Royal Bank of Canada (TSX:RY)

Investor Day 2018

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Jun 13, 2018

Well, good morning everyone, and thanks for joining us today. I think as I welcomed many people into the room today, while they did notice all the great booths that we're going to bring to life for you in a few minutes, they first noticed that I wasn't wearing a tie. They said, "It's the first time I've ever seen you without a tie." And I go, "Yeah, it might be the first time in public without a tie." But it talks a little bit about the story of change that we're going to tell today. Really our story is how does a market leader grow? Not only grow, our story today and the strategy that we'll outline for you is how RBC thrives in this world of change. And how from a leadership position, we see incredible opportunity in the future. We're in a world, as you've heard me say a number of times, where we're digitizing commerce, we're digitizing entertainment, we're building platforms. The world of work's changing. The world of education's changing. In this future world that we're all building towards and living in, maintaining customer relevancy and connectivity has never been more challenging, but there's never been a greater opportunity to connect with more Canadians. We're living and we're going to live increasingly in a world where scale becomes more and more important. Scale in data to maintain that relevancy and insight. Scale in cybersecurity and ability to invest in cyber. Scale in network. Scale to invest in the future. You'll hear that theme throughout our presentation today. Now, today, we're defining Canadian retail as our Canadian banking business and our wealth management franchise, and you'll hear a lot of detail about those two core franchises to RBC. The two other franchises that you know really well about that we're not going to talk about today, and that's our global capital markets business and our U.S. wealth franchise. Both, as you saw in Q1 and Q2 and last year in 2017, significant strength, significant momentum, opportunity to invest in those platforms, particularly in our U.S. wealth franchise. Talked a little bit about that in the City National Investor Day a number of years ago. But we're not going to have a chance to spend time on those today. But we're really going to focus on those two core franchises and technology and how we're transforming our business. Today's session has four main pillars to it. First, we are going to talk about the Canadian banking business, and Neil's going to get up and really talk about this tremendous platform that we have. This tremendous business that's given us significant growth over decades, that drives our premium ROE. Really is half our earnings. One that has built up a series of core assets that have been a big part of our historic success. But we'll spend some time on them, why we think a number of these assets are very hard to replace and are a big part of the story in the future. You're going to hear stories about us investing in existing channels and growing those, adding new digital capabilities to build new connectivity, building on our platform of reciprocity. Canadians love loyalty. There is, again, a unique sector opportunity, as you know, in the loyalty space in Canada to continue to reward Canadians for their business. That is a big part, pillar one. Pillar two, Doug is going to talk about our wealth management franchise. Market leader in asset management, market leader in wealth distribution through Dominion Securities. A business that has scale, but scale and capability. Capability that we think continues to attract new advisors, continues to attract new clients. Scale to reinvest in a digital future in that business. A very exciting story. So you are going to hear Doug really talk about accelerating client growth, accelerating assets under management in his business. Third platform or third pillar to our discussion today, Bruce will get up and talk about technology and data. It underpins everything we do today, but increasingly in the future, you are going to hear about how we are using data to leverage. Data in itself is not valuable until you convert it to knowledge and then into value. So you are going to hear Bruce talk about data scale, knowledge, and value. You are going to hear about how we leverage that into customer insight, how we leverage data into risk management, from credit risk management to cybersecurity risk management. And how Bruce has built a team and attracted talent to this organization that allows us to build complex things more quickly, more efficiently, and more effectively. Therefore, even further leveraging the scale that we have. The fourth platform that we are very excited, and you will see in a number of the booths that we have around today, is the one where we build new connectivity and new value propositions to Canadians. The strategy is to really elongate and stretch the opportunities and the needs of Canadians that we think we can meet across all our businesses by bringing new ventures, new capabilities, new channels, new connectivity. You will see them in our booths. This is a very exciting story, and this is something you have not seen before. How we accelerate client growth through our new ventures and partnerships is the fourth pillar to our story. Then Rod will come up and summarize how this impacts our growth trajectory. How does it increase our new client flow to the organization? How do we deepen our relationships with existing thinly serviced clients, single-service clients, which we have a number of that we want to grow and deepen? How do we improve the efficiency of our organization, both in the short term to reinvest but also over the long term? We will set efficiency targets for you that we think we can do with or without interest rate changes in the marketplace. Before I bring Neil up, I would really like to start at the top on how we think of as an organization, how we cascade our strategy, and it starts with purpose. For RBC, we fundamentally believe that organizations who articulate a core purpose and live that purpose in and out every day with their employees outperform over the long term. Our core purpose at RBC is to help clients thrive and communities prosper. We are only as strong as the health of our communities, and we are only as strong as the health of our clients. Our organization embraces the responsibility to make our communities stronger. We are actively involved in that. Our employees rally around that, and it leads to much stronger engagement of your employee base when you have a strong north star as RBC does. It takes an engaged workforce to deliver on what you're going to hear today. We couldn't do it without the exceptional employees, some of whom are going to be in the room today to talk to you and to man our booths. But talent is so important to what we do. We just got back our employee survey scores. We do it every year. We survey all 80,000 employees. We had a record response rate of over 72,000 employees wrote back and filled out the survey. Our employee scores have never been higher. Never been higher across the world, across our businesses, across our functions. What our employees are telling us is, "We're engaged in your purpose and our purpose as a company. We're engaged in the strategy and the transformation that we're undergoing. Despite the disruption, despite some of the uncertainty, we're engaged in the mission we're on, and we're excited." That's the first and most important part of transforming for this new world, is having an employee base that wants to go in this direction. Because we know whenever we've tried this and gone in a direction, our employees have taken us there. Our goal is to build long-term sustainable growth that leads to dividend growth. Similarly, we focused our corporate citizenship on ensuring a better future for our youth and a healthier environment. Now, our hope is to build long-term relationships with the next generation, marrying our social responsibility to help youth get prepared for a new world of work, for a new world altogether. We think we have a fundamental role to play in doing that. That's why you've heard that we made a CAD 500 million commitment to RBC Future Launch to really help youth build the skills, the confidence, the networks, and the internships and opportunities to connect with a new Canadian economy and a new world. So that's the foundation to our purpose, our corporate social responsibility, some of our thoughts on talent. Let's start talking about strategy. There's two core fundamental pillars that we've competed on in the past that will change somewhat going forward, but the architecture of the strategic premise doesn't really change. One that is sales power. We've competed historically on sales power, which we define to be the capacity of your sales organization, the number of people in branches, the number of branches you have, the number of mobile specialists you have, the number of investment advisors you have, multiplied by their capability. It's an exponential function. More people becomes better capable. More training, more resources, leads to exponential sales power. Two, in itself, if you're out in front of Canadians more frequently and more professionally than your competitors, if you don't have value to offer, it's still not going to work. So the second part of that, you have to create differentiated value for your customers. We've done that through, as you know, products that are very hard to replicate, like Avion, like Homeline. We've introduced reciprocity formulas to our customers through RBC Rewards. As Neil will tell you, is now the largest issuer of points in the country. The performance of our mutual funds in the top quartile on the Morningstar rating. When we are in front of clients more often, more frequently, we are in front of them with best-in-class value, best-in-class products. Through that, though, the world is changing, and that formula is going to start to change with the digital connectivity changes that we are seeing. I want to go through a few core assets that we are bringing forward into this new world that we think are mission-critical. One, over the last two decades, we have created a core payments capability, the largest Canadian payments capability and business in the country across debit, credit, and business cash management. Why that is important? It gives us enormous insight into Canadians. It is rich in data for our risk management and helping understand our customers and be more relevant to our customers. And two, when you have the core checking account, as you know, cross-selling and building a relationship, a broader relationship, is much easier. That is a very important asset that we are carrying forward. Two, as I mentioned, we created the largest proprietary reward program in the country. Canadians love reciprocity. They love loyalty programs. Very difficult to build, as you have seen. Two decades, not only does it provide us with the ability to expand and leverage that platform, as Neil will talk about, but certainly, it gives us insight into the needs of Canadians. We are the largest bank for business in Canada, from small business right through to corporate. Obviously positioned to grow across all markets, across all provinces to capture that growth in the country. But importantly, partners to wealth management, partners to the retail bank, great synergies, we think, as one generation matures and hands off their businesses and their wealth to the next generation. We created the largest wealth advisor and asset manager in the country. Again, very important in meeting the changing needs and the changing demographics that we are going to talk about as we move as a society. As the boomers age and they invest more than they borrow, very important to capture that secular move in money flow and asset flow from lending to investing. The next asset is mission-critical. We have built the most valuable and the most trusted Brand in the country. And trust, you will hear as a theme throughout the day, as we talk about trust in protecting data, trust in protecting your assets, trust in dealing with me in a digital future. That trusted brand is a theme that will play throughout. A most valuable and trusted brand is an enormous asset as you compete with traditional competitors, but also non-traditional competitors. And we sit today, as you saw in the video, number one in J.D. Power in customer satisfaction, number one in J.D. Power in their advice channels, and number one in J.D. Power mobile. Our platform is future-ready, and as customers are saying, "You are building the things I really value." But the world is changing. The world is changing in so many ways. Customers, from consumers to commercial clients, are transacting in new places, in new ways. Historically, a customer came to us in a branch. They picked up the phone and called us. We were always top of mind when that financial need came up. Increasingly, customers are working, entertaining, communicating, shopping in new channels. Therefore, their financial needs are more dispersed with new connective tissue into new platforms, new types of opportunities. How do you connect your bank to these new places where a customer is? You are going to hear that story today, how we connect into social media, how we connect into new platforms, how we build our own platforms to maintain relevancy with our customers. This is mission-critical, as we increasingly are seeing our customers live their lives, even now voice-activated, as you see, in an era of platform companies. Clients are connecting with us in social media platforms and dedicated entertainment. We have to reach in there, but we also have to have a deep understanding of these clients in our own existing platforms. I think that is a big part of the strategy, that we are not going to be reliant solely on seeing our clients in other people's platforms, but we are going to articulate a platform, a series of platforms today that allow us to maintain that relevancy. That is hard to do, but all the assets I talked about position us to do that. We are in an era where business value chains are decomposing. If you continue to define yourself as what we always did will continue to be relevant, the last inch in the payments business, the last part of the cash management, we are at risk of having another business model rebundle our services into their value chain. We are seeing it across every industry is breaking down barriers. Not just banking, but every industry is breaking down value chains and rebundling them. Just look at Uber as an example of what it is doing to the payments business. You used to take your credit card out every time you traveled in the taxi. Now you take your credit card out once to sign up for the service. It is rebundled into the value proposition. The key is, in the future, that model of sales power is a model of connectivity. How do you maintain connectivity into all these new nodes and all these new platforms? How do you maintain connectivity to that customer and that insight? We are going to show you how we do that. Enormous opportunity to launch new channels internally, opportunities to create connectivity to Canadians' lives. You have to create new and broader value chains and value propositions for your clients. Being the last inch in payments, is that going to be enough? Moving up into the value chain, the life value chain, starting a business, buying a home, owning a home. All these moments have longer value chains where Mike Dobbins is going to talk to you about how we are moving up earlier into that value chain to capture the client and build and discover the client. This is why we have built, we are going to articulate how we have created a digitally enabled relationship bank. Here is kind of the five pillars, I think, to the successful business model going forward. One, you have to create value through a deep understanding of clients. As I told you have to maintain that connectivity. You have to have that data scale. You have to have that trust that the client wants to deal with you and let them see your data. That means letting them see the value that their data brings to them. This is not about creating data with their value for yourself, but creating value for them and deriving a relationship from that. Trust is the pillar of that. How are we going to do that? Our payments franchise, our loyalty programs, and the partners we're going to talk about today in RBC Ventures create data scale that we think leads the market and creates our own platform of connectivity. We're going to create value by providing advice and service to the best people and more channels leveraging AI. We live in a complex world, but many of our customer relationships will still have a person at the core center. But to increase productivity, to increase capability, we have this new era of data and AI coming together in real-time to make our people better and therefore make our clients better and happier. This is a great opportunity through having great people, enhancing them with AI. You'll hear that in a number of the booths that we have. The third pillar is you have to create value by offering best-in-class services and products. Again, it's coming back to having Avion, but enhancing Avion. Having RBC Rewards, how are we going to grow and enhance RBC Rewards? Homeline, continue to perform in RBC Investments. And the new services that you're going to hear today is also a big part of it. The fourth is creating value by providing convenience through an omni-channel experience. The customer is bombarded with all these channels of choice, and it has to feel as if it's one channel. A lot of people talk about omni-experience. Building it and creating it