Royal Bank of Canada (RBC) is planning to spend $3.2bn on technology this year in a bid to attract new customers looking for more digital banking services.
The plan was revealed at an investor meeting in Toronto where chief executive David McKay set out a number of growth targets and an expanded technology budget.
The bank wants to use new technology such as artificial intelligence, digital services and social media to add 2.5 million new customers by 2023, a tyhreefold increase on its current rate of customer acquisition.
RBC currently has 6.5 million digital users, an 8% increase on the previous year, and has released a number of new digital services in the last year via its RBC Ventures division, including a financial advice app and a digital platform for small business owners.
McKay has stated his belief that banks must diversify their offerings beyond traditional financial services in order to remain relevant to customers and to see off the threat from big tech companies and e-commerce platforms.
The bank is also targetting more than $1bn in costs savings as a result of greater automation and system consolidation.
While RBC may be the bank with the biggest tech budget in Canada, it still falls well below the budget of other larger banks in the US and Europe. HSBC recently announced plans to spend $17bn on technology while JP Morgan has a budget in excess of $10bn, $7bn more than RBC.
The superior tech budgets and their importance were acknowledged by McKay in an interview with the Financial Times.
“The question every CEO should ask is, what’s [JP Morgan CEO] Jamie [Dimon] doing with the extra $7bn,” he said.