A man is seen outside the Manulife Financial head office in Toronto after their Annual General Meeting on Thursday May 3, 2012. Manulife Financial Corp. says it will cut its workforce by about 700 jobs as part of a wider restructuring of its operations. THE CANADIAN PRESS/Aaron Vincent Elkaim

Manulife cutting 700 jobs as part of digital business transformation

Manulife Financial Corp. said Thursday it will cut about 700 jobs as it becomes the latest financial services company to streamline and digitize customer service operations.

The cuts will largely target customer service positions that are no longer necessary as the company automates customer transactions, said Manulife Canada CEO Michael Doughty.

“Our industry, including us, are still doing too many things the old way: processing paperwork, accepting mail, answering telephone calls on information requests that clients should be able to access on their own.”

“This is a pretty bold step in transforming ourselves to become a digital, customer-centric organization,” said Doughty.

The job cuts will come through voluntary exit programs and natural attrition over the next 18 months, the financial services company said.

Manulife plans to focus personal client services on the 20 per cent of services dealing with major life events like a death in the family, while automating the 80 per cent of client interactions that cover submitting claims, asking questions and other routine tasks.

The shift is needed as customer expectations have changed dramatically in recent years and the financial services industry needs to catch up, said Doughty.

“Client expectations have changed so dramatically, and they no longer compare us to other financial services institutions, they compare us to the best service that they’re getting from the best companies across any industry.”

Manulife said that along with cuts to customer service jobs the company will look to recruit and train digital talent to adapt to new technologies.

The company is already using artificial intelligence in its life insurance operations to analyze millions of data points with algorithms to speed up the underwriting process, Doughty said.

Manulife will continue to expand its use of technologies — including AI — across the company, he said.

“We are, over time, basically addressing with a lot more urgency the need for us to provide customers with the automated, digital experience that they need.”

Manulife said it will also consolidate its two Kitchener-Waterloo operations into one Canadian division headquarters to cut about 350,000 square feet from its footprint in the city. The company also has major operating locations in Oakville, Ont., Halifax, Toronto, and Montreal.

The company has more than 13,000 staff in Canada as part of a global workforce of about 35,000.

Winnipeg-based insurer Great-West Lifeco Inc. underwent its own transformation last year with a plan announced in April to cut 1,500 positions over two years as it moved to modernize customer service and cut costs.

The insurance industry’s restructuring follows a trend that is already playing out in the banking industry. The Bank of Montreal, for example, said in 2016 it was cutting about 1,850 staff as customers shift to online banking, while National Bank said in the same year it would cut 600 jobs and hire 500 technology-focused staff as the industry makes a digital transformation.

In 2015, Scotiabank said it would close some regional offices as it shifts document processing to two new advanced hubs in the Toronto area. Royal Bank, CIBC, and TD Bank have also announced layoffs in recent years as part of general restructuring.

Banks have also been ahead of the insurance industry on rolling out digital customer service options. The Bank of Montreal unveiled artificial-intelligence powered customer service chatbots earlier this year, though the service is limited to general information requests.

The shifts come as part of a technological arms race in recent years that has seen Canada’s big lenders ramp up spending to stay ahead of the curve.

BMO, for example, increased its technology spending by 13 per cent last year, and expects that expenditure to grow in the double digits moving forward, its chief executive Darryl White told an industry conference in January.

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