seamlessly for a client is critical. Making it simple for a client to action in a multiple channels is the key. You can have connectivity in multiple points. You can create value, but if it doesn't come together in an omni-channel experience, you're not going to convert that customer into your franchise. And the fifth pillar is you really have to, as I said, elongate this value chain. You have to move up in the overall value creation of a client and build a relationship before you try to convince them to buy a credit card or take a mortgage with you. Help me solve my pain points, show me you're a trusted partner, make my life easier, and then I'll give you your business. And that is the fundamental change in the thesis of what we're going to tell you today. We've built this incredible franchise over time with all this sales power, yet we're frustrated that we're number one. The customer tells us we're number one. Experts like retail bankers say we're the best in the world, yet we don't think enough Canadians are using our services. We have had this inert customer for so long that's so sticky and so difficult to switch because they don't take the time or have the insight to perceive that there are significant differences in capability. This new world of connectivity, moving up in the value chains, gives us a unique secular opportunity to tell our story, to showcase these assets in new channels, to showcase them in modified channels, to let Canadians know and let them try this wonderful platform that's taken decades to build that can't be replicated. This is a secular opportunity. We've been bottled up. We used to bombard mailboxes with 24 million pieces of mail to try to get you to buy an Avion card. There's a lot better ways of getting Canadians to see the value of our products and try them, and that is what's changed. To unlock and leverage the potential of our channel. Our thesis that you're here today, we're going to create more value for customers through more channels, leveraging our partners, new value chains, and venture. In a world of digital platforms, we're going to create new connectivity, and we're going to bring this all together in this secular opportunity to showcase new and existing platforms in a new world of connectivity to grow our client franchise through new clients, to cross-sell and deepen relationships that we struggled to do before, and to improve our efficiency ratio. With that's the architecture of the themes today and our investment thesis, and I'm going to ask Neil to come up and talk about Canadian banking. Thank you. As Dave mentioned, we built the market-leading retail bank in the country, and we've done this with two ways he mentioned. The first is this combination of leading distribution, something we refer to as sales power. We'll talk a bit more about that. But also a full shelf of best-in-class value propositions. We've mentioned Avion. We were also among the first to launch a HELOC product, which is now the market-leading HELOC product. We also have Canada's best performing mutual fund lineup. From a sales power perspective, we have almost 1,200 branches across the country and over 20,000 advisors out there connecting with our clients. As we look at in terms of our industry, as Dave mentioned, it's evolving. Over the next 30 minutes, I'm going to give you a sense of why we believe this is an opportunity for us to extend that lead we've already got. As we move into the next horizon, we do so armed with a set of privileged assets that can't be easily replicated. I'm going to talk about four of them. The first is our scale and our leading client base. The second is this deposit franchise that took so long to build and the payments business that's attached to it. The third is our client data, but almost more importantly is the insights we get from that data. And then the last one is our proprietary rewards program, RBC Rewards. We'll start with our scale. Simply put, scale matters. And scale matters more now than it ever has. We are the number one or number two position in every single business we are in in Canadian banking. That means we have relationships with 44% of Canadian adults, and we service over 925,000 Canadian businesses. As Dave mentioned, this is all underpinned by Canada's most valuable brand. Why does that matter? As clients' needs and expectations are changing, this scale allows us to invest and navigate the change in our industry more quickly than our competitors. We can invest in our core technology and create market-leading client value propositions and beautifully simple digital experiences, and we can do it across every single segment we compete in. We can leverage these investments across more clients than our competitors can. We will turn to our deposits and payments business. Nowhere is scale more important than in deposits and payments. Our payments business is important because it provides day-to-day relevance for our clients. It also provides almost a quarter of our earnings in Canadian banking. It is also important because it is the core of the relationship. It defines the primary bank for our clients, and it drives client preference. This results in increased wallet share and also provides us with lower attrition for those clients. Why is that so important? Clients with a core banking account are 4 to 5 times more likely to consolidate their business with RBC. They make over 2 billion transactions a year, which brings us to the next privileged asset, our data. The data that comes from this payments franchise will continue to benefit our business, and it will fuel our business in a number of different ways. Our client insights is one way, and that will make our advisors more productive and ensure they provide the best advice possible. It will power our CRM algorithms to make sure we optimize every client contact strategy, and we will talk about that a bit more. It will also power our fraud and risk management models to make sure that we protect our franchise, but in the most client-friendly way we possibly can. We have invested to curate this data into what we believe is the industry's richest and most robust financial client data asset in the country. We have also invested in the tools and the talent to make sure we get more client insight. All this has allowed us to build what we think about as a next generation CRM platform. Because more data allows us to be more predictive, it means that we are most relevant to our clients. Already, our AI teams have applied machine learning to our models. That means we have been able to optimize who we contact, when we contact them, what we contact them about, and we make sure we contact them in the channel they prefer to be communicated to. We take all of that together, and what we have seen over the last 12 months is a 13% lift in client responses to our contact strategies. At our scale, that is a meaningful lift. This data is also a key source of advantage in our digital marketing. We are the first FI to bring digital marketing in-house, and we have only built on that capabilities. Right now, we would say our capabilities are second to none, and some of the industry experts tell me that every quarter. We have increased our client response to digital marketing by over 240% over the past two years while clients are increasingly out there shopping digitally. We have done this while reducing our cost per click by 25% or 26%. We are not just using the power of our data and our deep analytics to fuel our own business. We are actually taking those same inputs, data, and analytics, and we are using it to drive value for our clients. The power of AI combined with big data, which we have mentioned we have an enormous resource, drives client value like it never has before. in October of last year, we launched NOMI, our digital insights tool. NOMI is embedded right in our mobile banking app, which means clients do not have to go and download another tool and toggle between two separate applications. In the first nine months, clients have already interacted with 136 million financial insights. The fact is, NOMI users are just more engaged. They are actually spending 25% more time in our mobile app than non-NOMI users. With NOMI Find & Save, we have created a new product for clients. We use AI predictive cash flow insights to enable clients to save automatically. That is something we think is great advice for a lot of our clients. In NOMI Find & Save customers, they actually save twice as much as non-NOMI Find & Save customers. We are also using data to power value for our business clients. For them, we will soon launch a new service for our merchants to provide the kind of insights that previously only big corporates were able to generate. It just was not affordable. This service is going to allow retail entrepreneurs to answer important questions about their own business. Where are their clients coming from? Where do they outperform or where do they underperform their competitors? What are their clients really interested in? We call it right now Project Raven and hopefully get a chance to check it out in one of the booths later today. We are actually really excited about it. It brings me to the last privileged asset, and it is RBC Rewards. This is something Dave mentioned, but we are really excited about the power we have got in this asset. Almost 20 years ago, we decided that rewards was a core competency, and it just was not something that we thought we should be outsourcing. I believe that decision has served us extraordinarily well. We only need to look at the marketplace in the last couple of years to underscore that. Today, we run the largest proprietary rewards program in the country. We have 5 million RBC Rewards customers. They are highly engaged, especially in digital. By 2019, we will issue more value into the marketplace than either Air Miles or Aeroplan. Why is RBC Rewards so different? Why is it a privileged asset? While our peers rely on a third party for their loyalty programs, we own RBC Rewards. We control the strategy, we control the value proposition, and we get to manage the economics. Secondly, since we do not rely on a third party, there is no renewal risk for our program. Our customers are not going to be whipsawed based on the strategy of a third party. Then we don't pay a middleman, which means we don't rely on a breakage model the way some of these other programs do. We measure success really delivering on this brand value promise that we create value for these clients with the program. We've often said in the company, we're the ones that'll get clients on the plane. I can tell you for the last 10 years, I hear that from more and more clients every year. We've been investing in RBC Rewards for decades, and we issued CAD 1 billion in value last year through our combined rewards programs. Again, that's a scale that's just not going to be replicated overnight. At this point, I'm going to invite Sean Amato-Gauci up on the stage. Sean manages our everyday banking business, our credit card business, and RBC Rewards actually rolls up into that portfolio. We thought Sean could give us a little bit more perspective on the program. Thanks. Thanks, Neil. Thanks for coming up. Sean, we've given a bit of a sense of where we are today, but from your lens, what's the appeal for RBC Rewards for our clients? Yeah. I think, Neil, like you mentioned, we've been investing in RBC Rewards for over 20 years, consistently. We've built it from the ground up, but we've never wavered on our original commitment to deliver superior client value. Whether it's in the travel space where we continue to differentiate and win because we get our clients onto any airline when they want to travel with no blackout periods, no seat restrictions, and our points never expire. In addition, we've continued to create simple and rewarding redemption experiences, whether it's redeeming for travel or onto gift cards and merchandise with over 150 leading retailers, and by expanding into new categories like financial rewards or charitable redemptions. We're thrilled with our most recent innovation, which unbundles the reward redemption experience and rebundles it with the payment experience. Customers can use their points at the point of sale for virtually anything simply by tapping their phone. We call it Payback with Points. While it's early days, just in a few weeks, we're seeing really, really strong engagement with over 8.5 million points redeemed on just the soft launch. The bottom line, Neil, is that RBC Rewards provides an unmatched level of value, choice, flexibility, and innovative solutions, which is why our clients find it so appealing. Right. There's a clear distance between us and so many of the programs you compete with. Absolutely. If that's where we've taken it to date, can you give us a sense, where do we go next? Yes. Dave and you referenced that we think this is an absolute privileged asset that to date has fueled our credit card business. Moving forward, we're taking a three-pronged approach to evolving RBC Rewards beyond credit cards and beyond points. First, we will continue to evolve the breadth of redemption options. Right. Such as providing access to once in a lifetime experiences or special access to events, concerts, et cetera. By continuing to drive our innovation agenda by using technologies such as blockchain, which we'll showcase at our booth after the session today. Secondly, and most significantly, we will extend RBC Rewards across retail and commercial banking and into wealth management to drive client acquisition, to deepen client relationships, to incentivize further adoption of our digital capabilities, and to reward key renewal events or client milestones. Lastly, we will expand our reach by providing third-party access to RBC Rewards to connect with more Canadians. We'll accomplish this in three ways: by continuing to partner with leading loyalty programs, like our recently launched and highly successful linked loyalty partnership with Petro-Canada. By partnering with leading retailers who leverage RBC Rewards offers to create incremental value for our customers that drives share shift and volume to their stores. We have many recent examples, including Indigo and Roots and Apple and Saks, and many, many more. Finally, we're assessing the opportunity to white label our rewards platform and assets to support retailer loyalty objectives, which in turn would open distribution channels for us and new revenue streams. I'll end by inviting you to join us behind the back doors. We've got an innovation and payments booth where we'll showcase some of these solutions and answer any of your questions. Clearly focused on value for our clients. Absolutely. Thanks for sharing that. Thank you. We've walked you through these privileged assets, but how are we going to create more value, especially in this changing environment? Obviously the world's changing, and I wanted to share, we're actually viewing this that we're capitalizing on this change. We're doing it in two different ways. The first is we're actually widening the funnel, and you can see it in the top of this slide, to new clients. We're accessing non-RBC clients through our partners, and I'll share in a minute how we're doing that with WestJet and how we're doing with Petro-Canada. Secondly, we're starting to connect with non-RBC customers without the first step needing to be a commitment to a financial services product. Mike Dobbins is going to come up and discuss the work we're doing with RBC Ventures a little bit later. The second way we're taking advantage of these changes is through the mobility and digitization that have transformed client reach and intimacy. This is the secular change that we heard this morning. When we combine the digital engagement we're seeing every day and our data and the AI-powered analytics, it provides affordable reach that we just didn't have before. Dave references 24 million pieces of mail. That had a limit to the extent of reach we could have with clients, and data and analytics and digital actually break that model and give us new capabilities. Digital has also enabled new value propositions that provide more personalized value and advice to our clients at a scale we just couldn't achieve through our people alone. Together, all of this is going to enable us to attract new clients, deepen existing client relationships, and driving efficiencies. I will dig into each one of these one at a time. Let me start with how we are going to attract new clients. Our strategy is allowing us to reach more clients in branches, in digital, and through our partner relationships. I will start with our branch channel. Our digitally enabled relationship bank strategy is about bringing the best of client insights and data and combining it with our people. I do truly believe that our people remain one of our greatest strengths. Our branches remain an important channel of acquisition. It is not something we talk about maybe often enough. Our customers are choosing more and more to interact through digital, but branches are still where they come when they have got these once in a lifetime moments of truth that they want to get expert advice on, whether that is when can I retire? I am buying my first home. When do they rely on us? They are doing that, and they are coming to a branch. Over 200,000 Canadians are visiting our branches every single day. More and more, they are coming for that advice. They are not coming for that simple service they can do on their phone. Our advice appointments are actually up 11% year-over-year. In dollar terms, 90% of our new business origination comes from our advisors. Our advisors always have been working through our branch network. It is important we continue to evolve how we think about our branch