with flexible repayment terms Tokenized Assets: Tokenization of reallife assets (i.e. real estate, art) enabling fractional ownership and lending, and providing investors with new opportunities

AI in Banking market was worth $6794.27 million USD in 2023, and is expected to reach $36765.29 million USD by 2023 (CAGR of 32.5%)

“As we’re already witnessing, Generative AI will continue to have a massive impact. It is certainly making life easier in many ways (chat bots, personalized email and marketing campaigns…)”

2. The AI and Machine Learning Revolution Already integral to processing large datasets, ongoing advancements in artificial intelligence (AI) and machine learning (ML) are set to continue to redefine risk decisioning and the entire user experience. Future algorithms will leverage advanced neural networks and deep learning to enable near-real-time decision-making by not only analyzing complex variables (including behavioral patterns and unstructured data), but also predicting results with uncanny accuracy. These advancements in intelligence will also further enhance personalization possibilities, facilitating the shift from static to dynamic risk assessment and accommodating for life changes and real-time behavior — greatly increasing the inclusivity and fairness of financial services offerings (and the customer experience!) along the way. Advanced analytics will also help financial services providers understand on a more granular level how people are using products, enabling you to make improvements, track the customer journey, and interaction points. Likewise, AI enables us to break down silos across different datasets, understand consumer behavior much more dynamically across different

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The connected vehicle payments market could reach $600 billion by 2030.

systems — and allow you to tailor new products and services accordingly. The applications when it comes to financial services are endless, including AI-driven financial advisors that can provide highly personalized financial planning and wealth management services, tailored to individual goals and behaviors.

As we’re already witnessing, Generative AI will continue to have a massive impact.

It is certainly making life easier in many ways (chat bots, personalized email and marketing campaigns, dynamic customer management, etc.), but it will also mean greater ease in testing products and models as new data sets are generated (which used to take an incredible amount of time when done manually). Generative AI could also help test different use cases for products and UAT testing (which is traditionally very difficult and time consuming). We can also use Generative AI to translate videos and documents in real-time, or even do live translations in meetings, increasing the serviceable markets of financial services providers who may have previously been limited by language or region.

3. Quantum Computing: The New Frontier Quantum computing promises to fundamentally change the capacity to process information by performing calculations at speeds unattainable by traditional computers, enabling the ability to execute complex risk simulations and fraud decisioning and detection algorithms. This speed enables quicker, and more informed risk decisoning for financial services providers. Quantum algorithms could simulate market reactions to economic events or stress test financial portfolios under a variety of conditions, providing insights at a speed and scale that just isn’t possible with today’s computation methods.

Globally, the financial services industry’s spending on quantum computing capabilities is expected to grow 233x from just US$80 million in 2022 to US$19 billion in 2032, growing at a 10-year CAGR of 72% 4. Blockchain and Decentralized Finance (DeFI) Offering a decentralized and secure platform that can transform traditional banking infrastructure, credit approvals, and monitoring systems, blockchain technology can make big waves in risk decisioning, with advancements in peer-to-peer lending, smart contracts, and fraud screening measures. With transparent and fixed record-keeping, the technology can streamline processes and reduce operational costs, automating credit decisioning and other transactional processes. And with blockhain’s inherent transparency, the reliability of financial data is improved, greatly enhancing fraud and identity management. When it comes to the increasingly important aspect of identity verification, blockchain can also be useful — enabling Self-Soverign Identity (SSI) and Decentralized Identifiers (DIDs). SSIs allow individuals to own and control their own digital identities, stored on a blockchain for maximum privacy and security, while DIDs use unique,

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FORECASTS

5. Rise of Central and Digital Bank Currencies The potential adoption of digital currencies, including those issued by central banks (CBDCs) could dramatically alter the financial services landscape. Impacting how credit is managed and issued, these digital currencies offer new mechanisms for transparency and efficiency in financial transactions, with faster transaction times, reduced costs, and improved access to financial services, especially in underbanked/underserved communities.

When it comes to risk decisioning, digital currencies can provide more streamlined and integrated data flows, enabling better tracking of financial behavior and transaction histories, ensuring more accurate risk assessments.

134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC. 6. Integrating IoT into Banking The integration of the Internet of Things (IoT) in banking could provide continuous data streams to credit risk models, offering real-time insights into a potential borrower’s financial activities and habits, and ensuring more dynamic (and accurate) credit risk decisioning and lower default rates. For

instance, data from smart home devices could inform lenders about a customer’s energy consumption patterns, which might correlate with financial stability or risk levels. This level of integration can lead to even more personalized risk assessments, potentially improving credit access and inclusion while mitigating risks for lenders.

IoT In Banking and Financial Services Market size is projected to reach USD $30925 Million by 2030, growing at a CAGR of 50.10% from 2023 to 2030.

7. Cybersecurity: Staying Ahead of Threats With increased reliance on digital technologies comes increased cybersecurity risks. Robust security measures are critical, and future developments will include predictive and proactive security strategies to safeguard against continuously evolving cyber threats.

The financial services industry’s vulnerability continues to grow, requiring innovative tech for protection like AI-driven threat detection systems that can predict and neutralize threats before they do damage.

Proactive cybersecurity will become a critical component of risk management, ensuring that both customer data and financial assets are adequately protected.

Advanced cryptography can also help with data security, including zero-knowledge proofs (allowing users to prove identity without revealing personal info, greatly enhancing data privacy and security), and homomorphic encryption, which encrypts data in a way that allows computations to be performed without decrypting.

Financial institutions are the second most impacted sector based on the number

“When it comes to risk decisioning, digital currencies can provide more streamlined and integrated data flows, enabling better tracking of financial behavior and transaction histories, ensuring more accurate risk assessments.”

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of reported data breaches; ransomware attacks on financial services increased from 55% in 2022 to 64% in 2023.

8. Sustainable and Social Impact Lending Environmental and social governance (ESG) is a hotbutton topic across industries and can greatly affect financial services providers.

Risk decisioning models will need to reflect the growing consumer and regulatory demand for responsible lending and banking practices and could even influence the overall strategy of financial institutions towards more sustainable and socially responsible operations. With a rise in conscious consumerism and corporate responsibility driving the integration of ESG into financial decision making, lenders can use ESG scores alongside traditional metrics to assess credit and fraud risk. This approach aligns with global sustainability goals but also greatly appeals to a growing number of consumers (and investors) who place high value on organizations that prioritize ethical considerations in their operations.

Global sustainable finance product issuance totalled $717 billion in the first half of 2023.

9. The Impact of Regulatory and Ethical Developments As technological capabilities expand, so does the scrutiny around their implications. AI and advanced data analytics in particular will require the need for robust regulatory frameworks to ensure these technologies are used ethically and responsibly — including data privacy,

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blockchain-based identifiers that can be verified across different platforms without exposing personal data.

There is around $52 billion of value locked in DeFI, and global blockchain spending is expected to hit $19 billion this year.

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“Today’s consumers will no longer stand for long wait times, inadequate customer service, and massmarketed products.

Instead, a competitive edge requires rapid response times.”

preventing bias in AI algorithms, and maintaining transparency and explainability in AI-driven decisions. Financial services providers will need to navigate a world where regulatory compliance is about much more than just following laws, but also about maintaining ethical standards and ensuring ongoing public trust, especially in decisions that affect individual creditworthiness and privacy.

By the end of 2024, Gartner predicts 75% of the global population will have its personal data protected by modern privacy regulations.

10. Identity Verification The most critical aspect of offering loans or any other financial service is determining who you are dealing with and what the risk is. The way we identified individuals and their potential risk two decades ago was monumentally different than where we are today, and in the future this process promises to be even more seamless — and all-encompassing. We can expect even more dynamic verification codes to reduce the risk of fraud, highly accurate DNA-based identification, genetic markers to be added to biometric identification

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systems, and more inclusive/accessible verification solutions that adhere to yet-tobe-established global standards for digital identity. Also possible are multimodal biometrics, combining multiple identifiers including behavior (typing patterns, mouse movements, gait) to continuously verify identity in real-time. Likewise, we can use wearable devices like smart watches and fitness trackers, as well as smart environment interactions (connected devices including smart homes, cars and workplaces) to verify identity, potentially reducing friction in the process.

