Most banks today still rely on a hodgepodge of outdated technology that’s upwards of 40 to 50 years old. Efforts to modernize a bank’s core can be challenging but are necessary to take advantage of emerging technology and capitalize on the AI opportunities that exist today. The question that every bank struggles with is how do you solve the simultaneous equation of driving the business, modernizing the core and building the talent base of the future.
I recently spoke with Bruce Ross, Group Head, Technology & Operations at RBC, about what they have done to solve this equation. RBC is widely recognized as a technology leader in the banking space, including AI, with the bank ranked in the top three for the third straight year for AI maturity in the Evident AI Index (and ranked #1 among Canadian banks).
Here’s a portion of our discussion:
How did RBC become the technology leader that it is today?
When we started off, our technology was okay, but it wasn’t differentiating. And one of the reasons I got excited about joining RBC was that our CEO Dave McKay believed that technology and building the digitally enabled relationship bank was going to be essential to the organization’s future.
We followed three fundamental principles: 1. We’re here to deliver a differentiated client experience for RBC clients and also our internal partners and our people. 2. Transformation is not a one-time event, but a way of life. As an organization, we needed to get used to a different velocity in terms of adopting new technologies, being curious about their capabilities, testing them, and then deploying them to actually accelerate the business. And 3. We’re a people business and we’re only as good as the team we can put on the field. We needed to change the skill set of our people and become what I call a technology company with a bank sign on the front door. We keep pushing ourselves – why set a goal where you can jump the curb, which most anybody can do, when you can try to jump a 30-story building instead.
We talked about creating an engineering culture with a focus on curiosity, trying new things and establishing goals that are extraordinarily difficult to achieve. We were early on AI when we established our Borealis Research Institute in 2016. We started with a few AI scientists and PhDs and today and we have more than 100 PhD scientists and professors, and over 850 world-class AI developers and data engineers and 20% of the 1,000 patents we have filed since 2019 have been AI patents.
Our early investment also means we have spent time investing heavily in ensuring we are developing our AI tools and platforms safely. Our Responsible Artificial Intelligence (AI) Principles sit at the centre ensuring we have high standards of accountability, fairness, privacy and security, and transparency in all our AI endeavours.
I think what sets the leaders and laggards apart in banking technology is a culture of curiosity tempered with execution and client-focused innovation
It really comes down to focusing. We are a big organization, with over 10,000 people working in technology every day. How do you take the business goals, translate that into a technology strategy and then ensure that you present it clearly and succinctly enough so that over 10,000 people get up in the morning and can connect what they do directly to one of those strategic business outcomes. That’s my job. For us in 2024, it was executing our acquisition of HSBC Bank Canada.
I’m glad you mentioned that acquisition. That was one of the most aggressive and amazing things that occurred in terms of bank mergers, knowing that you did a close-and-convert on the same day! I’d love to know your thoughts on the role technology played in that.
Well, it really started with commitment at the top to establish a culture of execution across a single team within the bank. There was a major technology component to it, a huge business and operations effort, and a significant control functions element. Pulling the teams together as a single organization was essential to our success.
We had to seamlessly close and convert over a single weekend and the scale of it was enormous, with almost 800,000 clients, including over 2 million accounts and products migrated, across various business segments from HSBC Bank Canada joining RBC. It’s not something you get ready for in a single day, it’s what you get ready for in the years in advance. We were able to execute this task seamlessly because we had already invested in a core technology platform that was scalable at a demand deposit account level, at a mobile user interface level, and everything in between, from networks to physical infrastructure to applications. We had 4,000 people across five businesses and 17 sub-businesses underneath organized to achieve everything at a single moment.
We had to do a thorough evaluation of the customers at HSBC Bank Canada. We mapped HSBC products and services to our own and invested in substantial digital capabilities to ensure we delivered capabilities that met their unique needs. We focused on their client experience. How do we preserve as much of that as possible so that when you get on that RBC mobile app the first time, it remembers who you are, including your accounts and payees. We loaded all the HSBC Bank Canada customers’ experiences and customizations into the RBC mobile app. We also had that level of detail with the branch conversions. We switched the branch systems and branding on the same weekend and trained the branch staff so that when you walked into the branch, while the colors were different, it was the same person that the customer knew and loved. 4,000 of HSBC Bank Canada’s employees were onboarded and joined RBC that weekend and we went to great lengths to ensure they felt like part of the team on day one.
