Gleaning more value from data will be the key to remaining competitive for financial institutions, according to Dave McKay, president and CEO of the Royal Bank of Canada.
Opening the first plenary session of Sibos 2017 in Toronto, McKay said the decade since the beginning of the global financial crisis has been “arguably the most disruptive and creative period ever seen in our industry”.
Outside of the financial sector, technology advancements have “completely altered consumers’ lives” and are responsible for a “fundamental transformation in the goods and services economy”.
However, while some of these changes have comes about in retail banking, progress has been slower on the institutional side, with examples of innovation available, but not with the same levels of demand.
Now, this is changing, McKay said, and “it’s all down to data”.
McKay stressed that use of data in banking is not a new concept. Rather, the industry has seen an “exponential increase in computer power”, particularly in artificial intelligence and machine learning.
Industry players must find ways to increase flexibility and reduce friction in the ways they store and move data, he said.
The payments space, in particular, has seen several new entrants, leading to increased fragmentation in the market. Here, banks must consider how they will compete—either bringing clients in through existing channels, or serving them through new channels—and may have to re-consider their core value strategies.
In this world of fresh competition, “the battleground will be data”, McKay said.
The industry is moving towards a trend of more collaboration between banks and financial technology companies, McKay said. However, he also noted that financial institutions must ensure that their own pace of change keeps up with what is happening in the wider industry, becoming more fast-paced and nimble, and ultimately more client-focused.
AI and blockchain developments will allow banks to continue to derive more value from their data, and the next few years will see banks evolving further and faster than ever before, McKay predicted.
He concluded: “Cadence is important. In a world where barriers between industries are breaking down like never before, we have to learn from, act like, and increasingly partner with other sectors.”