Western Europe and Asia Pacific will potentially account for 50% of digital ID verification spend by 2028.

Future Innovation and The Customer Experience Technology has always had the power to drive significant change in all aspects of society, and future tech advancements will continue to alter how financial institutions operate and interact with their customers.

A common theme running through all of these innovations is the ability to personalize products and offerings, highlighting the extreme importance of the customer experience. A prime

example of this is dynamic, responsive onboarding — where financial services providers are tailoring the onboarding experience to individual customers by matching data checks (including identity verification, AML, KYC, and more) to the event risk and the responses of the customer. Depending on the consumer’s answers in an application, the actual application itself will change dynamically — populating additional responses required or minimizing friction with fewer questions if lower risk is determined.

Today’s consumers will no longer stand for long wait times, inadequate customer service, and mass-marketed products.

Instead, a competitive edge requires rapid response times, omnichannel offerings, customized products, and frictionless experiences — all enabled by automated, real-time decisioning.

But the concept of ‘decisioning’ itself will also evolve. Currently financial services providers utilize specific triggers that result in a decision being made, whether that’s from the end-consumer applying for a product, or from a provider proactively analyzing data and making a decision to offer a new product. But with the increased availability of data, extremely fast processing speeds, and the enhanced use of AI to analyze data and behaviors, decisioning will become much more fluid. Rather than trigger points causing a decision, are we in for a future where decisions around customers and products/services are just continuous?

Seamless? Always happening? This too will result in more hyper-personalization and a customer-centric approach in all aspects of financial services.

Done well, personalization at scale for banking customers can lead to annual revenue uplifts of 10%.

As these technologies develop, Provenir continues to lead the charge, offering an advanced decision intelligence platform that is adaptable, efficient, and strategically forward-thinking. Discover why choosing Provenir is the best decision for managing risk in a technologically evolving landscape.

ALLISON KARAVOS, Director, Content Marketing, Provenir.

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FORECASTS

5

Sage Reveals Bold Predictions for Future of Accounting by 2030 STAFF

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age, a leader in accounting, financial, HR, and payroll technology for small and medium-sized businesses (SMBs), unveiled its vision of how AI will reshape the accounting industry by 2030, with findings from their Forrester Consulting study.

A new Forrester Consulting Study of 2,339 SMB finance leaders, commissioned by Sage reveals how AI will unlock real-time insights, enhanced risk management, and strategic decision-making capabilities. Using these insights, Forrester made five predictions for how the financial function for SMBs could look by 2030.

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◉ More than 80 percent of firms will adopt robust AI ethics policies ◉ 75 percent of businesses will have transitioned away from the monthly close ◉ Over 70 percent of businesses will use real-time data for finance decisions

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“For centuries, the accounting industry has relied on processes that provide a point-in-time snapshot of financial health. AI is ushering in a new era of continuous accounting, continuous assurance, and continuous insights,” said Aaron Harris, Chief Technology Officer at Sage. “This shift will empower businesses with unparalleled operational efficiency, improved compliance, robust risk management, and more accurate financial forecasting.”

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FORECASTS

Predictions for the AI-Powered Accounting Landscape of 2030:

1 2 3 4 5

Ethical AI Leadership will be Priority: With 80 percent of SMBs having adopted robust AI ethics policy, by 2030 ethical AI will be non-negotiable. However, businesses won’t just adopt ethical AI policies — they will become the leading force in ethical AI assurance.

There will be a Total Overhaul of Risk Management: Over 90 percent of SMBs globally leverage AI for continuous monitoring and anomaly detection, reducing financial errors and fraud by over 95 percent.

This will ignite a reinvention in risk management.

The End of the Monthly Close: Real-time data will replace the traditional monthly close, with 75 percent of SMBs transitioning to dynamic, continuous accounting practices. The transition hinges on the success of continuous assurance. As AI revolutionise risk management, realtime reconciliation and other assurance capabilities will become possible.

Real-time Data will Fuel Finance Decisions: Over 70 percent of SMBs will integrate real-time data into financial decisions, empowering them to drive growth and innovation helping them thrive in the competitive landscape of 2030.

Increased Creation of New Roles and Opportunities for Accountants: AI will automate routine tasks, freeing up accountants to focus on strategic thinking and providing valuable business insights. This transition will create opportunities for accountants to leverage their expertise in new ways, driving business strategy and innovation.

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“While AI will ultimately be used to monitor all business activity and discover opportunities and risk in real-time, it will still play a supporting role in the industry, with outcomes and decisions always residing with a human,” Harris continues.

Canada’s Leadership in Ethical AI and Strategic Innovation Canada is positioning itself as a leader in ethical AI adoption, with 76 percent of firms engaged in regular ethics training and 69 percent having established formal AI ethics policies. This strong commitment to ethical governance reflects Canada’s approach to addressing the operational and ethical implications of AI, ensuring that AI technologies are deployed responsibly and transparently.

31%

Canadian businesses report significant improvements in accuracy due to AI integration.

into sharper focus with more practical experience.

It’s also positive to see that organisations are planning a strategic and collaborative approach to managing ethical challenges, which speaks to some of the hallmarks of the profession. There is a real opportunity to level-up based on securing the ethical standards, professional judgement, and human insight that make accountancy and finance professionals trusted sources of data and insight.

By embracing AI technologies thoughtfully and strategically, the accounting profession can enhance capabilities, deliver greater value to clients, and play an even more crucial role in guiding business decision-making,” said Alistair Brisbourne, Head of Technology Research, Policy & Insights at ACCA Sage’s vision for the future of accounting emphasises the importance of ethical AI integration and building trust in AIpowered solutions, such as Sage Copilot.

Sage is committed to working with small businesses to navigate this transformative period and harness the full potential of AI to drive success.

Note: Sage commissioned Forrester to conduct a survey to investigate the impact of AI adoption on accounting functions within SMBs globally, and test the following hypothesis: The adoption of artificial intelligence (AI) in accounting significantly enhances operational efficiency, financial

Canada is also at the forefront of AIdriven forecasting and planning, with 31 percent of businesses reporting significant improvements in accuracy due to AI integration. This advanced use of AI highlights Canada’s strategic focus on leveraging technology for enhanced decision-making and financial performance.

However, Canada shows potential vulnerabilities in data security, with 21 percent of firms reporting no specific measures in place to manage AI-related security and privacy risks. Addressing these gaps will be essential as Canada continues to scale its AI initiatives.

“There is an abiding sense of optimism around the potential that AI presents in terms of enhancing complex accounting tasks; and that potential is coming

accuracy and strategic decision-making across small to medium-sized businesses (SMBs). This hypothesis suggests that SMBs utilizing AI-driven accounting tools will experience substantial improvements in data processing speeds and accuracy, leading to better compliance, risk management, and financial forecasting.

A total of 2,339 completed surveys were collected from finance and accounting professionals, including roles such as Head of Accounting, Senior Accountant, Director, Treasury, CFO, and Business Owner. Participants were drawn from eight countries: the United States (N=513), United Kingdom (N=260), France (N=258), Canada (N=259), Spain (N=258), Portugal (N=257), Germany (N=257), and South Africa (N=277). While the study targeted SMBs with 10 to 499 employees, no specific industry quotas were implemented.

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TECHNOLOGY

Financial Teams Need to Improve Their Technology Usage

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The financial services and accounting sectors need to use more technology.

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BY PURNIMA MEENAKSHI

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KPMG report highlights that while Canadian financial institutions have made substantial investments in technology, there is still room for improvement.

The report indicates that financial teams are more confident than other industries in adapting to technological advancements, yet the pace of adoption remains measured.