So it was really about culture, client focus, ensuring the new employees were in a great space and lastly, practice. Practice makes perfect. We had several dress rehearsals and built a run book with almost 13,000 line items where every single step in the process was choreographed down to the minute. I felt very comfortable after the first 4 or 5 hours of the conversion weekend that everything was going to go well because we had 100% data mapping accuracy.
And the last thing is that we took some risks. We were a little concerned about the capacity the call center would have on Monday morning with all the new clients following the convert. So, in addition to other levers, we applied a range of AI and genAI technology to optimize workload and manage capacity – from real-time advisor scheduling, to call summarization and integrated capacity through asynchronous messaging. It worked seamlessly and we were able to deliver exceptional service levels through a significant conversion.
You were one of the earliest adopters of AI in the banking industry with Borealis. How do you see AI playing out in banking?
First of all, we believe that AI is so transformative that you need to not only understand it but also to have the capability to deploy it and a collective ambition between the business and technology to leverage it. It’s really data and the accessibility of that data that fuels everything. Without the data and the data collection capability and the data insight on your clients, it won’t matter what AI technology you have. For us, ensuring that our data is in virtually one place, that it’s accessible, and that we can manage that platform of data was something that we had to do. And that’s why we built a data platform called Lumina.
Some of our data will sit in the public cloud, but the vast majority of it actually sits in our own on-premise cloud, and we need to be able to do both based on the type of workload. Lumina helps manage that.
We’re proud we were an early adopter and could see the value of what this capability is going to bring to the RBC client, to the RBC investor, to our business as a whole, that we could then make those bets.
AI is not only going to provide efficiency and lower cost, but also increased revenue value at the top end. We don’t see this as something that only drives efficiency, it’s going to drive business value as well.
What qualities do you look for in tech leaders, and how do you support their development?
It starts with organizational ambition. I say to our team that we’re all going to Hawaii. That’s our aspirational destination and I paint the picture of how it will feel and what we can deliver when we arrive. But I don’t tell them how we are going to get there or what to do when there are snags. So that’s the joy of the journey. Hawaii in this instance is the digitally enabled relationship bank, with eight million active clients on our mobile app and a development manufacturing engine that will be 20% faster than the best in class. It’s about giving your people the freedom to be ambitious, but also creating an environment where they can innovate and fail fast. Sometimes you have to throw people into the proverbial deep end. They might go underwater for a minute, but then they’ll pop up because we have given them the right development and strategy to succeed.
The best tech leaders are those who are given tough challenges, rewarded for their success, and provided with clear career paths. We believe in a merit-based organization where career advancement is based on capability and delivery, not just the number of people reporting to them. We also encourage leaders to take calculated risks, which can pay off in the long run.
We have also introduced programs similar to what you would see at a big tech company. We recently introduced market-competitive roles and titles for our technical SMEs, the most senior being RBC Fellows. We also have a Distinguished Engineer designation that is peer-assessed and awarded based on technical achievements. Those are completely different profiles than you would normally see in a bank and it helps our technologists equate what they do at RBC to what they would do in Google or AWS and so on.
Looking ahead, what technologies are you most excited about, and how do you see them impacting RBC?
I think quantum computing is still an untapped opportunity for us, and I think that will change the game. I still think there’s a long way to go in NLP and what NLP can provide, as well as computer vision, particularly in fields like healthcare. These technologies are seen as key drivers of future innovation and value for RBC. We are already exploring how they can enhance our services and create new opportunities for our clients.
Lastly, what else is critical to remember as you advance RBC’s technology strategy and transformation?
Innovation matters, but it all starts with what a bank is there for: to provide a trusted relationship for our clients so that every day they can execute more than one billion events safely and soundly, and a bank that our investors can invest in.
We don’t have permission to take critical systems down. Clients should expect banking services in the same way they expect running water coming out of their taps and so we have to provide that and work within the regulatory guardrails that have been set up for us. If a bank is going to be successful in the future, it’s because we have to be truly essential to the livelihood and progression of individuals and families throughout the course of their lifetimes, being there for them when times are good, but also when times are bad.