network. It is not static. One of the parts of that evolution is we have to start thinking about how we change our formats. There are two formats we have recently introduced that we wanted to share. These formats are putting us back on the client's path, allowing us to engage in a very different way. The first one, you see it on the screen there, is our new student format. We have launched this at McMaster as well as UBC. We have many more of these student formats planned. We have specifically trained advisors who are connecting with clients, and in this engaging format. It is in a very different way, and they are talking to them about problems that really students are focused on. How do I manage my cash flow? How do I finance my education? Secondly, a couple of months ago, we launched a new format specifically targeted for newcomers. It follows a very similar formula, very small, really focused on the key capabilities of these advisors specialized for the segment. Both of these formats are already showing that we can generate 2x the flow of new clients through these formats than we used to do through a traditional de novo branch format. The second way we will talk about is through digital. Digital acquisition is playing an increasingly important role, and I can confidently say we do that better than anybody in banking. Almost half our clients are digitally active. Our digital clients, they are more engaged, they have better overall satisfaction, and we actually measure a deeper share of wallet with digital clients. Today, they interact with us once every two days, and that compares to about once a month for clients coming into a branch. What does that mean for our business? This trend to digital mobility gives us more opportunities. We heard that earlier. These opportunities to be in a client's path allows us to engage them and have this deeper client intimacy. We lead the industry in digital sales, and this capability is an important addition to our sales power formula. Digital sales represent almost 40% of personal deposit accounts, really driving our HISA growth, our high interest savings account growth, and over a third of credit card originations. In the future, we believe there's an opportunity to take that mix up to 50% for these two product categories. We've been investing in data as well as digital marketing tools because it's the know-how that takes this data and actually creates the results and creates the value. This slide actually just shows one example of how digital marketing has enabled outsized growth in our credit card business. In 2017, we made this decision to really have a new approach to how we go out and originate new credit card accounts. We shifted to what we call a 365 always-on digitally led approach, and you can see the results that it generated. We use machine learning. We constantly tested, we refined our algorithms, and the net result was a 3x increase in selling credit cards through digital. While we're on credit cards, that category has been a very good source of new clients for us. We mentioned Avion is the industry leader in the travel reward space, and RBC Rewards powers a number of products in our portfolio. But unlike many of our competitors, we decided to grow our portfolio organically. It built on those same drivers of distribution and value. Today, Avion has over 1.4 million customers, and 35% of that growth is coming from new to RBC clients. The same is true for our business credit card segment. Business Avion saw 8% client growth over the last two years, but we've seen 20% spending growth over that same period. Business customers are deciding that their Business Avion card is the best place to make their payments, and obviously that's good for our franchise. All that rolled together means we're gaining market share. We're growing purchase volume by 10%. We're growing our balances in the credit card portfolio by 6%. As many of you have probably seen, this is two to three times the industry growth rates of our competitors. Just to reiterate, we've done all of this with a very stable credit risk appetite. We're not taking on more credit risk to deliver this. The other way we're going to generate new client relationships is through our partners. We choose our partners very carefully. We believe in this idea of a win-win-win relationship, where both partners work together. We provide more value to clients, and in return, each of us get to grow our respective franchises. To date, we've been really pleased with the results. Our partnership with WestJet, for example, they get access to our 5 million highly engaged RBC Rewards members. In return, they provide us access to their broad and growing client base through their channels, whether it's online during customers actually purchasing a flight or actually on the airplane. They had a record 24 million customers fly with WestJet last year, and they've got aggressive growth plans as well. Last year, this drove 115,000 new WestJet cards in one year. With Petro-Canada, we have access to 4.7 million Petro-Points members. Together, Petro and ourselves are providing more value to all RBC cardholders, over 12 million debit and credit cardholders. We have already had over 500,000 cards been linked together in this linked loyalty concept that Sean mentioned, and that has allowed our clients to save millions of CAD on fuel. It has also been one of the things that has contributed to the lift we have seen in both our credit and our deposit account originations. I think when I look back, 500,000 cards being linked, the market is telling us that this value proposition, this new way to deliver loyalty is resonating. These partnerships are yet another key part of how we are going to provide value to clients and increase this prospect flow. In terms of business customers, I said earlier, we are both number one in business deposits and lending, but we continue to expand on our lead. On the left-hand side, you see what we are doing for small business customers. We know business customers have a lot of things on their mind. It is not only banking. We have been able to create solutions to help them right from the journey of starting that business, really focus on where they are trying to move, which is to grow that business. So we are providing our small business customers with cloud-based accounting. We have linked that to their online banking for business. That just puts all that money management capability in one convenient spot for them. We have also created what we call MyBusiness Dashboard, and it is a single digital experience that has combined 40 curated apps into a custom portal. Again, this allows clients to manage all these aspects of their business. On the right-hand side, you can see we are also investing to grow our expert advisors and specifically our commercial account managers. We have grown that sales force by 12% over the last couple of years. We are calling on more customers. We are providing better service to our existing customers, and in return, we are growing our business because they are rewarding us with more of their business. Again, we look at that, the combination of those activities are generating growth. Business lending, for example, we have had a 9% CAGR over the last couple of years, and we believe there is more opportunity in that space in front of us. Finally, on acquisition, I am going to touch on everyday banking. We have heard about just how important it is, and it is key, given it is the foundation for, again, deepening those customer relationships. We have strategies focused on a couple of key growth segments. We will talk about two of them, youth and newcomers. They are important because 57% of new-to-banking accounts come from these two segments. For youth, we have introduced new value propositions, the new formats I just mentioned, and targeted sponsorships with our marketing team like RBCxMusic and Future Launch that Dave mentioned earlier. As we have combined this, we have grown our market share from 25% to 28% in this segment in just two years. With newcomers, we have extended our focus all the way back into pre-arrival, the start of that journey, and we are also testing the new formats I had mentioned just earlier. It is about solving all the problems they have when they get to this country. Our advisors tell us they come to talk to us because they trust us. It is not just about getting a bank account. That's a differentiator and is driving more and more clients to us. We actually had a story of a client who drove all the way from Windsor to Brampton because they heard about our new format and the experiences some of the clients had there. Within this newcomer market, again, we are seeing market share growth. That segment is only growing at 1%. We are seeing our customers grow it at 4%. We combine all those things we just talked about, and back to this everyday banking account category. Just this year alone, year-over-year, we are up 13%. A lot of these initiatives we are going to talk about still provide opportunity in front of us. I am going to transition to talk about how we are going to deepen existing client relationships. We lead the market in the depth of client relationships. We have talked about this time and time again. This graph depicts the percentage of clients that have a deep relationship, and we define this in our industry as having a transaction account, an investment account, and either a card or a borrowing relationship. I have talked about a lot of the things that contribute to this deep client relationship, but there is one thing we have not really touched on, and it is reciprocity. Most of our customers reward clients with discounted fees when they leave large, unproductive balances in their account. We do not believe that is great advice for our clients, and we have not done that. We actually have a very different philosophy. We reward our clients for bringing more of their products to us. We call this, and we always have, multi-product rebate. Last year, these rebates equated to over $90 million rebated fees to our clients. It is a key part of how we are driving that deeper client relationship. The overall formula is our scale, it is great products, and this reciprocity. But we are continuing to innovate. Next year, we are going to launch some exciting new value propositions to our everyday banking clients, and part of this is going to be a refresh to that reciprocity program. Sean mentioned it is going to be fueled by RBC Rewards. The other opportunity in front of us is we are going to extend this reciprocity formula for our small business customers and our wealth management customers to franchises where we have the number one market position, and we also have over 30% market share. Again, a strategy our competitors are not going to be able to follow. Move to investments. We already have Canada's leading mutual fund distribution business. We have about 33% market share in that space, and we have done this again by offering a leading fund line and Canada's leading financial planning business, value and distribution. We believe deeply in the power of planning, and we can deliver an in-depth, face-to-face plan to our clients. We mostly do this with our advisors in a branch setting. But we wanted to democratize access. So we had a vision that we wanted to bring a financial plan to all of our clients, regardless of their wealth level. Digital and data have now allowed us to do that. We developed a solution that brings the best of digital together with a connection to a human advisor. MyAdvisor, it is what we call it, allows a retail investor to connect with an advisor remotely and go through a simplified financial plan in a shared screen and video experience. This year, we started to deploy MyAdvisor, and I would say the results, whether we talk to clients or whether we talk to our advisors, are absolutely incredible. Year to date, we're seeing a 37% higher AUM per client who've used MyAdvisor. Essentially, that's from great in-depth conversations with more customers, finding out they may have had part of their investment portfolio at another institution and proving we're the better value and that we can consolidate those assets. I'll move to mortgages. I think we all know there's been an unbelievable amount of change in the housing market over the last couple of years. We remain committed to making sure that our clients get into homes they can afford. It's this approach that gives us confidence in the quality of our mortgage book. But we also know that a home, for most of our clients, is one of the most important life decisions they'll make. For almost all of them, it's the largest purchase they'll make in their lives. This is where they turn to us for that expert advice. About three-quarters of our mortgage clients have their primary banking relationship with us, but we actually believe we even have more opportunity to earn that mortgage business. So a couple of years ago, we took a step back and said, "Clients don't wake up in the morning dreaming of having a new mortgage. They wake up dreaming of a new home." So we needed to be there engaged at every step of the journey, not just at that financing point. So we created a series of innovative tools across the home journey. You see them here, and I'll just talk to three of them. Our Neighborhood Explorer connects us with clients at that very start of the journey when they're just thinking about where they want to live, where they want to raise their family. Our True House Affordability tool, this one allows us to interact with clients as they start that buying part of the process, determining how much they can afford and what it's going to cost them each month. But together, these two digital properties generated a 35% increase in digital leads, and we're taking those leads and pushing them back to our advisors, and it's helping us generate the volume you see. The final one I want to talk about is the Renewal Hub, and this enables our clients to renew simply and digitally online. We're already seeing about a third of our clients take advantage of renewing this way. This is one of the reasons, in addition to regulation, we're seeing a nice lift on our mortgage renewal rates. But collectively, these tools are another example of digital enabling this client connectivity we've already talked about this morning. These home buyers are engaging with us earlier in the process, and they're giving us more information about their intentions, when they intend to move, the type of house, what type of mortgage, and the amount they're looking for. That gives us more opportunities to win their business. So I'm going to transition now to how we're driving efficiency. We believe our mobile app is the best in Canada, and there's a couple other organizations that told us the same thing, frankly, J.D. Power and Forrester. I've been asked, "What are you getting for all this investment in digital?" Beyond the obvious fact that we're delivering on a client's expectation of modern convenience, we don't talk enough about that it's helping drive self-service and the ability to reduce cost in our branch network in our contact centers. We're seeing more and more clients choose to interact through digital. We're seeing mobile actually become our number one channel as more clients interact with mobile for financial transactions this year, the first time we've ever seen it. From a cost perspective, this is a really positive trend for us. We're quite excited about it because mobile clients just behave inherently differently. The example you see on the screen is just a snapshot of 110,000 clients who recently adopted mobile. What you see is there's this dramatic lift in clients selecting self-service for their everyday transactions. This gives us confidence that this migration to digital, and especially mobile adoption, which we've been pushing quite well, is going to continue to drive a lower cost servicing model for us. The other side of that client migration equation is our branch distribution. As clients' behavior is changing, we're going to have to respond. We're transforming our roles and the composition of our staff and our network. We've reduced our service FTE by almost 2,000 over the past five years. We know how to manage a branch network. We've done all that through attrition, and that trajectory is about in line with service transaction trajectories. With the continued migration to mobile, we do believe there's another 400 to 500 roles that we can reduce, mostly from service and a small portion from management over the next few years. Again, we believe we can do all that through attrition. At the same time, we've also reinvested in our sales and expert advice, financial planners, mortgage specialists, investment retirement planners, small business, and commercial account managers. While our service staff has reduced by about 25% to 27%, our expert advisors have actually grown by 13%. That represents a material increase in that sales power formula. Based on the pace of the migration, we've modestly reduced our branch network. We haven't really taken it down quickly. We have a commitment where we're not going to get ahead of our clients. We've consolidated about 40 branches from our peak in 2015, but we've done it very carefully. When we look ahead, we see the opportunities more about having smaller footprints and having these footprints dedicated to advice and to really have a place for our advisors to connect with clients. These smaller footprints will allow us to reduce our square footage by about 20% over the next five to six years. If client behavior does change more rapidly than we've seen over the last couple of years, we do have the flexibility to move more quickly. About 70% of our leases come up for renewal over the next five years, so we