This measured adoption is seen with artificial intelligence. Despite a rise in AI usage, Canada lags behind countries such as the United States in fully integrating this technology into financial services workflows. Many executives express

excitement about AI’s potential, yet few have taken decisive steps to implement it.

Hesitation in digitization leads to higher error rates, reduced competitiveness, and underutilized employee potential due to manual processes. Historically, businesses have prioritized digitizing sales and customer service over financial tasks, considering them more critical for growth.

However, for financial teams to maintain their organizations’ success and efficiencies, it’s imperative to accelerate the adoption of advanced technologies.

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TECHNOLOGY Challenges to Technology Adoption The rapid evolution of technology and the frequent updates to software can be overwhelming, especially for smaller firms with limited IT resources. It’s also troublesome for companies to run financial systems off disparate pieces of software.

Plenty of software options exist, many of which have issues communicating with others, which leads to data siloing, redundant processes, and general inefficiencies.

Additionally, since privacy and security are hotter-button issues, a system built on disconnected software can be a risky approach. These data privacy concerns can also weigh heavily on firms’ decisions to adopt cloud-based and AI-driven tools, especially in light of stringent regulatory requirements and the importance of maintaining client trust. These concerns can delay or complicate the adoption of tech tools, as organizations must carefully navigate potential compliance risks and security vulnerabilities.

Flexible and user-friendly technology solutions with built-in security and data privacy are critical to reducing these barriers. Financial teams and businesses concerned with accurate financials should consider shifting from a catch-as-catchcan approach to software and begin using integrated systems mindfully, ensuring collaboration and communication.

The Role of Cloud Solutions Cloud-based finance apps and suites are designed to empower businesses with comprehensive and integrated solutions to manage their financial operations by simplifying accounting, tax compliance, reconciliations, reporting, and collaboration tasks. By consolidating financial processes into a single integrated platform, they also provide businesses with better control over their finances.

Moreover, adopting integrated cloud solutions that centralize all data is critical for unlocking the full potential of AI advancements.

With the use of cloud-based finance solutions, businesses can accelerate their digital transformation journey, and financial teams can reduce the reliance on manual processes that result in delays, errors, and inefficiencies that drive up costs

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chat features enable immediate discussions with peers and clients, improving productivity and simplifying communication.

and hinder growth.

Examples of cloud-based finance solutions include: ◉ Cash Flow Management: Cloud-based finance solutions provide real-time tracking of cash flows, enabling businesses to monitor income and expenses more effectively. ◉ Expense Management: Automated expense tracking and approval workflows simplify the management of employee expenses, reducing administrative effort and preventing errors. ◉ Financial and Client Insights: Realtime reports and dashboards help create visibility into their finances. With AI capabilities, organizations can analyze large datasets to uncover actionable insights, helping firms make informed decisions. ◉ Audits and Risk Assessments: Workflow automation streamlines audit and compliance processes by improving accuracy, reducing turnaround times, and minimizing manual errors, freeing up employees to focus on strategic initiatives. ◉ Client Collaboration: Self-service portals empower customers to keep track of their invoices, accept/reject quotes, make payments, communicate with business owners, and offer greater convenience. ◉ Automated Compliance: Cloud-based solutions are equipped with automatic tax and regulatory updates to keep up with ever-changing compliance requirements. ◉ Stakeholder Collaboration: Contextual

The Path to Improved Tech Adoption To overcome barriers to technology integration, financial services leaders can take proactive steps: 1. Adopt Cloud-Based Solutions: Cloud platforms provide real-time data access, scalability, and costeffectiveness, making them ideal for firms of all sizes.

2. Invest in Education and Upskilling: Training programs offered by cloudbased software vendors can help teams effectively understand and use new technologies, reducing resistance and fostering confidence.

3. Address Data Privacy Concerns: In addition to adopting solutions that follow strict security and privacy standards, implementing best practices for secure document management, privacy, and cybersecurity is crucial in ensuring compliance and protecting sensitive information.

The need for Canada’s financial services and accounting sectors to embrace technological advancements cannot be overstated. Adopting cloud solutions with AI capabilities is no longer optional—they are necessities for competitiveness, and industry leaders must prioritize technology adoption to improve operational efficiency and foster team collaboration to drive progress. By doing so, organizations can not only manage their finances more efficiently, but also optimize costs, make data-driven decisions, and position themselves for sustainable growth.

PURNIMA MEENAKSHI, Regional Head of North America, Finance & Operations Business Unit, Zoho.

ABOUT ZOHO: With over 55 apps across nearly every major business category, Zoho Corporation is one of the world’s most prolific technology companies. Headquartered in Austin, Texas, with international headquarters in Chennai, India, Zoho is privately held and profitable, employing more than 15,000 people worldwide. For more information, visit www.zoho.com.

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REGULATORY TECHNOLOGY NEWS

Cyber Resilience for the Financial Sector: Solutions for Current and Emerging Challenges

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recent ISA Cybersecurity survey revealed that 76 percent of Canadians polled are concerned about their financial institution’s ability to maintain the security of their personal information. Their concerns aren’t unfounded: 32 percent of financial services organizations in 2023 global survey on the state of security reported that they’d had data and systems held hostage, and 40 percent reported that they’d experienced a supply chain attack.

The financial sector is heading into more challenging times ahead — but with careful planning and preparation, these challenges can be overcome.

WHAT’S COMING Let’s start with looking at the future of cybersecurity in the Canadian financial sector.

Today’s solutions must be able to quickly adapt to tomorrow’s threats and adopting a proactive approach is crucial. Here are some key considerations for financial institutions: Embrace AI and Machine Learning: You may have seen a theme — AI is here and here to stay. FIs that are not embracing AI to play an increasingly important role in both offensive and defensive cybersecurity measures will fall behind fast. Financial institutions should invest

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in AI-powered security solutions and develop in-house AI expertise to stay ahead of evolving threats. And since AI will be fundamental to many parts of the business, establishing robust AI data governance structure will streamline safe and ethical adoption of more uses of AI as they emerge. A 2024 global report suggests that organizations of all kinds around the world are already seeing AI having a major impact on the threats their organizations are confronting: 74 percent feel that AI-powered threats are now a significant issue, and 89 percent agree that AIpowered threats will remain a major challenge into the foreseeable future. This is a problem that is not going away, so it’s imperative to act.

For more insights on the challenges of AI, I recommend reading the “AI Uses and Risks at Federally Regulated Financial Institutions” report from OSFI and the FCAC, which encapsulates the current landscape faced by FIs as AI becomes part of the fabric of everyday life.

I will end on a positive note: there are clear indications that the use of AI for defense is a sound investment across all sectors. According to data gathered by IBM for their Cost of a Data Breach 2024 report, organizations that made extensive use of security AI and automation “had breach lifecycles that were 54 days shorter and cost

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TECHNOLOGY CA$2.84 million less on average compared to companies not using these technologies”.

Focus on Resilience: The old “when, not if ” mindset about cyber incidents is a cliché, but an accurate one. I tell my clients to operate as if an attack is already happening — because it just might be. Thoughtful, well-tested incident responses plans are key to helping prepare for the inevitable. Our financial infrastructure is increasingly being operated by remote, distributed workforces on cloud-centric systems. There is no perimeter. As financial systems become hyperconnected, resilience internally as well as the ability to withstand shocks to partner networks is critical. Customer expectations are for instant access, so there is no tolerance for downtime. It’s implicit in the name: hardly anyone talks about “disaster recovery plans” anymore; the focus is on “business continuity plans”.

Collaborate and Share Information: Competition is fierce among financial institutions, but there needs to be room for cooperation on the cybersecurity front. We are seeing encouraging signs of more collaboration between government agencies and guidance for critical infrastructure within and across the financial sector as well. “Designed to be an evergreen resource that can be used by all critical infrastructure sectors, the CRGs [cyber readiness goals] will be updated by the Cyber Centre based on feedback from partners and as the threat landscape evolves over time,” according to the CSE’s press release. These efforts can significantly enhance the overall cybersecurity posture not just of FIs, but their customers and the country at large. The CBA’s September 2024 submission to Canada’s Department of Finance included a call to improve information sharing across the financial sector to strengthen cyber defenses.

