EXCLUSIVE–Future banking innovations aren’t going to depend on what technology financial institutions are using, but on what data is underlying that technology, according to Dave McKay, president and CEO for the Royal Bank of Canada.
If banks want to continue their current innovation progress and more importantly, if they want to elevate that innovation out from the “money movement” sector of banking where, according to McKay, it’s primarily been located, then data is the key area they need to focus on, McKay said during a speech yesterday at the SWIFT Sibos conference in Toronto.
“Banks are going to have to decide how they want to compete: will they bring customers into existing channels, or serve them in new channels?” he said, something that applies to both the retail and commercial sector.
“Every forward-thinking business knows that its future success will rely on its ability to collect data, to transform it to knowledge and from there, to value,” McKay said.
The key to this process, according to McKay? APIs, artificial intelligence, and machine learning: aka, any technology that makes banking more of a “platform” than it currently is.
“Where in the past, banks needed economic scale to succeed, in the future they will also need data skill,” McKay said. “This can be gained through existing franchises or increasingly through strategic partnerships and the use of open APIs to enable them to create a platform effect similar to social media platforms.”
The vision of banks tapping into what makes social media so popular isn’t new, and nor is the use of data to do it: banks, after all, have been collecting data for years. What is new, according to McKay, is their increased power to collect, and more importantly what can be done with it, thanks to AI and machine learning.
These technologies have already had a profound effect on investing and lending, similar to the ways in which blockchain is enabling banks to think more innovatively about money storage and movement.
For all of this, McKay said, “the battleground will be data.”4 - Readers Like This Post