have that strategic option. Last place we're going to touch on efficiency is in operations. We're always focused on capturing cost opportunities. It's not really a program per se. It's in our DNA. It's just really how we manage the business. I believe in operations, we've done a phenomenal job. Despite business growth of about 22% over the last four years, we've been able to reduce our operations cost by 2.7%. Right now, that absorption, we're running basically flat. We've used a combination of process reengineering, robotic process automation. Then maybe most importantly, we've taken the time to multi-skill our employees so that that capacity is put to the highest and best use where we need them. These are just a few of the examples listed here on the slide. We've also seen that digital capabilities are something that's helping us. eStatements is something that has given us significant cost savings. Again, we believe there's more value as more and more clients adopt eStatements. Where does that bring us? What our clients are telling us is we're on the right track. There's only three J.D. Power Awards in the market for banking: Overall Client Satisfaction with Mobile Banking. Then new this year, an award for Satisfaction with Advice. Right now, we hold all three of them. I believe this is a great validation of our strategy that to hold the number one J.D. Power Award in mobile and at the same time for Overall Client Satisfaction, that's a demonstration of our digitally enabled relationship bank strategy at work. I'll finish with our goals. In Canadian banking, we have two of them. The first one is that we believe everything we just talked about, all these new capabilities, the new client connectivity, the new intimacy that we can generate through data and digital, that will help us drive a 3x lift in our new client acquisition. That we'll be able to add 2.5 million new clients over the next five years. Our second goal is that we're aiming to have a sub 40% efficiency ratio by the year 2021. I'll finish there. I'll invite Doug Guzman to come up on the stage. Okay. Thanks, Neil. Everyone still with us? You got me. Then you got Bruce. Then you got a break. I've got a really simple objective for my 15 minutes or so, and that's to communicate three things. One is the extent to which we lead in wealth and asset management, because I have a hunch that many of you know we lead, but I have a hunch that many of you don't know by how much we lead. Secondly, to explain why we have that lead. Third, to persuade you to share my belief that that lead will continue to widen given what's going on in the outside world, both in wealth management and asset management. I'll do that by talking about distribution, so wealth management first, and then asset management second. The crux of the point I'd like to communicate is our lead is sustainable as a result of an advantage in scale, talent, and infrastructure, and a system that reinforces itself. There's one slide in particular that I'll draw your attention to as we go through. A system that is very difficult for our competitors to emulate or to replicate. I'll also show you that that system has a current track record of premium growth in the industry, evidence that the system has advantage and is sustainable. Then I'll make the argument that external disruption, as I just said, augments that advantage. Let's start with distribution. This is the full scale of distribution. Neil's talked to some of these channels. There are a lot of them. That breadth of investment in and of itself is significant and hard to replicate. On your left, the self-directed channel, all of them powered by digital, by the way. All of them a combination of human and digital. On the left are our direct online trading business, direct investing, CAD 80 billion, largely digital, low fee. As you move to the right, you're going to find more service and more fee, more full advice. The second channel on the chart is InvestEase, our robo-advisor. It's currently in pilot in Alberta, Ontario, and Saskatchewan. Launched in November of 2017. We're ready to roll that out as we choose. Its experience in terms of clients is 50% new to investing clients of RBC, so we're gaining clients with it. In the center, the branch channel that Neil talked to, clients either served by teams or with individual advisors, either in the branch or digitally with MyAdvisor that Neil addressed. I'll spend my time on the right-hand side of the page. Dominion Securities, the country's leading brokerage model, although it's not fair to call it really a brokerage model anymore, and I'll talk to that, leads by a margin. Then our investment counseling business, PH&N Investment Counsel, also a leader at CAD 30 billion. Then I'll end with a few words on the asset manager at Global Asset Management at CAD 420 billion. So the investment and distribution, I'll be quick on this side. We lead in the investments arena. We've got 17% of the investment advisors in the country. Those 17% of the advisors drive 28% of revenues and 25% of assets under administration. Our private bank, one of Neil's businesses, leads as well, 33% deposit share, 31% credit portfolio market share, and we lead in a number of other places. Interestingly, on the bottom right of this slide, our sales through brokerage of insurance products last year represented 43% of the industry's insurance sales. So a significant platform. That lead, I suspect, is bigger than you might otherwise think. We're 80% larger in Dominion Securities than the next largest competitor. In fact, if you add 2 and 3 together, you approximate the size of our business. That's driven above industry growth rates, 10% compound annual growth rate in revenues. The white diamonds show our revenue market share. That's expanded as well over time. As has our AUA. Here's 2 measures of AUA, either the bank share or the whole industry consistently rising year to year, left to right, and a compound annual growth rate in assets under administration over a 10-year period that's been a 200 basis point premium to our bank competitors. Proven track record that this system is sustainable and provides advantage. Here's the important slide. I've talked to some of the investments in our industry-leading capabilities, and I'll spend a little more time on the next slide. That drives better client outcome and experience. The client experience and outcome makes us a more attractive place for the country's best investment advisors, and I'll prove that in a second. If you put the best advisors on the most powerful platform, you get higher productivity, industry-leading productivity, which drives cash flow, which drives market share cash flow, scale, and an ability to invest back in the business that exceeds our competitors. That flywheel or reinforcing circle is differentiated. A piece of that differentiation is our wealth management services team. 200 subject matter experts. Deep expertise on the spokes you see on the left-hand side. Gone are the days where we are investment advisors in Dominion Securities. We are full wealth planners, family advisors, business advisors. We can talk to philanthropy. We can talk to cross-border planning, everything you see on the page. That investment in people, the annual spend run rate of that investment in people for us approximates the before tax profit of some of our bank competitors. It's not easy to replicate. I said our advisors are the best in the industry, or at least I said that we are the most attractive destination for advisors in the industry. This is the industry survey that's done annually by an Investment Executive, and it asks IAs across a number of categories to rate their own firm. I've picked some of the categories here, but I haven't biased the result. The result, if you looked at the survey, would be consistent with what I'm going to show you. What I chose was those categories of support for IAs that matter, where they're measuring the attractiveness and the power of our platform. How's our technology? How's our mobility? How's our planning support? How's our will and estate expertise? How are the spokes on that wheel I showed you before? This is the bank-owned IAs average feedback, kind of 7-8. The independents tend to be Did I lose a slide there? The independents Oh, I'm going to blow the answer here. What it'll show you in a second, it would've been really better with the cartoon. What it'll show you is there'll be a yellow set of dashes, which I'm going to try again, that will show the independent brokers' feedback. Then there's the punchline. The blue bars are our IAs feedback across all of those criteria. Our overall rating from our advisors is 9.4 relative to compared to 7.4 for the rest of the bank. We lead in 30 of 31 categories. Our investment advisors tell us they are better prepared on our platform to do business with their clients. That leads to us being able to hire, gather investment advisors. Our share of advisors is going up across the industry. Those advisors are able to carry larger books per advisor because they have more to work with. They have more ammunition, and that drives higher revenue per advisor, which also makes it an attractive destination. That's hard to replicate. Those books drive revenue that's 30% higher than our competitors and 70% higher asset balances in the middle part of the chart than our competitors. They are also doing business with more and more of the country's highest value clients. The yellow bars at the bottom are the highest net worth clients in the country, and we are up to about 50% in those yellow bars. What happens over time as the world changes? You are familiar with all of these external forces. The clients' expectations are changing, more fee aware, more digital, expect more customization. Technology in the center has set expectations in terms of the level of service they receive that the platform companies have delivered to them, have allowed more automation, more personalization, and changing regulation on the right, more fee transparency, investment at scale, and things like CRM2. All of those, I would argue, are tailwinds to an industry leader who has made a significant investment in capabilities. Whether it is the breadth of advice models I showed at the start, the number of solutions, a DNA in our advisor force of planning and discovery that started 15 years ago well ahead of the rest of the industry. Again, as I said, gone are the days where we are just investment advisors. An ability to invest at scale in digital, not just in our wealth business, but in partnership with Canadian banking, which Neil talked to, and the ability to deploy technologies across both of those businesses. The chassis of digital across that whole series of digital channel or channels I showed in the first slide, some of which are exhibited here in the corner, can be a shared chassis. We benefit from those investments. Here is a variety of them. You can visit them in the booth in the corner. I will highlight one in particular, which is AVA. This is differentiated. This allows our advisors to be effective outside the office. They bump into a client at a grocery store. They go visit a client at their place of work. It allows them to pull up portfolio information to work with a client on planning. We have just rolled out electronic Know Your Client, eKYC, which is a huge friction point for clients and for advisors. An example of where we lead, where our ability to invest in digital and future-proof, future-ready the business is quite differentiated. There are other ones around that page. You can talk to our team in the booth in the corner. That is the story on distribution. A sustainable lead, I would argue, that shows evidence of widening, and outside forces will likely act as a tailwind to continue to have that widen. Manufacturing. The architecture of my comments is going to be pretty similar because I can make this similar and will make a similar argument around Global Asset Management. We are bigger than our competitors, 20% larger than the next bank asset manager. We are about 50/50 in terms of retail and institutional, and I will talk to why that is important in a second. My argument about sustainable advantage will feel a little bit similar. We have made investments in capabilities in people, the best portfolio managers, supported by digital, supported by systems. Those lead to better client outcomes, which I will talk to in a second. There is a symbiosis between retail and institutional asset management, and I will use our Global Asset Management teams in London, our global equities team, our emerging market team as an example. Because we had a retail distribution channel of size, we were able to hire very capable portfolio managers, put them on the platform, and give them an asset balance to work with before they developed a track record that the consultant would bless. That is a long, as people in this room know better than I do, that is a long process. We were able to get them to work, and there is obviously governance in the system where we do the right thing for our retail investors first and foremost, and there is a tension in the system to test that. Those people had a chance then to build a track record, and they built a very attractive track record. Now that the consulting ratings have rolled in and they have got formal track records, they are successfully marketing to the institutional community. That allows us to build asset management organically in a way that some don't have that advantage. The institutional side sharpens our skills. Some of the best portfolios in the world would prefer to, or at least have it included in their portfolio, institutional asset management. We get better people. It is a tougher environment. It is a place where you have really got to perform exclusively on performance and price as opposed to. More exclusively on performance and price than perhaps in the retail arena, where there is a broader set of advice around it. I will show you the better client outcomes that leads to. That leads to market share and cash flow when combined with the distribution channels that both I talked about and that Neil talked about, and back to a similar pattern of scale to invest back in the business. In this area, though, we have also got a lever in terms of price. We are passing our size economies of scale and size benefits back to our clients. Our mutual funds in the retail arena, you have probably heard from us a number of times before, are 15%-20% cheaper than average. We approach our client base, in particular in retail, with an attractive price and market-leading performance. I talked about our investment. Here is a quick slide on some of those pieces. We have covered most of it, but distribution on the left, a full range of solutions, exceptional client service, and passing those economies of scale back to the investor on price. Performance, you can look at it a bunch of ways. Here is a couple. The percentage of our funds that beat the benchmark and the percentage of our assets that beat the benchmark. In this case, it is three-year gross of fees. You could look 135. You could look at net of fees and compare it to an ETF net of fees, in which case the number would be 81%. Simple to say we perform in a way that is attractive for our clients. We have also got third-party validation of our process. A number of places where we lead the industry, as you can see on the chart. The one on the bottom right is a bit dated, but it is the last year that Morningstar awarded the award. We are very proud of it because it speaks to doing the right thing for our investors, and I think it is fair to say that some have wondered whether universal banking models with matched distribution can do the right thing for their investors. Here is a third party observer of the industry saying, not only does RBC do it well, but we do it better than anyone in the industry in terms of acting for our investors. That leads to premium growth. I said I'd show you the evidence of premium growth. 