A collective and proactive approach highlighted by sharing threat intelligence is crucial for financial services organizations to defend against future threats. Organizations like CCTX help pool knowledge about emerging threats, attack patterns, and vulnerabilities — helping institutions stay ahead of the cyber criminals that are constantly evolving their tactics. Collaboration allows for faster detection of new threats, more effective response strategies, and improved

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resilience across the entire financial sector. Sharing threat intelligence in real time through secure platforms helps create a more comprehensive and up-todate defense, ultimately strengthening everyone’s ability to withstand and quickly bounce back from cyber attacks.

Preparing for Quantum As you’re trying to get your head around AI, it may be tempting to punt quantum computing concerns down the road. It’s unclear when we will enter the “quantum era”, but when it arrives, there won’t be enough time to react “in the moment” to the new challenges introduced.

Financial institutions must proactively prepare for quantum computing cyber threats by understanding the risks, conducting thorough risk assessments, and developing comprehensive risk mitigation plans. They should invest in quantum-resistant cryptography, closely following and preparing to implement new standards as they emerge. Collaboration within the industry, knowledge sharing, and staying informed about technological advancements are crucial. Institutions should also enhance security awareness among staff and continuously monitor developments in quantum computing.

THE CURRENT STATE Compliance Financial institutions are facing growing regulatory pressure on all fronts, but particularly regarding cloud security.

Recent regulations like the NIS2 Directive and Digital Operational Resilience Act (DORA) in the EU, as well as SEC disclosure guidelines in the US, have increased compliance requirements. And AI regulations aren’t far behind.

Here in Canada, Bill C-26 — “An Act respecting cyber security, amending the Telecommunications Act and making consequential amendments to other Acts” — was tabled in June 2022. The Act cleared

the House of Commons in June 2024, and was under consideration in committee as of November 2024. If the Bill passes, it would enact the Critical Cyber Systems Protection Act (CCSPA), which would impose a series of cybersecurity-related obligations on private-sector entities in the four key, federally-regulated sectors: finance, telecommunications, energy, and transportation. The CCSPA would apply to industries providing vital services or systems as set out in Schedule 1, and classes of designated operators identified in Schedule 2. This Act will have a profound effect on organizations in the affected sectors, so preparation is vital. It’s essential to stay abreast of the proposed Act and how it may evolve in the future.

Supply Chain Attacks The interconnected nature of the financial sector makes it vulnerable to supply chain attacks, where threat actors target third-party vendors or software to gain access to multiple organizations. The financial services sector is particularly vulnerable to supply chain attacks due to its extensive use of third-party services for online platforms, cloud storage, data processing, and other crucial functions. As an example, I’d point out the 2023 incident involving open-source software that specifically targeted the banking sector via a third-party compromise. The MOVEit incident also counted dozens of financial institutions among its global victims.

The implication here is that you need to have the same expectations of your suppliers as you should have of yourself. Implement rigorous vendor risk management processes, including regular security assessments of third-party providers. The (AMF) in Quebec has one of the country’s most comprehensive risk management programs concerning outsourcing. Even if your FI does not operate in Quebec, it is an excellent resource. AI has a role in the supply-chain risk management space as well, with modern AI-powered tools available to continuously monitor and assess vendor security postures.

Ransomware Attacks Just as threat actors are stepping up their game with respect to phishing, we

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TECHNOLOGY are still seeing ransomware attacks that pose a significant threat to the financial sector, with attackers constantly evolving their tactics. In an independent, global survey in 2024, a stunning 65 percent of respondents representing financial services organizations responded that they had been “hit by ransomware” in the preceding year, with 90 percent of those victims reporting that the ransomware attack attempted to compromise their backups at the same time.

The basics I mentioned for protecting against phishing and social engineering are the same table stakes for defending against ransomware attack as well. Developing and regularly testing your incident response plan with custom playbooks dedicated to a ransomware attack is really important, and will often yield insights on how to improve defenses and responses. And resilience measures like robust backup and recovery systems with offline storage options are critical as well, as a fallback in case of cyber incident.

Cloud Security Vulnerabilities I know firsthand that FIs still have a lot of in-house and legacy systems to deal with. They have decades of experience in defending these classic network resources.

Cloud-based services, however, are a different game altogether. Dealing with these new environments presents a steady diet of challenges. There are multiple cloud services to consider and manage, new technologies to configure, and an array of disparate systems that need to talk to each other securely. Most financial services organizations have cloud migration at top of mind — a global survey by the Institute of International Finance and McKinsey & Company found that 84 percent of FIs have cloud migration on their radar, more than any other technology (even AI!).

Managing this transition through sound governance is essential here. It’s deceptively easy to spin up resources and databases in the cloud. But without a comprehensive cloud security strategy, including proper configuration management and access controls, you’re asking for trouble. Once your model is in place, AI-powered cloud security posture management (CSPM) tools can be used to continuously monitor and remediate misconfigurations. And conducting regular security assessments and penetration testing of cloud environments is vital. It’s always better to find out if you have any

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vulnerabilities before the bad guys do.

Another pitfall that many organizations — not just financial institutions — encounter is to fully understand their shared responsibility model for security in their cloud deployments. The line between the cloud provider and the FI must be clear, and the responsibility for securing customer data — both on premises and in the cloud — must be well-defined.

Sophisticated Phishing and Social Engineering Attacks A big new challenge I see is actually an old challenge! Phishing and social engineering attacks continue to be a primary threat to the financial sector. But the new angle we are seeing today is the increasing use of AI, and the broad support from nation-states and organized threat actors in making these attacks more sophisticated than ever before. Generative AI is being used by malicious actors to carry out new strategies for their cyber attacks at low cost. FIs of any size can be victims of ransomware, credential abuse, BEC, or fraud, all frontended by a phishing attack.

I am seeing FIs fight fire with fire by aggressively adopting AI to keep pace with the bad guys. They are using modern email technologies that use AI-driven email filtering systems to detect and block sophisticated phishing attempts, and modern XDR solutions to identify and neutralize attacks immediately. Security awareness is crucial: the importance of regular employee training on recognizing and reporting phishing attempts is heightened by the higher-quality attacks that are being launched. And of course, multi-factor authentication (MFA) for all critical systems and customer accounts is essential… but not enough. I’ll refer back to our recent report on this point: 95 percent of Canadians surveyed are willing to use extra security measures, so the appetite is out there.

Credential Abuse As financial institutions continue to digitize their operations and services, managing identities and access rights has become increasingly complex and critical for cybersecurity. MFA is an important preventative step, but robust Identity and Access Management (IAM) and Privileged Access Management (PAM) programs with

zero-trust architectures are necessary for a more complete solution.

In my conversations with executives from financial organizations, access management is definitely one of the areas garnering the most attention. Adaptive and continuous authentication measures are being adopted by sophisticated players to keep the bad actors out of their networks.

I can’t stress enough how important it is to develop a comprehensive IAM strategy. AIpowered IAM solutions that consider both employees and customers can provide risk mitigation from external attack as well as insider threats (indeed, a 2024 global survey showed 31 percent of recorded attacks on financial institutions were as a result of malicious insider activity).

Enforce the principle of least privilege and regularly review and update access controls.

Develop comprehensive insider threat programs that include employee training and monitoring. Implement AI-powered user and entity behavior analytics (UEBA) to detect anomalous user activities. And deploy Privileged Access Management (PAM) tools to control and monitor high-risk privileged accounts. These strategies will also help address the next threat: supply chain attacks.

FIGHT BACK As cyber threats continue to evolve, financial institutions must remain vigilant and proactive in their cybersecurity efforts.

