Tech chief explains how RBC’s future is built on data

When Bruce Ross joined Royal Bank of Canada (RBC) as head of technology and operations in 2014, Canadian banks were in the early stages of digital adoption. “At that time, we processed 380 million transactions a day and had about 1 million active mobile clients,” he says.

Today RBC has circa 4 million mobile active clients and 10 million digitally enrolled clients. The bank’s transaction volumes have increased by a 30% compound annual growth rate, driven mainly by these mobile users. The bank is now processing 500 million transactions a day and Mr Ross expects this will rise to 750 million in the next five years. Additionally, he is planning for the possibility that all 12 million clients will be active mobile users.

Yet clients will continue to visit bank branches. “Given the breadth of RBC’s product portfolio, we must be able to serve clients wherever they want but at the same time continue to accelerate our strategy in this digital world,” says Mr Ross.

RBC believes it needs to be a leader in innovation. The bank’s digital strategy has four strategic imperatives: build the best digital experiences for clients, which is underpinned by the bank’s 'next generation delivery platform'; provide data insights through leveraging artificial intelligence (AI) and machine learning; drive efficiencies and operational excellence through automation and retooling core technologies; and deliver 'RBC-as-a-service' by building services that clients can consume on a use basis. “It can run on their platform or our platform, on the public cloud or RBC cloud,” adds Mr Ross.

The four imperatives are underpinned by two themes: investing in people and building an engineering culture, which is “bold, curious and outcome focused”; and ensuring the bank’s safety and soundness with advanced cyber security.

Focus on the customer

Banks are operating in a rapidly changing environment, with advances in technology helping new entrants and non-traditional players to eat away at traditional profit pools hitherto protected by high barriers to entry. In addition, clients are demanding more holistic relationships.

“Banks need to support a client’s lifestyle, not just address their financial needs,” says Mr Ross. “It is not just about their mortgage, but about their home-buying decision. So, we started thinking about the ecosystem around home buying and how we could be more relevant when clients want to upgrade their home beyond giving them a home equity loan, such as providing access to builders.”

In support of its strategy, RBC sometimes looks to the fintech community to bring in extra capability. For example, in May 2019 the bank acquired home renovation platform Smart Reno, which connects home owners with builders. Two months later it bought accounts payable specialist WayPay to support small and medium-sized enterprises.

Under RBC Ventures – the bank’s internal start-up incubator and investment arm designed to engage with consumers and businesses in spaces banks do not exist – it built Ownr to help small businesses by providing registration services, branding services and so on.

The power of data

Data analytics and management is critical to the future of RBC, according to Mr Ross. The bank has actively sought out the smartest data people and also built Borealis AI, an RBC Institute for Research, which is leveraging the neural science talent in Canadian academia.

Today, there are more than 80 PhDs in five laboratories that are closely connected to universities, such as University of Toronto. “They are not just looking at how we leverage AI today but [they] are advancing the science,” says Mr Ross. Partnerships with universities also help the bank with talent acquisition. “We bring close to 1000 students a year into our technology group alone. In addition to building the bank of the future, we are building the workforce of the future,” adds Mr Ross.

RBC is using AI in its trading environment to analyse time series data. It has also built Apollo, which is a news-reading service that aggregates, analyses and curates the day’s news based on an individual’s historical selections. This has proven valuable in equity research and wealth management, for example.

In addition to the trading environment, RBC uses AI in cyber defence. Mr Ross believes that it is machine fighting machine in cyber space. “To keep up, we need machine learning capability to look at our networks and compute fabric. In this world, we can’t wait for a human to react – we need the machine to respond,” he says.

What’s next? “It is the digitally enabled relationship bank that is driven by insight,” says Mr Ross. “AI insight is going to permeate every decision we make internally and every decision our clients make.”

But that does not mean that the bank feels it has carte blanche over client data. “Our view is it is the client’s data, and RBC is the custodian of that data. If we want to use client data, we ensure that the client knows the list of capabilities that we can get from that data,” explains Mr Ross.