4.5x net asset accumulation over the last 10 years relative to the average, and almost twice, 1.5, twice the closest competitor. A big part of that is having lower redemptions. There is CAD 1.5 trillion in mutual funds in the Canadian industry, so even a small difference in your redemption rate can have a big effect on the left. We gather assets at a premium to the market, and we redeem lower than the market, and therefore, we build assets faster than the market. Share goes from left to right on the chart, from 7.5% to 14.5%. That share is very slow to move because the base is big. It is CAD 1.5 trillion. Think of net long-term mutual fund sales in a year being 40 to 50. The base moves very slowly. But we are 50% larger than the next competitor in retail. This is the whole industry in retail. Neil showed you a percent that was higher because it was the bank channel. What we pay attention to, because that base moves very slowly, is what is our monthly, quarterly, annual sales relative to that 15%? Because as long as our net sales are above the 15%, we know we are dragging that 15% up, even if it moves a little bit more slowly because of the relative sizes of numerator and denominator. Here, over a five-year period, we have consistently outsold our underlying base, and so we have got a tailwind to the building side of the business. We continue to invest in GAM as well. Just the same story as I told you in distribution. New active in the top left, building a liquids, alts, unconstrained quant. We have got CAD 18.5 billion in pure quant. Importantly, we are weaving that quant into fundamental support for human advisors. We are building quant into ETFs. At the bottom right, we have grown that family of delivery vehicles for our investment asset management expertise. We have got 53 tickers in the ETF business focused on active ETFs. We lead on the top right in ESG, incorporating social and governance and environmental concerns. Again, woven through the investment process of all of the teams, not on specific funds alone. Bottom left, we are able to, again, in partnership with the retail bank, have the scale to invest and experiment on next-gen concepts, whether it is blockchain or artificial intelligence, and we are doing that as well in Global Asset Management. Similarly, on digital to the distribution side, lots going on. Again, I will pick one to highlight. Our portfolio review service allows us to use optical character recognition to scan in statements. We have just met you for the first time. You hand us our competitor's statements. We scan them in. Or maybe you are a client of ours and you want a full picture of all of your assets. You give us the statements, we scan them in. We can analyze your portfolio. We can make recommendations on asset mix. We can make recommendation on lowering the cost of your advice or your manufacturing fees, a differentiated capability that serves our clients and makes us better advisors and asset managers. I make the same argument in both places. Capabilities, innovation, a mindset to continue to advance the business against an environment where that advancement is going to serve as a bigger and bigger differentiator. So the same words I'd make for asset management as I said for distribution. Last slide for me. To wind up the Neil and Doug part of the program where we talked about retail banking and retail wealth management, there's still lots to do fishing off the company pier, if I can use that colloquialism, because there's lots of potential with existing clients at RBC. Only 35% of our high-net-worth banking clients have a relationship with Canadian Wealth Management. 16% of our Canadian banking clients invest at all with GAM, with Global Asset Management. We can give you, and I'm happy at a break or as we go through the booths, to talk about places where we're crossing the silo like we haven't before, and the opportunity that that presents. We're optimistic. We feel like there's a tailwind that's helping us gain share. Maybe appropriate that I ended on technology, because I'm to be followed by Bruce, who will give you a deeper cut at what we're doing in technology at RBC. Thanks, Doug, and good morning, everyone. First of all, you've heard a lot about the digitally enabled relationship bank this morning, and the group that I represent in technology in RBC, we think of ourselves as the engine room underneath that. I thought over the It's a journey we've been on over the last 4 and a half years, and I'm really excited to be able to bring that to life to you today. When we look at They gave me a new clicker, and it works. This has not been a technology issue, okay? When we look at the differentiation that we bring to the table from a technology front, I think I really believe it comes in four key areas that you see on the screen here. The first is operational scale. We support five businesses in 37 countries around the world with the investments that we make, and we leverage those technology investments across all of the businesses. So you get that scale advantage and the technology that we've been investing in for years, to be able to drive down the unit cost rate for everything that we do. The second is that we spend a lot of time looking at the manufacturing platform. So think of this as the assembly line as you would in the auto industry, and re-engineering that, what we call the next generation delivery platform, to get speed and scale for all the things that you've seen here and will see here this morning. Third is, Dave started talking about this, the data advantage and the insights that we are able to create as a result of that data advantage, leveraging artificial intelligence and these new technologies really creates an opportunity for us to create a great day for our clients that others cannot. The fourth area is innovation and talent. We work in a space today where technology is changing at a very rapid pace, it is not good enough in the business that we are in as the number one bank to not lead in innovation. You can get left behind very quickly. We look at innovation and we look at talent as absolutely core to who we are, and I hope to bring that to life for you this morning. Now, all these investments that we are making, we spend CAD 3.2 billion on technology, and we will talk about that, but it is delivered in the form of three areas. First, scale. We talked about that. We have 11,000 people in technology that are working together, that are building on the capability that we already have. They support changing business volumes. Four years ago, we delivered 400 million transactions per day. Today, it is 500 million transactions per day. The velocity and speed that we produce has got to be flawless, it has to be secure, and it has to enable our business to deliver the results to our clients. That is not good enough. It comes down to creating value for clients, and the outcomes that you are going to see, whether it is what you saw with MyAdvisor or any of the other capabilities that we have been showing you this morning, are really how we measure the success of our team, and we will talk about that. Now, as I said, we do spend CAD 3.2 billion a year in technology. That has been growing at a compounded annual growth rate of 7.5%. It is not just the raw number, it is the ability to actually move from run to change. We have moved CAD 520 million from the run budget to the change budget over the last four years. We have needed to do that in order to deliver some of the things that you have seen. We have asymmetrically invested in new areas, and that is the 25% annual growth rate in our digital investments. We have spent CAD 1.1 billion in terms of creating new capabilities. We have been able to leave the underlying infrastructure piece relatively flat while we have had increasing business volumes that I will show you. We have doubled the investment that we have made in cybersecurity, as we all know. Now, operational efficiency has been core to us. It has not been just growing the budget, it has been actually delivering the operational efficiency. We have delivered CAD 430 million in operational efficiency over the last four years, and we have done it really in a few different ways. One is we have consolidated. We have global footprint. We have been consolidating as much as we can from data centers to applications and just really working on that core capability of the bank. Two, we have been applying automation, whether it is robotic process automation or just, as I like to say, getting hands off keyboards in everything that we do to streamline what we do. Then creating reuse. Because of those five businesses, we are able to create digital capability in any one of those five businesses and reuse that in other areas of the business, and we will talk about that. Now, we have created these operational efficiencies while investing CAD 400 million in what we call our transformation budget. That transformation budget is all about changing who we are for today. So the transformation budget has been focused on creating this next generation delivery platform. It has invested in cloud and artificial intelligence capabilities and creating this data platform we have. Then finally, it has been about creating modular systems where you can reuse those components. You may have seen in March, we announced what we called an API store. That API store to the marketplace was we looked at extending the development population of RBC beyond the four walls of who we are today to allow other clients or development firms to be able to interface with us well and to be able to create capability for us. So one of the APIs we put out was a mortgage calculator. Another was a branch locator. We were the first Canadian bank to do so. So while we have continued to grow in terms of our investment, in terms of digital, et cetera, we have also had to keep that infrastructure relatively flat, which we have done, all the while as the Canadian environment has grown to the knee of the curve on digital transaction adoption with a 33% annual growth rate. As well, the growing business and the success the business has had is it growing the underlying core by 8%. So we do all these things together, invest in the new technologies, move money asymmetrically to the areas that we need to, and keep the underlying capability as flat as possible in the investments that we make. So let us talk a little bit about this manufacturing line. When we got together a few years ago, but I am not going to talk about all the technical details, although I could if you wish, but we sat back and we said, "If we need to be able to get capability to the market faster with higher quality, we need to re-engineer this assembly line." That is what we did. We got together with the business, we started working in Agile ways together, and we started deploying into the cloud. Then what we did is we decided to automate everything in between, from testing and all the other capability we had, to create a streamlined process that frankly got people out of the way and let the technology do its job. The results have been fantastic. We are now able to release technology into the marketplace at the speed that clients can consume it and the business wants to deploy it, versus the limitations on technology. So that AVA platform that Doug talked about, we have released 12 versions of that in a single year. We could do more. The mobile app, eight releases in a single year to get the capability in front of the clients moving as fast as it needs to be. We have done it at scale. We have 350 Agile programs going on in RBC right now on an ongoing basis, and we have been able to generate CAD 250 million worth of productivity benefits. With that productivity benefit, we either reinvest that in additional capability that the business needs, or we can return that to the business in terms of efficiencies. This has been a great capability. The third area I talked about was data. Sorry, I will talk to you a little bit about some of the things that come out of the manufacturing line. Neil talked about our NOMI capability. 136 million insights. It is doing things like telling you how much did you spend last month versus how much did you receive. It is telling you whether your Netflix bill went up by $10, which I would have never known had my wife informed me the other day. It has been a great capability, but you have to be able to absorb the knee on the curve. Secondly, MyAdvisor. We took natural language processing and we took video technology and we applied that so that we can support our customers in whatever environment they are in, on whatever form factor they want to see capability in. It allows the advisor to scale their relationship with clients. The third area is our ACE program. This is for our Investor and Treasury Services business. We do work in pre-trade, trade, and post-trade with these clients. Huge amounts of data. We have changed the paradigm from where we used to send reporting to the clients to allow the clients to come in and look at and interrogate their data as they wish, much as the way you would with a Google interface into systems or data yourself. Fourthly is Project Aiden. Aiden is at the back of the room. We will show that to you as we go. We have taken a look at the trading environment inside RBC, and we have used machine learning and artificial intelligence to look at how markets behave over years, and then how do we create an AI-based trader. It is performing extremely well. It has traded over CAD 1 billion already, and it is really competing well with our traders down on the second floor here in Toronto. A lot of capability, and obviously, Aiden is a great example where data-driven capability and how we use data differently. Let us talk a little bit about that. There are really four capabilities you need in order to actually be really good in terms of using data and artificial intelligence. First, it starts with the core data capability that you have. At RBC, given the size that we are, the fact that we work with 40% of the Canadian economy, that we work in 37 different countries, and that huge client base we have, we have a richer data set than anyone else. When you augment that data set with data that you acquire from the marketplace, the listening that you do to your clients and really use that data, that data acquisition engine is the second big thing. The third capability that you absolutely need is you need great talent that can build these AI-driven models and machine learning models that people talk about and apply those to your existing models inside your business. That absolutely is key, but without the other two, it will not work. Fourthly, you need a culture of business and technology working together. We have built our capability organically versus purchasing it. Today, when you look at us, we have 32 data labs that execute around RBC. Business and technology working together on really important business challenges and opportunities, and you will start to see them as we go. The investment that we have made has been CAD 225 million over the last four years in this data environment, and it has been an environment that has created a set of capability that allows us to grow exponentially in terms of data acquisition. As you can see, we really believe that while every six months right now, we are generating as much data as we had in the previous 20 years, that is only going to accelerate over time as we believe that we will be 10X in two years. Let us show a couple of examples of the types of things that we have been doing on data and AI. First, credit risk indicators. Obviously, we have credit risk models. We have had them for years, and they are fantastic. We applied machine learning capability to those credit risk models, and we were able to improve them. We had a 12% improvement, which generates a CAD 50 million benefit to us on an annual basis. On your right-hand side, you are going to see a booth later on that talks about no model left behind. We are taking all the models that we have in the bank, and we are actually starting to apply machine learning to those models to improve the outcome that we can get from them. On the right-hand side of this chart, you will see what we are doing in location-based intelligence. This is an example of a retailer. If you look at the red circle in a restaurant, the restaurateur would normally have thought that their clients would have been within a 20-kilometer radius of their restaurant, the radius of that circle. They also felt that, the postal code that was represented in that radius would also be a good indicator of where the clients were. Now, using machine learning techniques and location-based intelligence, we were able to show this restaurateur that their clients were actually where those little orange dots are. More than 50% of the clients were actually outside of the normal parameters that they were using to either target offers or to work with their clients on. We are able to give that value back to clients because we are looking at dozens and dozens of different indicators to actually come up with better intelligence on where they might sit. Now, when we talk about artificial intelligence and data, you have seen a couple of hopefully great examples of what we are doing. We do not believe that that is enough. We believe that when we look at artificial intelligence, it is going to start to influence every decision that we make as a bank in the years going forward. It will not necessarily make all those decisions, but it certainly will influence them. If it is going to be that important to us, we did not believe that it was going to be something that we would buy from others or that we would not lead in. We believed that we fundamentally had to have a lead in it. Especially in a geography like Canada, where the artificial intelligence capability is, yes, very high, but also at a premium and hard to get. When you have companies like Google DeepMind, Facebook, Microsoft, and others investing in the country and taking that talent, we need to capture it. So we built Borealis AI. Borealis is a research center up at the MaRS Center that really is fundamentally focused on theoretical research and advancing science and patents so that we can lead, and number two, applied research and how the two do work together so we can work on those great problems. Now, better than me talking about it is really our leader, Dr. Foteini Agrafioti. Foteini is the founder of Borealis AI, and I'd like to invite Foteini up to the stage to chat about this for a second. Welcome, Foteini. Hello. Hi. Hey, welcome, Foteini. Just in your own words, maybe a little about the mission of Borealis and what you're doing. Yeah. So Borealis AI, as Bruce just said, is an RBC institute that's dedicated to fundamental and applied machine learning and artificial intelligence research. This is an institute that we have two parts of it. The first, the fundamental research center, is focused on developing intellectual property, where we are looking to not only be users of science, but also develop state-of-the-art machine learning algorithms. Then the applied research side that receives that innovation and uses that to solve problems for the financial services industry. Now, if you've been following the AI space, you probably know already that Canada has done extremely well scientifically. Things that you probably read in the media, like reinforcement learning, deep learning, machine learning altogether, was actually born here in Canada. So Borealis AI was our bet to capture that