The stakes are higher than ever, with customer trust, financial stability, and regulatory compliance all hanging in the balance. But as I hope I’ve demonstrated, while the challenges are significant, they aren’t insurmountable. By staying informed about the latest threats, investing in robust security measures, and fostering a culture of cybersecurity awareness, financial institutions can significantly reduce their risk exposure today, and tomorrow.

If you’re ready for a conversation about these challenges, contact me at ISA Cybersecurity today. My team is ready to help you take action to protect your customers, your institution, and your reputation.

RUCHIR KUMAR is Senior Director, Architecture and Protection at ISA Cybersecurity and shares his perspectives on the landscape for FIs in Canada and around the world.

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From Ambition to Implementation: Five Ways Canadian Banks Will Scale AI Initiatives in 2025

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BY ANDRÉ GAGNÉ

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ver the past year, Canada’s Big Five banks have emerged as frontrunners in the race to implement AI, all ranking among the world’s top 25 adopters of AI. But while these organizations push forward in introducing new AI use cases and bringing on AIspecific workforces, dozens of smaller banks and hundreds of credit unions across Canada are only just beginning to experiment with the technology.

This is largely because many of these organizations first needed to transform their legacy internal infrastructures to support new AI capabilities. Compared to major financial institutions that have had extensive technology budgets dedicated to these transformation initiatives for years, this process tends to be a more

costly, complex and time-consuming undertaking for organizations without the same resources.

While Canadian financial institutions may be at different stages of their AI journeys, however, the vast majority are on the same page about one thing: the benefits to be gained from AI significantly outweigh organizations’ initial investments.

As the rest of Canada’s banks and credit unions begin catching up with their larger counterparts, here are just a few AI use cases that present the greatest opportunities for financial institutions as they prepare to scale their AI efforts organization wide.

1. Loan Risk Assessments Some of the earliest AI use cases we’ve seen in the financial industry have centered around improving the customer experience through virtual chatbots and other automated assistants.

Now, banks are increasingly exploring other ways

to improve the customer experience in both their front end and back-end offerings.

For example, using AI and machine learning to power data analytics algorithms and prediction models, banks can assess a borrower’s risk faster and more accurately than doing so manually. In order to implement these newer models at scale, however, banks need to be able to provide them with access to all of their new and historical data.

This means breaking down siloed data sources and transitioning to a consolidated, digital data infrastructure — such as one that is built in the cloud.

From there, banks can introduce even further efficiencies into the loan risk lifecycle that go beyond the initial risk assessment. According

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TECHNOLOGY to McKinsey & Company, some of these use cases include credit underwriting, automating credit applications, loan portfolio monitoring, and managing customer communications in the event of any issues.

3. Fraud Prevention Identifying and eliminating fraudulent activities is critical in the financial industry but can be a complex undertaking due to the vast amounts of data that banks and financial institutions are responsible for overseeing. Canadian banks are additionally required to report any activities that warrant investigation to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), a government organization that oversees suspicious transactions. This process, albeit critical to fraud reduction, involves even further manual work for banks.

Using AI and machine learning, banks and financial institutions can quickly synthesize massive data sets in seconds, enabling them to automatically spot,

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2. Know Your Customer (KYC) Assistants In order to validate that a customer is who they say they are, banks are constantly running Know Your Customer (KYC) verifications to reduce the likelihood of fraud, money laundering and other financial crimes.

In traditional models, this involves an entire team of KYC analysts who are dedicated to gathering and assessing customer data to verify their identification.

Then, they conduct “adverse media screening” to compare this information

flagged by their new AI assistants.

against media sources, court records, watch lists and other public databases to determine if the individual has been involved in, or is a high-risk for, any illicit activities.

AI-powered KYC tools can streamline all of these processes. Using automation, these tools can analyze massive amounts of data and flag any high-risk customers in realtime. And because this process requires significantly fewer resources than it does for humans to complete, KYC checks can be run faster and more frequently than when conducted manually. In turn, analysts will be able to focus their time on analyzing and remediating any problematic cases

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report, and put a stop to any suspicious activities in real-time. This enables organizations to take a preventative approach to fraud, which reduces both the risk and heavy fees associated with reactive fraud management.

4. Software Development While there’s been a significant focus from Canada’s Big Five banks on the consumerfacing impacts of AI, financial institutions shouldn’t overlook the opportunities that AI offers to transform middle and backoffice processes as well.

Software development, for example, is heavily dependent on manual tasks such

as reviewing code, testing, documentation and bug fixes. While these tasks are critical to banks’ ability to deliver new digital experiences at a pace that’s consistent with consumers’ expectations, they often take up a disproportionate amount of developers’ time, pulling them away from larger product innovation.

Generative AI tools are equipping banks with the ability to streamline and automate the software development lifecycle. In doing so, our clients have been able to accelerate certain tasks such as story creation by as much as 90%, compared to traditional development processes.

With proper training, these tools can do everything from reviewing code more accurately, creating stories with more detail, identifying vulnerabilities quicker, and generating higher quality documentation — all in a fraction of the time as it would take humans to do so.

5. Autonomous Agents Once banks and financial institutions have rolled out individual AI tools to manage specific business operations, their next step will be introducing AI to manage their AI. As this happens, companies will no longer have to move between different systems to manage their operations.

Instead, they’ll interface with these overarching AI-powered agents that will work with all of the other tools on their behalf — significantly streamlining workflows and productivity.

These new systems will be infused with Natural Language Processing (NLP) capabilities, meaning that banking employees will be able to speak to them like they would any other co-worker as they work in tandem to automate routine — and otherwise manual — tasks.

While there is a near-limitless amount of AI capabilities available to banks, implementation doesn’t have to happen all at once. By taking a phased approach to testing, developing and rolling out new capabilities in high-priority areas first, financial organizations that are just starting out with AI are in a better position to manage risk, spread out costs and resources over time, and demonstrate value before expanding to other areas.

ANDRÉ GAGNÉ, CEO, GFT Canada.

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TECHNOLOGY

Data Essentials in the Age of Generative AI Six essentials you need to know to build your company’s readiness STAFF/MASTERCARD REPORT

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enerative AI can help companies reinvent themselves and drive growth in many ways. However, to unlock the value of AI at scale across an organization, a digital core that’s built for both machines and humans is required.

The good news is that most organizations already own the most valuable asset in the era of generative AI: their proprietary data. But is that data ready for generative AI? Forty-eight percent of CxOs said their organizations lacked enough high-quality data to operationalize their generative AI initiatives.

With the rapid advancement of generative AI changing the sheer amount and types of data companies need… the road to readiness can seem complex. But there is a clear path forward.

We’ve identified six key essentials you need to know about how data is changing in the era of generative AI — and what it means for your business — so that you can pull ahead of the pack.

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Your proprietary data is your competitive advantage Generative AI foundation models become relevant — and therefore useful — when combined with your company’s proprietary data. This combination unlocks high value insights into your customers, products, and operations, providing a competitive edge.

Tapping historical and real-time institutional knowledge can improve internal decisionmaking, reduce risks and identify new

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TECHNOLOGY

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efficiencies, as well as open up attractive monetization opportunities.

Your unstructured data holds untapped potential Unstructured data — encompassing formats like text, images, audio and video — is rich with contextual information.

Generative AI excels at processing this data type, transforming it into valuable business insights and applications. Like turning a how-to video into a list of product features, summarizing a voice call or spinning up marketing content.

When combined with structured data, it adds the context needed to enable more human-like communication: it contains signals for tone and personality, look and feel that drive much richer interactions.

end business processes that cut across functions and value chains.

Businesses can apply generative AI to break down data silos and discover more efficient ways of working. To achieve this, every part of the organization must make data accessible and treat it as a valuable product—reliable, secure and easy to use.

Think, how much better would life be if customer service could “see” the required updates based on exact specifications from product R&D. Or marketing could know right away that supply chain can keep up with their promotion.

Access to cross-functional data breaks down boundaries and opens up the organization to new ways of working.

