RBC rallies its friends to fend off big tech
Urges banding together versus Amazon, Google
The head of the Royal Bank of Canada sounded a rallying cry for corporate Canada on Wednesday, urging firms north of the border to “band together” to fend off the threat to their businesses posed by global technology giants.
“As we look outside our borders, the platforms are almost all foreign owned, and they are collecting more information and more insight on Canadians than Canadian firms are,” said Dave McKay, president and chief executive of RBC, during an investor day in Toronto.
“So it’s an imperative that we kind of band together as Canadian firms with insight into Canadians to take control of our future.”
The pitch came as RBC unveiled new goals for its Canadian business that include increased efficiency and the addition of more than 2.5 million new clients by 2023.
The country’s biggest bank plans to take advantage of its scale to get there, as well as a tech-focused strategy that will use RBC’s treasure trove of customer data, investments in startup-like “ventures” and lower costs created by the growing digitization of the business.
But the bank will also lean on partnerships with other companies, a point underscored during an onstage discussion between McKay and executives from Suncor Energy Inc., Indigo Books & Music Inc. and WestJet Airlines Ltd.
Ed Sims, president and CEO of WestJet, noted that despite their different industries, the three were all facing competition on some level from the likes of Amazon.com Inc. and Alphabet Inc.’s Google.
“I don’t worry about what’s happening in Montreal (where WestJet’s chief rival, Air Canada, is based), I worry about Google,” he said.
In keeping with the theme, RBC and WestJet announced a new “next generation loyalty platform” on Wednesday, which has been dubbed Ampli and will be open to all Canadians.
Other merchant partners in the program are to be announced over the coming months, with Ampli to debut later this year with “merchant offers, flexible rewards and exclusive bonuses,” according to a release.
McKay said that one of the goals was to create a “counterweight” to some of the non-Canadian platforms out there.
“No one wants to create another internal, kind of foreign-based platform that controls all the data,” he said.
McKay’s comments followed ones he made at the bank’s annual meeting in April, wherein the CEO raised concerns of the “big players” in search, social media and e-commerce picking up on “data cues” of customers. At the time, McKay said “there is a risk that our visibility with clients will diminish in the networked economies — or ecosystems — of the future.”
But on Wednesday it seemed that RBC was preparing for the fight ahead. McKay highlighted the scale of the bank and its partners, and told reporters that “you have to take control of your destiny.”
“It is kind of a madein-Canada solution to the platform challenge that the world faces, and a very important one,” McKay said. “We don’t want to be buying back our clients through someone else’s channel because they’re living their lives there. We have to create an alternative.”
RBC’s investor day even had something of a Silicon Valley vibe to it. The stage was surrounded by tech-focused booths, such as for the bank’s institute for artificial intelligence research, and all of the executives who presented seemed to be going for a slightly less formal look by not wearing neck ties. The day also featured a première of the bank’s new RBC Ventures unit, which aims to go “beyond banking” and make contact with prospective clients earlier on through different sorts of apps.
The bank estimated it will spend $3.2 billion on technology in 2018, and that that expense has risen at a compound annual growth rate of 7.5 per cent since 2015.
McKay said the bank was getting a lot of “big things” done while the economic times are still relatively good.
“If you don’t grab these partners now,” he told the crowd, “there’s not enough to go around.”