talent, and build that capability internally. They said we were crazy 3 years ago. They said, "You cannot build a team like that and a world-class research center inside a bank." But here we are today. We're a very unusual team to find in a financial services company. We're a team of academics and entrepreneurs. If you follow what we do, you probably already saw we publish a lot of our research in top-tier academic venues. We've proposed and beat benchmarks for machine learning algorithms. We deploy all of that across our businesses as we go as well. You talked about talent and the marketplace. How do we attract talent to Borealis AI? There's three reasons why people come to Borealis AI and prefer us over other choices. The first one is access to datasets. We have a vast amount of data in RBC, and scientists are very interested in getting access to that and testing their algorithms. As you know, data for AI is the lifeline, so it's very important. People are also very attracted to our infrastructure and our compute capability. It's something that you absolutely need as a researcher in order to iterate quickly. They also come to us for our academic freedom, and that's something that's extremely unique to Borealis AI. To the best of my knowledge, you cannot find a group like that across the Canadian industry. What it means is that we enable curiosity-driven research. The type of work we do, you'll find other centers in the industry and technology companies or across major universities in North America actually do. We try to decode how the human brain works. We try to understand how humans make decisions so we can replicate that and support that with compute power. Make no mistake, this is not an easy talent to recruit. It's an extremely competitive market. Companies like Google, Microsoft, Uber, they've all set up their AI research centers in Canada, so we go head on with them every day. With that competition, we've actually managed to build a team of 60 people. Most of us are PhDs in computer science. We have five research centers across the country right now, each of which is led by a top professor from a Canadian or a U.S. school. They left their faculty roles to join a bank and lead that effort for us here. Now, you've got a booth over here, but just a couple of the outcomes that you've been able to deliver that are pretty exciting. Yes, because it's important to mention that although we believe that research is the only way to developing competitive intellectual property, that's not our destination. We're in constant delivery mode. We brought a lot of that stuff with us here today, but one project that is quite notable that I wanted to share with you, it's called Apollo, and it uses natural language processing to understand news. Because when I first joined the bank, and I met financial analysts, I asked them what they do day-to-day, and they said, "Oh, my job is to know everything about a market, everything about an industry." I was shocked. What does that really mean to know everything about something? There's so much information out there, and we humans are truly limited by our capacity, our biases, our fatigue, the languages we speak. All that information is critically important in making decisions for our clients. Imagine if you had an AI agent watching the world for you, picking up on those tiny world events that may be taking place at any given time, and then estimating the likelihood of them escalating and potentially impacting North American markets. It's a very exciting technology. We've actually just launched it. Apollo Beta is being used by RBC GAM, and we have it here with us live today. If you want to see what it's predicting right now for North American markets, please come see us. There's a lot of other applications of AI that we've looked at. There's a lot of the things that you've heard already from my colleagues here are actually either fully or partially supported by Borealis AI algorithms like Aiden, Next Best Offering Marketing. We do work in cybersecurity as well, which is a very interesting intersection between AI and security because there's a lot of data there as well. What's notable is that that's where true AI comes to life. We've been able, in cybersecurity, to beat human-level accuracy in catching malicious activity in our servers. That's quite substantial for one technology gadget, right? Okay. Well, thank you very much, Foteini. I don't normally think of cybersecurity as interesting, but it is a fundamental operational risk for the bank, and it's one that we're extraordinarily focused on. As I said earlier, we've doubled our investment in this area. Some of the statistics that you see on this page are because of the work that we've done in artificial intelligence. 42% improvement in efficacy, which basically is our ability to actually, when we look at an event, to actually understand whether it's a problem or whether it's not a problem. Also detection. We're three times faster than we were before and when we look at global threats. Underneath this huge landscape of events that we look at, and the number is huge. We look at 200 billion data points on a monthly basis just to ensure that we're safe. You can't do that with people alone. You have to use the level of automation and AI that goes into it. The cyber landscape that we're in is actually getting more and more complex, and it's also getting. The volume is growing. The reason for that is because of some of the technologies that we use within the bank. You can go into the dark web. You can actually get a piece of malware technology without actually really knowing what you're doing, and you can use cloud technology and cloud services to aim that at a financial institution. Our investments here and our capability to understand threats, but be able to go through this entire wheel that is an internationally known NIST framework right from protect to recovery, is critical to us. We don't do it alone. We partner with every secret agency you can think of. We look at ourselves as if we're a police force, and we have to actually have as good connectivity within the rest of the industry and the rest of the world as we do within our own shop. When we talk about innovation is a differentiator for us at RBC. When you look at innovation, again, it's about being at the pace of where technology can take you as opposed to being necessarily a follower. Our job and my job is to look at the world in three spaces, run that 500 million transactions every day flawlessly, transform who we are to enable the digital capability, and then innovate. What is the world going to look like three years from now, and how do we bring it into today? We have created nine labs. Fotini represents some of that operation. Those nine labs are federated, and we did that because we wanted to be closer to the business and be embedded within the business and the other functions, as opposed to being a centralized only location. We get value based on that. Two, we want to be able to run at speed. We have part of our innovation group sits with Mike Dobbins in the ventures group so that we can act like a startup and execute that way. Three, we partner with others in the marketplace, and you see those, and you will hear from others that you might talk to about their own partnerships. For us, our partnerships are different. We do not just invest money, but we invest people. We put our people on site in those locations, whether it is the University of Waterloo or University of Toronto, because we absolutely believe that the challenges that we are going to face, we have to face together, as opposed to just putting our brand on the wall. Some of the things that we are working on, we are not interested in PowerPoints, we are interested in real outcomes. You will see us, things like blockchain. We are working on cross-border payments. We are working on reconciliations. When I say we are working on it, we have people coding into that capability today. In cybersecurity, we are looking at what are the impacts that quantum computing could have on current encryption algorithms so that we can get ahead of that and lead the industry. I thought rather than me talk more about this, what I thought I would do is show you a short video so that you can see the types of things that our great technologists are dreaming about and working on. What am I not working on? Do you want the short answer? The technology is beautiful. I am working on how to use data to fundamentally change how a bank works. I am working on location intelligence technology in the space of climate change to understand risk and opportunity. I'm working on building the next generation of financial ecosystems based on a distributed computing technology called blockchain. I'm working on figuring out how a rainfall in China can escalate and impact your portfolio positions in Canada. I predict cybercrime and help stop it before it happens. An API platform, and we're going to have a whole ecosystem of developers who are going to start using our capabilities for applications we never dreamed of. One of the problems that we're looking at is the impact of quantum computing. We're working with the top mathematicians in the world to implement these post-quantum cryptosystems, and we're going to test them within the infrastructure now. We are part of a small task force with large banks across the world, looking at the risks and looking at the opportunities from climate change. An artificial intelligence solution that uses natural language processing in order to process and analyze news in real time in any language. You could literally have just a concept in your head, a few months later, build an application out, and a few years later, scale it out to have industry impact. This is one of the few places I can do this in, and that gets me out of bed every morning. That ability to leverage the scale of the bank and the opportunities that we have in the Canadian marketplace on the global landscape, and the view that we have to helping communities thrive and clients prosper, that purpose behind RBC, that draws talent to the organization. We always say is great talent brings in great talent. We have been very focused on this over the last number of years. We have been focused on retraining our staff as we move into this transformational and new area. So we can say that we have changed the skills of over 3,000 of our people with a very focused program. We have also invested in external hires, many of them not from financial institutions, but getting the best technologists that we can in the space, and you will meet a number of them around here. That 700 that you see on there, those are people that are focused on things like cloud, machine learning, artificial intelligence, et cetera, and blockchain that are really helping drive who we are. At the core of it is how do we grow our talent base from the students on up. We bring 1,000 students a year into RBC. We have over 450 of them in here right now. We put them on very meaningful projects, but we take 80 of them and we put them into a unique program we call RBC Amplify. That program is four students, computer science, engineering, business, data science. We have a business and an IT sponsor. We give them a problem on their first day, and we say, "You can talk to anyone you want to in RBC. You can have access to anyone you want, and we will work with you. We are going to see you in 12 weeks, and we are going to have a competition." So they are on a stage just like this with people just like you that are actually evaluating the solution that they create, and we give scholarships to the winners. We tell them that if they want to create a business as they have gone through this work, that we have got lawyers, we have got engineers, we have got bank staff, obviously, and we can help them on their way. Last summer, 10 patents came out that were generated by these students. So they work at a high pace. We cannot wait to see what they do this year. We took that same program, it was so successful, and we put it inside the bank, and we use that today. It is called RBCx. We do that on a 10-week program with our own staff. We do not give scholarships, though, but we do everything else. So talent is core to who we are and who we are going to continue to be in the future. So in closing, I thought I would just talk about those four key areas again of what makes us who we are. It truly is operational scale, that we can leverage the capability we have across the bank to be able to create lower unit cost than any other one of our competitors. Two, it is the asymmetric investment into digital. We have taken that 25% compounded annual growth rate in digital and keeping the underlying core execution of the engine flat has been a key differentiator, and you have seen some of those capabilities. It is data and AI coming together through unique investments that we have not purchased, but we built organically. When we build them organically, they are ingrained in the fabric and culture of who we are, which is essential. Then the next generation delivery platform, which is that engine room that allows us to build with scale and to build with quality and get things out of the door. In the end, it comes down to our people and what they can do. If you cannot read her shirt, it says, "If it does not exist, I am working on it." That is the way we look at things. With that, I am going to hand it over to Dave Mun and appreciate your attention because I know I am between you and a break. Dave, over to you. Thanks a lot, Bruce. We are running a little bit behind schedule, so we are just going to regroup in about seven or eight minutes. We will call you back in. So grab a coffee and we will see you shortly. Thanks. Cannot keep my hands to myself. Pick a dust them off, put them back up on the shelf. Some little baby girl is in need. Am I coming out of left field? Ooh, I am a rebel just for kicks now. I have been feeling it since 1966 now. Might be over now, but I feel it still. Ooh, I am a rebel just for kicks now. Let me kick it like it is 1986 now. Might be over now, but I feel it still. Try to love amongst the freaks. Leave it with a baby seal, mama call the grave digger. Gone with a fall in need. Am I coming out of left field? Ooh, I am a rebel just for kicks now. I have been feeling it since 1966 now. Might have had your fill, but you feel it still. Ooh, I am a rebel just for kicks now. Let me kick it like it is 1986 now. Might be over now, but I feel it still. We could try to walk on peace. Give in to that easy living, goodbye to my hopes and dreams. Stop looking for my enemies. We could wave until the war is over. Come and get a little, kick the kids in the middle. Oh, dearly departed, won't bother me. Easy come and easy going, easy come and easy going, easy come and easy going blood. Ooh, I am a rebel just for kicks, yeah. Your love is an abyss for my heart to eclipse now. Might be over now, but I feel it still. Ooh, I am a rebel just for kicks now. I have been feeling it since 1966 now. Might be over now, but I feel it still. Ooh, I am a rebel just for kicks now. Let me kick it like it is 1986 now. Might be over now, but I feel it still. Might have had your fill, but you feel it still. You have only got a couple miles to go. You have been trying to drown your sad. I saw you crack a smile about a week ago, in the middle of the pouring rain. Climbed the cliffs of Dover to go dry off in the sun. A four-leaf clover covered hide from everyone. Shine on me. Shine on me. Shine on me. Shine on me. When I get up I got to get me a plan to do whatever I can, I suppose. I am already working for my Uncle Sam, you know he has got me counting chiro-euros. No crying on my shoulder, I am allergic to her tears. It is trying for this soldier to pretend for all these years. But shine on me. Shine on me. Shine on me. Shine on me. Got to keep my ribbon torn so my eyes will not burn. Probably should not have to warn, number one concern. Shine on me. Shine on me. Shine on me. Shine on me. Shine on me. Shine on me. Shine on me. Shine Shine on me, shine on me. Shine on you, shine on me. Shine on you, shine on me. Shine on you. Get hot, get too close to the flame. Wild open space. Talk like an open book. Sign me up. Got no time to take a picture. I will remember someday, all the chances we took. We are so close to something better left unknown. We are so close to something better left unknown. I can feel it in my bones. Give me sympathy. After all of this is gone. Who would you rather be? The Beatles or the Rolling Stones? Oh, seriously. You are going to make me stay tonight. Come on, baby, play me a song like Here Comes the Sun. Come on, baby, play me a song like Here Comes the Sun. Do not go, stay with the all unknown. Stay away from the hoax. All the chances we took. We are so close to something better left unknown. We are so close to something better left unknown. I can feel it in my bones. Give me sympathy. After all of this is gone. Who would you rather be? The Beatles or the Rolling Stones? Oh, seriously. You are going to make me stay tonight. Come on, baby, play me a song like Here Comes the Sun. Give me sympathy. After all of this is gone. Who would you rather be? The Beatles or the Rolling Stones? Oh, seriously. You are going to make me stay tonight. Come on, baby, play me a song like Here Comes the Sun. Come on, baby, play me a song like Here Comes the Sun. Come on, baby, play me a song like Here Comes the Sun. I wanna follow where she goes. I think about her and she knows it. I wanna let her take control. 