Big technology companies and their interest in consumer data could pose a risk for Royal Bank of Canada, the lender’s president and chief executive officer suggested on Friday.<\/p>\n
In the past, Dave McKay has said RBC and other banks would be among the first to know about significant events in the lives of their customers due to the financial consequences \u2014 be it a marriage or plans to buy a house. But today, he said, a consumer’s intentions are coming to light through their social media and search patterns, which are ripe for harvesting by the major technology companies.<\/p>\n
\u201cThis means that our newer competitors \u2014 the big players in search, in social media, in e-commerce \u2014 can quickly pick up on these data cues,\u201d McKay said during a speech at RBC’s annual meeting of shareholders in Toronto. \u201cAs these technology players realize their digital dividend, there is a risk that our visibility with clients will diminish in the networked economies \u2014 or ecosystems \u2014 of the future.\u201d<\/p>\n
Speaking with reporters after his speech, McKay expanded on what sort of risk this poses, bringing up the tracking and sharing of consumer browsing patterns with potential merchants. According to the CEO, RBC is preparing for a world in which other businesses see what would-be customers are doing before the bank does, and can thus insert themselves between the bank and its customers.<\/p>\n
\u201cIf it\u2019s a financial service, what\u2019s to stop them from making that offer before you\u2019ve even come and told us you want a car, you want a mortgage, you want to buy a washing machine, you want an increase on your credit card to do that?” McKay said. “You\u2019re broadcasting to the world what\u2019s going on in your life and what you\u2019re interested in. It\u2019s not hard to deduce what the financial need from that might be at the end of the day.\u201d<\/p>\n
While there is no issue yet for RBC, Canada’s largest bank by market cap, McKay said he wants to make sure it doesn’t become an issue.<\/p>\n
\u201cYou think about someone getting between you and your customer with that information and starting to influence the customer to choose different providers,” he said. \u201cAnd therefore, you want to go back to a world where you have a deep enough relationship with a customer that they have an incentive to tell you because they trust you, because you provide them with great service, but also because they think you\u2019re the most relevant provider for them going forward.\u201d<\/p>\n
The remarks came amid the scandal that has struck Facebook Inc., which has come under fire after it was revealed user data may have been shared improperly with a political consulting company. The comments also followed a fine levied by the European Commission against Google over allegations of the company using its dominance as a search engine to favour its own comparison shopping service.<\/p>\n
RBC’s is not the only bank CEO pondering the intentions of Silicon Valley. Bharat Masrani, chief executive of Toronto-Dominion Bank, said after his annual shareholder meeting that he does have some concern about \u201cnon-traditional competitors.\u201d<\/p>\n
Technology has also become a bigger part of the banking business in general. RBC is investing in artificial intelligence, which along with machine learning, is “the most significant force of change” affecting the relationship between the financial services industry and its customers, McKay said.<\/p>\n