5 3 Synthetic data is key to filling in data gaps AI is hungry for data — and the more complex the task or output, the more data is required. Synthetic data addresses the scarcity of specialized datasets, enabling companies to explore multiple scenarios without the extensive costs associated with real data collection.

For example, a company might use synthetic product and customer data during market-testing to save time and resources. It can also be used for risk-management, designing “what-if ” scenarios, and even to remove bias.

Synthetic data also addresses certain data risks. It can be used to train AI models without transgressing privacy if the data is sensitive. In cases where data is regulated, keeping copies of synthetic data rather than the original reduces risk in case of a breach.

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Connected data is key to context for generative AI So much of today’s data is locked in silos and functional domains, limiting potential and collaboration. Generative AI facilitates the use of crossfunctional data, enabling the reinvention of end-to-

Generative AI accelerates data risks Most new opportunities come with new risk, and generative AI is no exception. It introduces new challenges, particularly when it comes to data governance and security. There are a number of common blind

“... to unlock the value of AI at scale across an organization, a digital core that’s built for both machines and humans is required.”

spots that organizations must address to mitigate new risks like — new data types, greater access, increased attacks and maintaining data quality.

To mitigate these risks, companies should adopt robust data governance— something that is often baked into Responsible AI programs. Accenture’s own internal Responsible AI program, for instance, has four main components — establish AI governance; conduct an AI risk assessment; enable a systematic RAI testing program; and ongoing monitoring and compliance of AI.

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Generative AI, applied to data, jumpstarts data readiness It’s not just about what your data can do for generative AI, it’s also about what generative AI can do for your data.

Applying generative AI to your current data processes can enhance various aspects of the data supply chain, from capture and curation to consumption.

Generative AI can help summarize and classify business data requirements; automatically generate design documents, test cases and data; and generate runbooks and deployment scripts. It can be used to help users find, contextualize and use data.

It also provides opportunities to leapfrog legacy systems and slow ways of working. For example, generative AI supports the reverse-engineering of an existing system prior to migration and modernization.

Mining your data’s full potential Many companies are sitting on a goldmine in potential generative AI value in the form of their proprietary data. It’s time to dig in. The journey to data-readiness can be accelerated by keeping these six essentials in mind. Now that you’ve got this information, how do you move forward and ready your data? We’ve identified key actions companies need to take to ensure their data is ready for generative AI. Now, we suggest you read the full report to understand key considerations and how to strengthen your data capabilities to build data readiness.

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SECURITY

Collaborating to Turn the Tide Aga C

BY ROB WOODS

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onsumer trust and institutional stability is under attack. Why? In a simple word: Fraud.

Fraud is reshaping the global financial sector, introducing risks that extend beyond monetary losses. Sophisticated schemes such as authorized push payment (APP) scams, synthetic identity fraud and vast mule networks means that financial institutions need to advance digital fraud protections and fast.

One good thing that came out of the pandemic is that it forced companies and consumers to embrace an expedited digital evolution, but with the emergence of new, more convenient payment types comes more risk and complex threats.

Fraud in banking and payments not only imperils revenues but threatens the foundational trust that financial institutions rely upon.

With fraudsters exploiting every place where a transaction occurs, institutions must adopt innovative strategies and collaboration to ensure security without sacrificing convenience.

To address the growing challenge, financial institutions (FIs) need access to risk insights and a layering of protective tools to mitigate them effectively. They can also pool their knowledge with other organizations and leverage shared collaborative networks. This not only allows FIs to see risk signals within their own environment, but it also gives them risk intelligence related to devices, IP addresses, email addresses and other indicators outside of their environment from participating peer organizations. This helps all members improve their fraud risk assessments.

Fraud has become widespread in the financial sector, as criminals take advantage of rapid technological change and expanding digital footprints. Losses from APP fraud, where criminals manipulate people into making payments to fraudulent accounts, are expected to exceed $5.25 billion in the US, UK and India by 2026. The rise of real-time payment systems has further complicated fraud defenses, providing fraudsters with quicker tools to move illicit funds while institutions scramble to slow down attacks.

Synthetic identities represent another growing issue for FIs. Global losses tied to synthetic

identity fraud now approach $40 billion, as criminals combine fake identities from both fictitious and stolen personal data. With global data breaches on the rise, fraudsters are gaining access to an increasing reservoir of valuable data points to craft convincing but fraudulent applications for credit or accounts.

Compounding these issues is the operational complexity of detecting fraud early along the customer journey. The global nature of financial crime makes it particularly challenging for institutions to distinguish between legitimate and suspicious behavior. An attack on one bank often links to larger networks that span industries and countries.

Collaboration as the Financial Sector’s Best Defense Collaboration within an industry and across industries and borders helps solve for simple to the most complex fraud. Criminal organizations are highly networked, able to deploy scams at scale with precision. To fight back, financial institutions are able to work together to create similarly robust defense ecosystems.

Collaborative intelligence networks are proving to be indispensable for addressing this challenge.

These networks enable financial institutions to share anonymized insights on risk signals across customers, devices and transactions in real time.

For example, insights into mule activity from one institution can flag signs of fraudulent activity at another, preventing scams from escalating, demonstrating how collaborative networks enable knowledge from one institution to protect other members of the community.

Layering technology is the recommended approach to combating fraud within the financial sector. Advancements in artificial intelligence (AI) and behavioral intelligence are reshaping fraud detection and prevention capabilities to empower organizations to spot patterns, behaviors and anomalies that may otherwise slip through conventional risk checks.

AI-driven analysis has shown remarkable promise in detecting synthetic identities. By examining hundreds of attributes tied to an

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SECURITY

ainst Fraud in The Financial Sector security without introducing friction, enabling a smooth customer experience in mobile transactions which are fast becoming dominant in the financial sector.

Combining these defenses with collaborative real-time intelligence on fraudulent beneficiaries magnifies antifraud workflows effectiveness and is critical in limiting mule activity within the ecosystem.

Safer, Secure Payments Securing the payments process is central to fraud mitigation. With the global volume of instant payments expected to reach $58 trillion by 2028, financial institutions are under mounting pressure to defend realtime payments systems against fraud.

Organizations that adopt a broad range of fraud solutions experience up to an 18.5% reduction in fraud losses, according to the LexisNexis® Risk Solutions Global State of Fraud and Identity Report. By layering threat intelligence, alternate authentication strategies and in-depth transactional analysis, these institutions can achieve safer, faster and more secure payments.

An FI’s ability to compete relies heavily on its proficiency in combating fraud , adapting swiftly to emerging risks and providing a convenient and low friction user experience. Financial institutions can integrate advanced technology with collaborative frameworks to counter the increasingly resourceful fraud networks.

Real-time fraud monitoring at both inbound and outbound steps of the transaction life cycle will remain essential.

Additionally, the sector must work towards clearer regulatory standards beyond borders. Fraud is a global problem and the lack of cross-border cooperation limits the effectiveness of even the most robust local systems. Harmonizing international frameworks will be key to addressing the interconnected nature of financial fraud.

The road forward isn’t without challenges, but there are opportunities to not only mitigate risks but drive innovation. A financial sector that embodies collaboration, leverages advanced technology and invests in consumer education can transform fraud prevention into a competitive advantage, safeguarding both businesses and the consumers they serve.

ROB WOODS is Director, Fraud and Identity, LexisNexis Risk Solutions.

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identity, such as behavior, device usage and relationships with other accounts, financial institutions can distinguish genuine users from malicious actors. This is especially valuable in changing financial ecosystems where emerging identities, such as young or migrant users, mirror the characteristics of synthetic identities.