'Cause every time that she gets closer. She pulls me in enough to keep me guessing. Mm. Maybe I should stop and start confessing. Confessing, yeah. Oh, I've been shaking. I love it when you go crazy. You take all my inhibitions. Baby, there's nothing holding me back. You take me places that tear up my reputation. Manipulate my decisions. Baby, there's nothing holding me back. There's nothing holding me back. There's nothing holding me back. She says that she's never afraid. Just picture everybody naked. She really doesn't like to wait. Not really into hesitation. Pulls me in enough to keep me guessing. Oh, oh. Maybe I should stop and start confessing. Confessing, yeah. Oh, I've been shaking. I love it when you go crazy. You take all my inhibitions. Baby, there's nothing holding me back. You take me places that tear up my reputation. Manipulate my decisions. Baby, there's nothing holding me If we lost our minds and we took it way too far, I know we'd be all right, I know we would be all right. If you were by my side and we stumbled in the dark, I know we'd be all right, I know we would be all right. Ladies and gentlemen, the program will start in 2 minutes. Thank you. If we lost our minds and we took it way too far, I know we'd be all right, I know we would be all right. If you were by my side and we stumbled in the dark, I know we'd be all right, I know we would be all right. Oh, I've been shaking. I love it when you go crazy. You take all my inhibitions. Baby, there's nothing holding me back. You take me places that tear up my reputation. Manipulate my decisions. Baby, there's nothing holding me back. Oh, whoa. There's nothing holding me back. My fears, your screams. When you're with me, baby. Baby, there's nothing holding me back. I could lift you up. I could show you what you wanna see and take you where you wanna be. You could be my luck. Even if the sky is falling down, I know that we'll be safe and sound. We're safe and sound. I could fill your cup. You know my river won't evaporate. This world we still appreciate. You could be my luck. Even in a hurricane of doubts, I know that we'll be safe and sound. Safe and sound. We're safe and sound. Safe and sound. We're safe and sound. Hold your ground. We're safe and sound. Safe and sound. I could show you love. In a tidal wave of mystery, you'll still be standing next to me. You could be my luck. Even if we're six feet underground, I know that we'll be safe and sound. I know we're safe and sound. Ladies and gentlemen, the program is about to begin. Please take your seats. The program is about to begin. Safe and sound. Hold your ground. Safe and sound. I could lift you up. I could show you what you want to see and take you where you want to be. You could be my luck. Even if the sky is falling down, I know that we'll be safe and sound. I could lift you up. I could show you what you want to see and take you where you want to be. You could be my luck. Even if the sky is falling down, I know that we'll be safe and sound. We're safe and sound. We're safe and sound. We're safe and sound. We're safe and sound. Safe and sound. We're safe and sound. Safe and sound. We're safe and sound. Hold your ground. We're safe and sound. Safe and sound. We're safe and sound. I want you to be my girl. Oh, stand up in the club. The crowd won't let go. You want me to come. Just a reminder, ladies and gentlemen, the show is about to begin, so please take your seats. Thank you. It's not a show. 'Cause I want you to be my girl. Oh, stand up in the club. The crowd won't let go. And I want you to come. I won't let you go. So if you wanna dance. Ladies and gentlemen, please take your seats. We will now resume the 2018 RBC Investor Day program. As everyone gets to their seats, I just wanted to welcome you back. You saw and heard a lot as we connected our digital world to our business. We've got three more sections that we're very excited to talk about next. Just to put some context to the next two sections. About three years ago, I put a team of senior leaders together to talk about how do we see the world changing. We brought experts in from various disciplines to talk to us about how the consumer is changing, how businesses are changing, what trends, how do we capitalize on this. From that came the concept that we can fundamentally reimagine our role in customers' lives. I talked about this fourth pillar of building out value propositions, reimagining customers, creating value, and creating new connectivity that we think can significantly accelerate our growth as a company and change how banks play a role in customers' lives. Mike Dobbins is going to come up in 2 seconds, joined us from Capital One about 8 years ago. Started in our retail business and ran our mortgage business, and then now is Head of Corporate Development and Ventures. Mike, why don't you come up? Mike's going to talk about our Ventures program and how we're completely reimagining our role in customers' lives to create future growth. Mike, over to you. Morning, everyone. I get the pleasure of talking about our newest growth strategy, so a lot of the cool and exciting stuff. In particular, excited today because you are the first public audience that we will ever have talked about with RBC Ventures. I wanted to start today's presentation with a bit of a thought provoker. These are three companies you may be familiar with, Houzz, Shopify, and Credit Karma. They've all built digital, frictionless, useful solutions, and they've achieved significant scale, 120 million clients among them. What I find interesting about these companies is two things. The first is they play quite closely to the high-value client segments banks compete for every day. Think about Houzz. Houzz is a site devoted to homeowners looking to improve their home. We are the largest lender to homes in Canada. The same can be said for Shopify, a site devoted to businesses. We are the largest bank for business in Canada. The other thing that interests me when I look at names like these is why were they not created by a bank? Why wouldn't a bank create a compelling solution that's frictionless and useful that could get to large scale as either a companion for its core banking product to make it differentiated or, more importantly, to drive more people to their banking product? This is a question we asked ourselves at the beginning when we created RBC Ventures, and our answer to the question is, we can. I will show you some examples of ventures that we have developed. Banks historically have stored, moved, lent, and invested money. Neil and Dave and Doug just talked to you about our digitally enabled relationship bank strategy, a strategy that leverages privileged assets, the largest and most diversified network in Canada, a multi-year investment and journey in data curation, artificial intelligence, and a number of proprietary products, including Canada's leading reward proposition. Even with that, Dave mentioned we all got together and talked a few years ago. Even with that, we looked at the forces of change, the speed of change. We believed we needed to put another strategy on the track and run it at scale simultaneously with our digitally enabled relationship bank strategy, and that was to move beyond banking. We call it RBC Ventures. It's our ability to move from being a part of many experiences to being the orchestrator of entire experiences. Now, what I'd like to do is show you a short video that my team created, and then I'm actually going to walk you through our ventures, and get into some more detail. 150 years ago, the bank was literally at the center of the community, where connections with clients ran deep. Today, communities reside in the digital world. To connect with people, we have to reimagine the role we play in their lives and how we add value. We have to redefine, reimagine, reinvent what a bank can do. We have to go beyond banking. With the mission of creating meaningful solutions that will shape the future and make lives better, this is what RBC Ventures is all about. How do we do this? We operate like a startup, which means being open to new, innovative ideas, being ultra-lean, and being able to move super fast. We build new ventures, connect with more people, and engage with them in new ways. We establish new partnerships and invest in companies that can help us grow and find great new talent to keep doing it over and over and over again. We don't have pets in the office or ride scooters just yet, but we have the passion, the smarts, the people, the ingenuity and creativity to not only change the way we do business, but to change people's lives or at least make them a little better. Stay tuned because we're just getting started. We use the word reimagine a lot. Dave used it. It started a few years ago. We asked ourselves why can't a bank reimagine the role it plays in a customer's life? You heard it in that video. I'm going to talk to you about three different types of reimagining. I'm going to show you a venture that fits each type. The first one is reimagining when can a bank engage a customer on their path and their journey? How early can you engage? The next is reimagining the nature of the services a bank can provide a customer and the frequency in which those services are used. Lastly is just reimagining customer. Is a customer only someone that comes to the bank, that sits down and opens an account? Or can a relationship start in a different way, less friction, thinner, and have a relationship built over time? We are going to talk about three examples today, and the first one is a venture we call Ownr. Ownr is a newly deployed service of the bank, and Ownr is a site devoted to businesses and entrepreneurs, and it is everything they need to create their business. So inside of Ownr, we have built a really cool and frictionless digital registration service. So a new business can come, complete all the processes online of a legal name search, and actually receiving digitally their business identification number. If it is a bigger business, they can incorporate themselves through the service, including getting a rendering of their articles of incorporation. It has got a host of tips and tools, and most recently, we added a feature where we can help the business build its brand and identity. Using an artificial intelligence tool, a business owner can come into this service and select icons, images, color palettes, and we will use artificial intelligence to actually render the brand and the identity within minutes of that business on their screen. Now, why is Ownr important? Ownr is important because all those things I just said happen before a business would go to a bank to open a business account. If we wait until the customer comes to open up a business account, we are competing in a crowded space. Where with Ownr, we play at the very top of the journey as one of a kind, bringing the customer all of those services seamlessly and digitally, including bringing them into the banking relationship with Canada's largest business bank. Our hope for Ownr is both differentiation in terms of a bank that can provide everything a business needs, but also to play higher into this growth segment on their journey. Now, the next venture I want to show you is an example of an always-on venture, and this one is called Drive. Drive is a venture that plays into the 20 million vehicles on the road in Canada today and the people that drive those vehicles. Now, Drive is both insight and service. It is as easy as the customer providing a license plate number. Drive will go. We have built capability to extract all the other information that is relevant to the vehicle, the make, model, year, VIN, all of that good stuff. Unlike a manufacturer solution, Drive is not about a particular type of car. You can have your '86 Honda and your 2000 Cadillac all managed within Drive in one interface. From an insights perspective, Drive starts by just telling you the value of your vehicle. What is it worth? What will it be worth over time? In addition to that, Drive will also provide you recall notices. If you are not the first owner of a car, it will provide you a history of all the recalls on the car. More importantly, Drive is a platform to manage vehicles and vehicle service. We are connected with 800 Canadian dealers, and customers can go into Drive and book their service experience, be it basic service, major maintenance, directly through the app, where the entire experience is done through the app. The scheduling, the communication with the dealer, even at the end, when you get the piece of paper back at the end that tells you what they did and the receipt, those come digitally, and they are stored neatly in your Drive document folder. Why is Drive important? Drive is important because today, automotive finance is probably one of the most competitive businesses we are in. We play at the very end of the customer's journey, when you are in the finance office and somebody else is deciding where the financing is going to go. At Drive, our goal is to get many of those 20 million to use Drive for the value it provides and build a community of auto dealers where we will add the capability of being able to search for a new vehicle, finance a new vehicle, and build a total auto platform. We think that this will be a win-win-win. We think it will be a win for dealers because we will be able to bring customers to them in a more complete way, a more informed way, and hopefully in a way where they will put more value on the table for the consumer because they will not have to advertise with inefficient plays like maybe on Autotrader or things like that. It is a win for the bank because we hope to get more volume, and ideally, a win for the customer because they now have this solution to manage the entirety of their car. The last solution I want to show you is a solution called FinFit. As the name suggests, it is about financial fitness. Like Credit Karma, FinFit provides free credit scores. It also has a very cool credit simulator. For a customer looking to improve their credit or just know what would happen if they did something, they can go ahead and take actions in the simulator, and it will tell them what their score would become. But different than Credit Karma, we wanted to provide a full financial fitness tool. So we have built the ability for the customer to aggregate all of their financial accounts wherever they hold them in Canada. We bring them all together in the application, and we run an artificial intelligence agent underneath that to provide spending insights to consumers, to tell them how they have spent over time, to tell them based on their cash flow what is safe to spend, what is safe to save. From this, we will build bridges to RBC products in time. If we have money that we see is safe to save, we will conveniently let them save it or invest it with RBC. Why is this important? It is important because today, banks do not provide advice unless you have gone through the act of opening an account, a checking account. With FinFit, we can frictionlessly put advice out to everybody and build relationships with them over time. So this is a way of trying RBC without that friction that Dave talked about, that inertia. Now, we took a play out of the technology playbook, and we're always learning because we're sort of new at RBC Ventures. You see the 50,000 noted at the bottom there. We tried putting a wait list out to just test demand for this type of service in the marketplace, and we were able to get over 50,000 people who joined the wait list for this product, which only went live last week. We're constantly learning techniques on how to not just build ventures, but how to put the emotiveness that founders of businesses would put into them. Ventures have been a bit I was employee one of RBC Ventures when we started it. All of these, I'm like the proud dad of all these ventures. I could talk about them all day. I thought what would be interesting, though, is to maybe actually do one more venture and bring the team on stage that built this venture. This venture is called Arrive, and it is another one of those top-of-the-journey ventures. It's there specifically for newcomers to Canada, which is the largest growth segment that we go after. It is a highly differentiated solution. I'm going to ask Shikha and Tricia to come on the stage. Shikha and Tricia were the Imagineers. It's the title we give to all of our employees. They were the Imagineers that designed Arrive. As soon as we said we love it, they became the co-founders of Arrive. Tricia, thank you. Shikha, hello. Hello. Hi. Let's start with this. Why don't you tell the group about yourselves and your background so that the group can become familiar with the kind of people we hire to build these ventures? Sure. My name is Shikha. I am one of the co-founders of Arrive. My background is in business, have done my MBA at the Rotman School of Management. My prior experience is in banking, so I have held roles in strategy, product management, and marketing. More so related to this, I come from a newcomer family, so I am extremely passionate about solving for this space. Hello, my name is Tricia Jose. I am the other co-founder of Arrive. My background is in technology. I did my undergrad in computer science, my master's in biomedical engineering. Prior to this, I actually started a fintech company myself. Like Shikha, I came to Canada when I was 2 years old, so this mission is really near and dear to my heart as well. That is great. A lot of banks, when I look at their advertising for newcomers, this is just banks, it will be something like get a credit card with no credit history required. Why do you tell us about Arrive and why Arrive is different? Sure. I will kick this one off. Arrive is a digital helping hand for newcomers to Canada. We really want to be there for them from the moment that they are approved to come to Canada to when they arrive and settle in and beyond. I am super excited because we are actually live today. If you would