RBC says ‘AI arms race’ key to future growth

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Tariffs from U.S. President Donald Trump have raised concerns about the Canadian recession, but the country’s largest banks are confident that they can overcome any recent obstacles and continue to release healthy growth in the coming years.

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RBC executives say that in addition to focusing on acquiring more customers and strengthening Canadian relations and promoting its business globally, including in the U.S., the use of artificial intelligence will help “unlock” opportunities.

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“Take our strong digital, data and AI capabilities to the next level, which is an important part of what we will continue to build future banks and unlock the next phase of growth,” RBC CEO Dave McKay said on Thursday at the Bank’s first investor day event in 2018.

But he said the bank needs to adapt to “several macro-change forces”, such as “super humanization and the shift in the AI ​​weapon race”, and every business needs to keep up with that, changing immigration dynamics and the context of deglobalization and global tariffs.

“On the one hand, we have lower interest rates in Canada to stimulate investment,” he said. “But this is offset by the increased uncertainty of tariffs and their impact on businesses and jobs.”

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McKay said the market reacted strongly to any form of positive news because they felt the opportunity and did not want to be delayed in catching them.

“Negative news can lead to a pause, but positive news will encourage you again and then go very quickly,” he said.

Royal Bank of Canada (RBC) must provide more than expected funds for potential non-performing loans in the first quarter, but the key reason lenders easily beat analyst expectations is the performance of their personal business areas, which include clients’ deposits and mortgages.

Erica Nielsen, head of the group’s personal business, said the bank still wants the segment to grow, but consumers are cautious due to the threat of the trade war.

She said that in the fall when interest rates fell and stock markets performed well, there was also some “buoyancy” in the mortgage market, but people are more reluctant to put money into the market until they get more specific guidance on tariffs.

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Nelson said there was “a lot of depressing demand” in the mortgage market, so she hopes that once “there is more certainty”, businesses will get up.

With many contract renewals over the next two years, she also hopes to “competitively” in the mortgage business.

“We want our sales force to compete to win this kind of contract renewal,” she said.

Nelson said it was too early to understand how the latest round of tariffs affected Canadians and banks’ personal business units, but that did raise questions about employment and unemployment.

“It will be a trend we’re going to come out of a common period by thinking together and coming out of a common period,” she said. “Any turn in these down cycles, unemployment has had an impact on our business. That’s what we’re going to focus on with caution.”

•Email: nkarim@postmedia.com

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