Digital intelligence, behavioral intelligence and device binding, which links a user’s mobile device to their account, are particularly impactful in securing mobile banking interactions. These tools allow institutions to authenticate user identities passively, using factors such as the way someone holds, types on or interacts with their device. These measures enhance

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Finding Accounting Irregularities Before They Become Front-Page News F

BY WENZEL RYAN REYES

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inancial scandals are dominating headlines with increasing frequency, affecting organizations of all sizes — from multinational corporations to fast-growing startups. No company is immune to the risks of fraud or financial reporting errors. The consequences go far beyond financial losses; they undermine trust, tarnish reputations, and shake investor confidence. No business wants its name associated with these damaging stories.

Instead of asking, “Who’s to blame?” when fraud is uncovered, the better question is, “What allowed this to go unnoticed?” In today’s fastpaced, data-driven world, traditional detection methods often fall short. That’s why it’s critical for management, internal auditors, and external auditors to work together — armed with the right tools — to detect and prevent fraud before it escalates.

accounting records are manipulated to paint a misleading picture of a company’s financial health. It may not involve direct theft, but the consequences can be just as devastating — misleading stakeholders, distorting financial statements, and eroding trust.

Fraudulent financial reporting mechanisms often include: ◉ Capitalizing operating expenses on the balance sheet to avoid impacting profits. ◉ Creating fictitious prepaid expenses. ◉ Misclassifying intercompany charges to avoid scrutiny. ◉ Recognizing offsets to revenue to improve financial optics. ◉ Reclassifying operating costs as inventory expenses to hide true expenses. ◉ Manipulating accruals to change the timing of cost recognition.

Understanding financial reporting fraud One of the most concerning types of fraud is financial reporting fraud. This happens when

As companies handle increasingly complex financial transactions, the risk of these practices going undetected grows.

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How to Stay Out of the Headlines:

MANAGEMENT Why traditional detection falls short Traditionally, detecting irregularities meant sifting through accounting entries manually — especially those recorded near period-end. Reviewers of these entries typically look for things like: ◉ Missing documentation or unusual approval patterns. ◉ Suspicious offsets between unrelated accounts (like debiting fixed assets while crediting expenses).

Traditional fraud detection methods can’t keep up with the sheer scale and complexity of today’s accounting data.

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But let’s be honest: in today’s data-driven world, this just isn’t enough. Companies produce mountains of accounting data, and relying on human reviewers to analyze every entry is unreasonable. Critical red flags can easily slip through the cracks.

The role of AI in fraud detection Traditional fraud detection methods can’t keep up with the sheer scale and complexity of today’s accounting data. This is where AI-powered tools like MindBridge come in. Unlike manual reviews, MindBridge algorithms analyze 100% of ledger entries with unmatched precision, flagging potential red flags that humans might miss. Here’s a glimpse: ◉ Fabricated entries MindBridge uses Benford’s Law to catch entries with suspiciously fabricated amounts—ones that just don’t follow the expected frequency patterns. ◉ Backdated or unusual journal entries Identify entries posted outside regular working hours or backdated to earlier periods. ◉ Unusually large or round-number entries Spot transactions that stand out due to their size or round-number patterns, which may indicate manipulation.

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◉ Last-minute adjustments Highlight consistent and late adjustments made right before financial close, which can often conceal irregularities. ◉ Account entry deviations Detect accounting entries that differ significantly in amount, timing, or frequency compared to the rest of the ledger population — something manual reviews can’t achieve. ◉ Recurring entries avoiding the P&L Flag entries in accounts specifically designed to bypass the profit and loss statement. ◉ Unexpected account interactions Surface rare or unusual relationships between accounts, which may point to intentional misclassification. ◉ Abnormal activity in expense accounts Highlight irregularities in expense accounts, such as spikes or inconsistencies, that don’t align with typical trends. ◉ Expert scoring Use scoring models built by experienced auditors to identify improper account interactions or entries.

In addition, MindBridge offers powerful features to make fraud detection even more effective: ◉ Keyword searches Scan journal entry descriptions for terms like “adjustment,” “correction,” or “override” and flag these for review. ◉ Granular trend analysis Compare account trends at a detailed level across periods to identify significant decreases or inconsistencies. ◉ Ratio analysis Analyze key ratios between accounts and flag deviations from historical norms, which may indicate misclassifications or inappropriate capitalizations.

By combining these features into an ‘ensemble’ evaluation, MindBridge ensures even the most subtle anomalies can be detected, giving financial reviewers the most advanced anomaly detection available today.

Best practices for fraud prevention When it comes to fraud, prevention is always better than detection. Building a solid foundation of internal controls is the best

way to minimize risks. Here are a few simple but powerful steps organization can take: ◉ Foster transparency and accountability Create a culture where openness is encouraged, and everyone knows the value of walking the straight and narrow. ◉ Strengthen internal controls and oversight Build robust processes to detect and prevent irregularities from the start. ◉ Regular training and awareness Continuously educate employees about the risks of financial fraud and best practices for reporting suspicious activity. ◉ Leverage AI-powered technology Use advanced anomaly detection tools like MindBridge to analyze all financial data continuously and proactively identify potential issues.

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When it comes to fraud, prevention is always better than detection.

Final thoughts Preventing financial fraud requires a combination of proactive detection methods, strong internal controls, and a culture of accountability. Advanced AI tools like MindBridge are transforming how financial records are reviewed, enabling organizations to detect irregularities before they escalate into front page news.

While the human element of professional skepticism will always be essential, AIpowered tools provide the efficiency and accuracy needed to keep up with the growing complexity of reviewing financial data.

WENZEL RYAN REYES is the Senior Director for Methodology and Audit Solutions at MindBridge Analytics, and formerly director of public company audits at PwC.

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MARKET TRENDS

Holiday Spending Went Down in 2024 N

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ew survey finds nearly three quarters (74 percent) of Canadians are reducing holiday spending due to rising living costs: Spring Financial survey.

A new survey from Canadian fintech company Spring Financial, revealed Canadians’ holiday spending, saving, and stressor trends in the 2024 holiday season and shone a light on how this year’s economy was altering consumer spending.

The holiday season is typically a time of joy and celebration, but for many Canadians, it comes with a heavy financial burden. This year’s survey revealed that over half of Canadians (56 percent) — especially Gen Z (66 percent) and millennials (64 percent) — find the financial strain of buying gifts to be the most stressful part of the holidays. This stress is compounded by rising financial anxiety, with 38 percent of Canadians reporting they feel more financial strain this year than they did in 2023, a sharp increase from just 13 percent the year prior.

“Canadians are feeling the financial strain of holiday spending this year more than ever,” shared Tyler Thielmann, President and CEO of Spring Financial.

“In these tough economic times, it’s encouraging to see so many people finding creative ways to avoid debt and consider alternative gift options. I hope this shift reassures those who are financially stretched that they’re not alone—and that it’s perfectly okay to explore meaningful, less costly ways to celebrate.”

For financial professionals, understanding the nuances of holiday shopping is essential to supporting clients during a particularly challenging time of year.

Key survey findings include:

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Millennials and Gen Z are Feeling the Squeeze ◉ Nearly ¾ (74 percent) of Canadians — and 79 percent of both Gen Z and millennials — agree they are more likely to reduce their holiday spending budget this year due to rising living costs. ◉ Nearly ⅓ (31 percent) of Canadians cannot afford to buy gifts this holiday season, this is highest among millennials (38 percent) and Gen Z (36 percent). ◉ Half of Canadians (50 percent) are considering

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MARKET TRENDS alternative gifts like homemade items or experiences, with younger generations leading the trend; Gen Z at 71 percent and millennials at 58 percent. ◉ On the bright side: Nearly half (46 percent) of Gen Z expect to pay off holiday debt by the end of December.

Debt Payment Strategies are Strong ◉ Though the Bank of Canada recently lowered interest rates, only 16 percent of Canadians feel it eased holiday financial stress. ◉ While 75 percent of Canadians plan to pay off holiday debt by the end of January, 4 percent anticipate needing a full year. ◉ On the bright side: Only 13 percent of Canadians plan on using buy now, pay later services to pay for holiday shopping, down from a whopping 44 percent last year.

