Canadian Occupational Projection System (COPS)

NAICS 5211-5269; 5311-5331

This industry comprises establishments primarily engaged in financial transactions or in facilitating financial transactions (such as banks, insurance carriers and brokerage agencies) and establishments primarily engaged in selling and buying real estate for others or renting and leasing various tangible or intangible assets. Real estate and leasing services are the most important segments in terms of production, accounting for 64% of the industry’s real GDP in 2021, while finance and insurance are the most important segments in terms of employment, accounting for 73% of all workers. More precisely, the industry employed 1.3 million workers in 2021, with 49% in finance and banking, 24% in insurance, 23% in real estate and 4% in leasing. Employment is largely concentrated in Ontario (48%), Quebec (21%) and British Columbia (13%), with women accounting for a slight majority of the workforce (52%). The real estate segment is also characterized by a high proportion of self-employed (43%). Key occupations (4-digit NOC) include:

• Other financial officers (1114)
• Real estate agents and salespersons (6232)
• Customer services representatives - financial institutions (6551)
• Insurance agents and brokers (6231)
• Banking, credit and other investment
• managers (0122)
• Financial sales representatives (6235)
• Financial and investment analysts (1112)
• Accommodation service managers (0632)
• Insurance adjusters and claims examiners (1312) Property administrators (1224)
• Banking, insurance and other financial clerks (1434) Insurance, real estate and financial brokerage managers (0121)
• Financial auditors and accountants (1111)
• Information systems analysts and consultants (2171)
• Supervisors, finance and insurance office
• workers (1212)
• Securities agents, investment dealers and brokers (1113)
• Computer programmers and interactive media developers (2174)
• Insurance underwriters (1313)
• User support technicians (2282)
• Computer and information systems managers (0213)
• Assessors, valuators and appraisers (1314)
• Data entry clerks (1422)
• Financial managers (0111)
• Database analysts and data administrators (2172)
• Business development officers and marketing researchers and consultants (4163)
• Computer network technicians (2281)
• Economists and economic policy researchers and analysts (4162)
• Software engineers and designers (2173)
• Collectors (1435)
• Mathematicians, statisticians and actuaries (2161)

Although firms in the finance and insurance segments derive about one third of their revenues from outside Canada, the industry as a whole is heavily reliant on the performance of the domestic economy, given the importance of the real estate segment in terms of output. Overall, the industry is particularly sensitive to consumer spending and business investment, including residential and non-residential investment. Output and employment in the industry increased steadily over the past decade, even during the COVID-19 pandemic years of 2020-2021, driven by solid growth across all segments. The substantial rebound recorded in equity markets following the financial crisis of 2008-2009 gave a boost to the finance and banking segment, while mortgage and interest rates at all-time lows have stimulated growth in the real estate and insurance segments, with buyers purchasing homes at record high prices as well as a large volume of big-ticket items (such as cars or household appliances) because of low financing costs. Throughout the pandemic, ultra-low interest rates and government support programs allowed Canadian households not only to continue paying off their existing loans, but also to boost their income and savings. This factor, combined with home confinement and telework policies, led to a surge in real estate activity and renovation spending, increasing the volume of mortgage and bank loans, as many households searched for a bigger house or a new house away from urban areas or turned to home improvements during the pandemic. The resulting pace of growth in the industry’s real GDP averaged 3.1% annually over the entire period 2012-2021, posting among the strongest growth rates across the economy. Employment growth, however, was more modest, averaging 1.9% per year. This situation reflected significant gains in productivity (+1.2% annually), largely attributable to the growing use of online technologies in financial, banking and real estate services, allowing the industry to increase output with modest growth in employment. For example, premium calculations, sales and claim processing are being increasingly automated by insurance firms. The rise of fintech start-up companies is also playing an important role in encouraging Canada’s largest banks to adopt more innovative technologies.

Output growth in the industry is projected to soften over the period 2022-2031, primarily reflecting a more tepid outlook for real estate and lending services in the short term. High inflation and rising interest rates are expected to restrain growth in consumer spending, particularly for big-ticket items, while the surge in housing prices and rising mortgage rates are expected to reduce new housing and resale activity over the next few years, limiting growth in renovation spending. Those factors will not only restrain the demand for real estate and lending services, but also the demand for home and property insurance services. Once inflation returns to its target rate of 2%, output growth in the industry should improve modestly in the medium term, supported by some cyclical recovery in consumer spending and demand for new housing in response to higher immigration, stronger pressures on housing supply and an eventual decline in interest and mortgage rates. However, growth is projected to moderate again toward the end of the projection period, as the weaker pace of growth anticipated in disposable income (resulting from the gradual slowdown in employment growth and massive retirements of baby-boomers) and the declining trend projected in household formation rates (due to population aging) are expected to limit growth in consumer spending and residential investment.

On the positive side, the industry will continue to benefit from the First-Time Home Buyer Incentive. This program, put in place by the federal government a few years ago, offers 5% or 10% of the home’s purchase price to put toward a down payment, making homeownership more affordable. Demand for business lending is also expected to be supported by a better outlook for non-residential investment, more specifically from renewed growth in investment related to machinery and equipment and engineering structures and faster growth in the construction of commercial and industrial buildings. That said, financial institutions are in the midst of a technological revolution, with fintech and insurtech applications transforming the traditional business models and opening doors to new competition, notably from the computer services industry. Such technologies include the use of artificial intelligence, big data analysis, robotic process automation (RPA), open banking and blockchain transactions to improve efficiency in the delivery of financial and insurance services. For example, fintech is making financial services easier to use through mobile banking and automated advisory services, while insurtech calculates discount premiums by monitoring healthy behaviours through tracking devices or biometric sensors. However, the steady rise in the number of data breaches presents a risk for financial institutions and regulators must ensure those new applications are safe for consumers and firms before being fully implemented. The frequency and cost of natural disasters are also rising, threatening the stability and profitability of the insurance segment.

On average, real GDP in the industry is projected to increase by 2.6% annually over the period 2022-2031, down from 3.1% in the previous decade. Employment growth is also projected to slow somewhat, averaging 1.4% per year. Again, a significant part of the growth in output is expected to be fuelled by productivity gains (+1.2% annually) resulting from technological innovations. The increased prevalence of automation and online services in real estate, banking, insurance, and even investment services will continue to improve efficiency in the industry. However, productivity growth may not always come at the expense of employment growth. It is mostly the composition of jobs within the industry that is expected to change over the coming years. For example, the automation of repetitive tasks should reduce demand for less skilled workers such as bank tellers and customer service representatives. Demand for financial advisors could also be impacted, as new digital tools and platforms are automating a growing number of activities traditionally performed by portfolio management firms. In order to keep up with emerging fintech and insurtech startup companies, the industry is expected to hire a larger number of workers with specialized skills in information technology (IT), such as software engineers, data scientists and cyber security experts, which could more than compensate for the jobs that may be displaced. While fintech and insurtech firms can sell their innovative applications to financial institutions, many of them are supplying services directly to consumers and businesses, thereby competing directly with existing banks and traditional insurance companies.

Real GDP and Employment Growth Rates in Finance, Insurance, Real Estate and Leasing Services

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.

Sources: Statistics Canada (historical) and ESDC 2022 COPS industrial projections.