Atlantic Canada has Highest Stress but Strongest Payment Plan ◉ Atlantic Canada is feeling the pressure more than any other region, with 66 percent agreeing that the financial strain of buying gifts is the most stressful part of the holiday season this year. ◉ 62 percent of respondents in Atlantic Canada are planning alternatives to gift giving, higher than any other province. ◉ Atlantic Canada is one of only four provinces (alongside BC, Alberta, and Ontario) where residents are considering a personal loan to fund holiday shopping. ◉ On the bright side: 41 percent of Atlantic Canadians plan to pay off holiday debt by the end of December, the highest percentage of any province.

“We’re dedicated to helping Canadians break the debt cycle so it’s promising to see fewer people turning to high-risk options like buy-now-pay-later programs or overextending themselves with their holiday shopping,” added Thielmann. “By minimizing debt around the holidays, Canadians are setting themselves up for a healthy financial start to the new year.”

Understanding the spending habits of Canadians offers insights to financial advisors on how to best support their clients. The waning interest in buy-nowpay-later programs, for example, suggests

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a growing consumer wariness toward debt and evolving attitudes toward managing debt and financial health.

Interestingly, this year’s survey data found two savvy spender categories emerge. The first is Alternative Gifters; with everyday items getting so expensive this year, many Canadians are opting for experiences or quality time together in lieu of gifts. The second is the Year Long Planners; the survey found that 32 percent of Canadians have been saving money throughout the year to prepare for the holidays, with one even sharing that they buy their gifts throughout the year to spread out spending. This trickle savings approach can help alleviate much of the financial burden of the holiday season.

For those shoppers that are not interested or able to budget throughout the year or explore alternative gifts, it can be helpful to remind financial clients about the importance of budgeting within one’s means. Some expert advice for final holiday shopping includes: 1. Try not to overextend too much over the holidays

It can feel really difficult to curb spending over the holidays but the data shows that more Canadians are feeling financially stressed this year. Shoppers are encouraged to check in with friends and family and be honest about their current financial situation. Given the number of respondents that are exploring alternatives to gifting, there’s a good chance loved ones may also be looking to reduce spending. Things like quality time, shared activities, or a baking or used book exchange might be a more appealing way to connect with loved ones over the holidays than traditional gift giving.

2. Assess your financial situation and use it to make a plan for next year

While inflation seems to be cooling, overall prices are still quite high. With Canadians feeling the pressure this year, this could be a good time to get ahead of next year’s holiday season. For those that have the financial means, starting a savings account that is designated for holiday spending can help alleviate financial pressure next year. Alternatively, spreading out shopping throughout the year can help reduce that shopping pressure when next year’s

holidays roll around.

3. Compare your debt options

There are lots of financial options available to Canadians. For those shoppers that need to buy gifts, comparing the interest rates on credit cards, lines of credit and loan options can be a great way to determine which debt option is most affordable in the long run.

This is also a good time of year to explore different credit cards that offer perks like cash back or points that can go towards 2025 gifting.

4. Develop a payment plan

With only 36 per cent of Canadians paying off their holiday debt by the end of December, and some Canadians needing a full 12 months, creating a payment plan to pay debt off more quickly, and reduce the amount of interest incurred can go a long way.

For financial professionals, these shifting trends in holiday spending provide crucial insights into the evolving priorities and challenges faced by Canadian consumers.

The sharp rise in financial stress highlights an urgent need for financial professionals to offer solutions that address short-term pressures while encouraging long-term financial well-being.

As Canadians seek to navigate the holidays with a balance of generosity and financial prudence, there is a unique opportunity for financial professionals to step in—not just as service providers, but as trusted partners. Educating clients about budgeting, offering flexible yet responsible lending products, and fostering financial literacy can help alleviate consumer stress while reinforcing trust and loyalty.

By understanding these trends and aligning their strategies accordingly, financial professionals can play a pivotal role in empowering Canadians to enjoy the holidays without compromising their financial health.

These findings are from a survey conducted by KT Communications among a representative sample of 1,515 online Canadians who are members of the Angus Reid Forum. The survey was conducted in English and French at the end of 2024. For comparison purposes only, a probability sample of this size would carry a margin of error of +/-2.53 percentage points, 19 times out of 20.

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here is something unspoken yet deeply felt in Canada’s economy: a sense that working harder isn’t getting people further ahead. It’s not for lack of effort.

Canadians are toiling longer, juggling more, and still feeling pressed. Wages struggle to keep pace with inflation. Output per hour — the productivity metric that really matters — continues to lag behind peer countries.

This would be less troubling if Canada didn’t already house some of the world’s most advanced AI research labs and technology talent.

The issue isn’t innovation. It’s implementation. Tools like anomaly detection and machine learning are no longer reserved for R&D or Silicon Valley. They are shaping how work gets done — when companies are bold enough to deploy them.

TD Economics projects that generative AI could lift GDP by as much as 8 percent over the next decade. The need for such gains is pressing. Many of Canada’s key industries — from automotive and agriculture to manufacturing and retail — are under pressure from shifting global trade rules, escalating tariff threats, and prolonged supply chain instability. These forces are squeezing margins and disrupting long-standing operating models. In this context, productivity gains aren’t just desirable — they’re critical for survival. But, as with so many promising figures, there’s a catch: it only happens if we adopt these tools at scale. And right now, the uptake across Canadian industries is glacial.

That hesitation is costing us. Globally, companies are racing ahead — integrating

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How AI Could Fix Canada’s Productivity Gap — If We Let It ISTOCK/ TREETY

BY WENZEL REYES

AI to detect supply chain inefficiencies, optimize decisions and cash flows, and automate repetitive tasks. Here in Canada, the conversation too often remains academic.

Some organizations have quietly started making the shift. AI-powered anomaly detection tools are being used by finance teams in sectors like automotive and retail to clean up messy data and accelerate period close. Internal audit groups in logistics and manufacturing are using them to stay ahead of evolving risk landscapes. Even public sector teams — rarely at the bleeding edge — are using these technologies to better track infrastructure spending and procurement patterns.

The benefits aren’t theoretical.

One mid-sized manufacturer

reduced procurement costs after anomaly detection surfaced duplicate invoices and pricing inconsistencies. Staff who were previously bogged down in review cycles have been reassigned to higher-value work.

These are not moonshots.

They’re modest steps with meaningful gains and proven ROI. But the wider culture of Canadian enterprise has yet to catch up.

A big part of the problem is perception. AI still feels like a special project — something for digital innovation labs or longrange strategy teams. But that thinking is outdated. Making AI operational — embedding it in day-to-day tasks — is where productivity gains start to compound.

Another blind spot is the public sector. Government

agencies and institutions manage vast budgets, yet often lack the tooling to monitor where value is being lost.

Transparency may be the watchword, but without realtime data and anomaly analytics, oversight is often retroactive.

Then there’s talent. We need more professionals — not just data scientists — who can work with AI tools confidently. That means updating curricula, offering practical training, and ensuring AI skills are treated as a workplace staple, not a novelty.

And what about small and medium-sized businesses?

Many assume AI is beyond their reach. It’s not. With the rise of plug-and-play platforms and pre-configured algorithms, even lean teams can adopt tools that once required enterprise-level IT support. If anything, subject matter experts have the most to gain — they often operate with the thinnest margins and the tightest resources.

The hard truth? The cost of waiting (or worse, doing nothing) is now greater than the cost of trying. Every month spent in pilot mode is a month lost to competitors, both domestic and global. Other economies are not pausing. They are streamlining, standardizing, and scaling with AI. Canada doesn’t lack for ideas.

What we lack is deployment at scale. The longer we delay, the more our productivity challenge compounds.

This isn’t about flashy innovation. It’s about making the work Canadians are already doing go further. That’s the real promise of AI — and the reason why caution, at this stage, is the greatest risk.

What we need now isn’t more proof. It’s more action.

WENZEL REYES is the Senior Methodology Director at MindBridge.

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