like to see a demo, we are more than happy to show it to you at our booth there later this morning. We want to be there for newcomers for all their needs, and be a hub for them. Where we are starting is this problem of information and action overload. What I mean by that is that throughout that journey that I described, there is a number of actions and activities a newcomer has to perform, and a lot of information they have to digest. As you can imagine with the internet, it is so overwhelming not knowing which information is authentic, which information is made for me, and which information I even need to pay attention to at any given time. At least it used to be that way. Through Arrive, we serve up to our users content that is relevant and correct, tailored to them and their unique journey. It is the right information at the right time for the right people. Beyond that, we understand that people really need to speak to an individual. We offer users on Arrive the ability to speak to a settlement and employment expert through our leading not-for-profit partner, the Centre for Education and Training. I will just add that we are different because we go beyond banking. What that means is, very early on, Tricia and I, we actually took off our bank hats and put on our newcomer hats to truly understand and empathize with what newcomers are facing at every point of their journey. By bringing newcomers to the table, we learned that there are a number of challenges that go beyond banking. For example, employment, getting back into your desired field of work, or settlement, finding the right place to live. What we found is that these challenges are actually top of mind, and they exist well before that newcomer comes to Canada, and well before they are even thinking about banking. Arrive is uniquely positioned to provide support in a holistic way to newcomers starting at pre-arrival. That is great. Shikha, Tricia, can you just tell us, working in venture style, we have built a little bit of a culture of our own. Right. Maybe you could just tell the group, what is it like working in RBC Ventures? Sure. I'll just start off that it's really fun. I'll start with that. We essentially operate as a startup, so we have our own mini units. Particularly for Tricia and I, we have a team, a very small, lean team. We're very mighty. We play multiple roles, wear different hats every day, and it's very quite different than a traditional work environment. What we really love about our jobs, and trust us, we really do love what we do, is because when you're building from the ground up, you're forced to have a laser focus on your end user. Our users dictate every aspect of our business, and it's what pushes us to build something that we believe is really meaningful, impactful, and differentiated. That's great. Last question, either of you can answer it, but what is your ambition for Arrive? Sure. We hope to be the number one platform for all newcomers coming to Canada. We'd like to be a part of that newcomer's life before they get here and thinking about where they're going to live, once they land, helping them find that job, and eventually as they become a Canadian citizen. In doing that, we are confident we're going to earn their banking business. I think we're uniquely positioned to be able to really solve these problems. We are operating like a startup, but unlike other startups in this space, we have the scale, the reach, the resources of RBC behind us. Building Arrive outside of the traditional retail banking, we're actually able to solve those beyond banking problems. We're confident that we'll be able to reach 100% of all newcomers to Canada because our goal really is for all people who choose to make this beautiful country home, like our families did many years ago, and I'm sure many of yours, we want them to feel like they truly are home through Arrive. Nice job, guys. Thank you. Thank you. A little bit of a scorecard. We've been quite busy. We have seven ventures that are live in the market. During the break, you'll be able to see them at the RBC Ventures booth. They are all early days, but we are seeing very, very good customer feedback and very good early signs of growth. We have 12 ventures that are under development, so we have a lot of Imagineers, like Tricia and Shikha. We've also made a number of strategic investments and have built a number of strategic partnerships. I want to pause on this because this is actually quite important. We knew early on in building ventures that if you're going to build lots of things, you needed a toolkit with lots of tools. That includes capabilities from other tech companies that you may need to integrate. It includes corporate partnerships that you may want to work with. We have amassed a number of them. It is a privileged asset, but it is quite important, and as you can imagine, it is not infinite. You have to have the right people that you can work and collaborate with to build these. We also made one acquisition. It is probably important to note that all of the ventures that we have built to date, with the exception of the one acquisition, are all organic. A lot of people wonder if these are investments. These are just us hiring smart and creative people and putting them on themes and allowing them to do what they do, to come up with great ideas, to build great ideas, and run great ideas. Now, in the spirit of just this part of partnerships, I wanted to show you, I know this is a busy slide, but I would say partners kind of fall into three categories. The first category is capability. This is an image of Drive at the bottom left of your screen. Two capabilities are called out. One is called YourMechanic. It is an investment that we made. It will be live shortly. It, through Drive, will allow you to have a mechanic come to your home or office for up to 200 basic services. A pretty cool feature. The other one is a company called Tire Butler. For all of you that are Canadian, you know it gets cold here. You do have to change your tires, and to have a nice company like Tire Butler come to your house and do it is a nice add. Those are two exclusive partnerships of RBC, and they are there to support Drive. So that is using partners as capabilities. As far as distribution, Neil talked about the relationship we have with WestJet and Petro-Canada, which are great examples. This is an example of a fast-growth tech company with about 1 million users called Carrot Rewards. We do a little bit of business with Carrot. 1 million users, they have gotten there pretty quickly, and they are about physical fitness. So we found a nice symmetry with financial fitness, and they help promote our product, FinFit, for us. So they are a large part of the 50,000 people that are on our list for FinFit. So there is a lot of ways you can collaborate. Lastly is just the expression of value, which again, Neil talked about as it relates to Petro, which is if two organizations can come together where you are not seeking each other's clients in the open market, but rather you can come together and create customized propositions, then there is more value to put on the table for the customer, increasing the overall value of the venture or the idea. Now, I know this is an investor day, so you are probably looking for some numbers, so I am going to give you two. The first is my ambition. My ambition, not just mine, my team's ambition, is to be able to build a relationship with everybody in Canada. That is a long-term ambition, but we have built seven ventures that we feel quite good about. We have 12 others that are very exciting, which you will see coming soon. We will keep hiring Imagineers and building things that we think will make a difference in clients' lives. From a math perspective, we have committed to Neil and Doug to deliver 5 million venture users over the next several years, then to actively convert 500,000 or 10% to either new bank customers or deeper bank relationships. Rod will help sum all this up at the end. The last slide that I want to touch on is really what I think is the most important slide of the day, which is it is all one strategy. Dave talked about this in the beginning. This slide is intended to depict the choreography that goes on to do this, to run a very large bank, a large wealth business, to have this ventures business running on the side. They are all there for the same purpose, which is to grow more clients, to provide more value for them. In some cases, ventures will feed the top of the funnel for things like our business bank. In other cases, the bank may feed a venture because in the automotive space, we probably already have customers that have 4 million of those cars. It is that choreography and that collaboration that allows us as a leadership team to execute confidently and move forward on all of these things simultaneously. Now, I have one last responsibility while I am on stage, which is to ask our CEO, Dave McKay, to come back on stage to speak to this next segment, which is appropriately titled The Power of Partnerships. With that, I invite Dave back to the stage. Thank you. Thanks, Mike. You heard this exciting new opportunity to increase the funnel, to move up and reimagine the role we can play and connect with up to 5 million new Canadians that, as we talked about before, who have been inert in the past, who have been very difficult to reach through traditional, even digital channels. To connect with them and to build relationships and to create value and then to offer them our financial services, I think is a completely new way of acquiring a customer in a very exciting way. You see you have got a flavor for some of the ventures. The last part of our growth story, as Mike talked about, is partnerships. There are other like-minded institutions, retailers, airlines out there who are thinking very similarly to we are, that we have to lever our client base. We have to partner with other organizations to connect with clients to offer what they think is their differentiated value proposition. We are all in the same boat together. We are trying to connect with Canadians and trying to reimagine our businesses. Partnerships is a very important part of our growth stories. In addition to the 5 million net new Canadians that we are going to connect with through ventures, we think there is a multi-million opportunity to connect with new Canadians through partners. I am going to cue a video, then I am going to invite some very special guests on stage. RBC is reimagining the role it plays in people's lives. We are going beyond banking to connect with clients in new channels and in bold new ways. That is why RBC is harnessing the power of partnerships. Collaborating with like-minded, forward-thinking organizations to deliver greater value to current and prospective customers. RBC is now proud to share the stage with three of Canada's most iconic organizations, Suncor, Indigo, and WestJet. Get the chairs up here. It gives me great pleasure, and I think this might be a first in Canadian Investor Days, to welcome three distinguished CEOs, Kris Smith, EVP of Downstream at Suncor, Heather Reisman, CEO of Indigo Books, and Ed Sims, CEO of of WestJet, on stage to have a dialogue about the power of partnership in the future. Please welcome. We also firmly believe in the power of partnership. Chris, we are going to start with you and talk a little bit about our existing partnership before we get to the future, and our Linked Loyalty card, and already attracting 500,000 net new Link cards. Talk a little bit about what it means to Petro-Canada and why you are excited about it. Yeah, sure. Thanks. Dave, thanks a lot for inviting us today. It is great to have this opportunity. It is a bit rare. It is a rare opportunity, and we are excited about the partnership and to get the opportunity to talk about it even just briefly. If I go back just for a moment, Suncor, we are Canada's largest integrated energy company, from crude oil all the way to the customer at the pump. Our partnership is at the customer level with RBC. Our network, our Petro-Canada business, we are the largest branded retail network across the country by share of market, by sites. We also have the largest loyalty program in the company in our space. We have almost 5 million Canadians are part of the Petro-Points partnership brand. The traditional way of partnering with financial institutions Do you want to run that again? 5 million? 5 million. Well, wait till I get to your number. When you think about the traditional way that financial institutions partner with retail gasoline stations, it has actually been quite linear. It has been co-branded cards. It has been very one-dimensional in how loyalty and partnership has worked. We wanted to do something different because as a company, we like to think in an integrated way all the way to the customer. We want to drive innovation, and there is a big technology story here. We found a partnership with you and your team that really unlocked a different way of thinking about loyalty and how to connect with the customer. Instead of partnering on a co-branded card, which has a very narrow way of approaching the market, it is just a few thousand customers usually. Instead, we unlocked the power of your 12 million customers. There is the number I was Yeah going to bring together with our 5 million loyalty members. We do 1 million transactions a day at the pump across the country. This is a novel partnership. It has not been done before in the Canadian retail space. Matter of fact, globally, this type of partnership is quite unique. Bringing value to customers, not only in cents per liter off, making the technology work so it is easier to actually make the transaction at the pump, and also leverage both loyalty platforms. So, the value for our customers is quite apparent for them. We have been really excited about. We have been about 8 months now into the partnership. We have been really excited about the results we have been seeing. We have over half a million customers who have linked Petro-Points with the RBC Rewards program. That does not include the other 11.5 million who, even though we are trying to get them out to link those programs, still enjoy benefits that come to our sites. Yeah. Anyway, we are really excited about the partnership, and it is a different way of thinking about loyalty and about how two companies. The other thing that I am really excited about is we have got great Canadian companies sitting up here. I think when you get great Canadian companies working together who have scale across the country and the amount of Canadians that we touch each and every day, we can think about value a lot differently. That is true. It has been very exciting. Right. We are just at the beginning. Creating an always-on, you heard Mike say, trying to be always on with the customer is a little bit like back to the future. We are always on with the customer because they used to walk into our branches and cash checks and make deposits. Being always on in other ways is so important to both our brands. Right. Yeah. So really excited about where we are in the- Just let's say, just scratching the surface of the opportunity. Okay. Heather, I say around North America, you are one of the great retail innovators in the world, much less in Canada. When you walk into your new concept stores, I tell people from Hollywood to New York, "You got to go see Heather's store. She is reinventing what it means to be a retailer." We have had some great experiences as early partners. Why don't you give the group an idea of what we have worked on so far? Sure. I have to echo Chris' comments, Dave, and in front of this whole group, have this opportunity to say to you personally, it's just been incredible for our organization to work with yours. I mean, Indigo, relatively speaking, a little tiny company, right? We will do CAD 1.2 billion this year. Very tiny compared to the bank. Although, we have 8 million loyalty members, so let's put the ball down. I am not competitive at all. She's setting the bar and I like it. I am not competitive. That's pretty good so far. It has just been fantastic to work together, and it doesn't feel like we're working with this big behemoth. I think it's because of the value connections of the people and our team is thrilled at the opportunity to work with the Royal Bank through Mike Dobbins and his team. I think the connection is because we are both very, and I suspect this is for all of us, really focused today on how do you legitimately create value for end consumers that we serve. So that's number one, and we share this. Indigo's tagline that motivates everything we do is Enrich Your Life. We are in business to enrich the lives of our customers just a little bit every time they interact with us, which is very specifically what the Royal Bank is trying to do. Yeah. I think it's funny that the tagline is enrich because no doubt people think about it at the bank. Reading's enrichment. Exactly. But what's really come together is that we interact very specifically at critical moments in customers' lives. I always say, when they're getting married, when they're having a baby, when they're trying to inspire their kids, whether it's around reading or STEM or, right, whether it's around a gifting occasion, at life moments. And so does the bank interact around life moments. What we see happening is that by working together, we can make these life moments actually meaningful for people, sharing back and forth what our customers want, and then advantages both ways. Now, I will say the part of the partnership that is most exciting to me, and I get to announce it this morning. Some of you may know that since I started Indigo, I do something called Heather's Picks, which I take very seriously, and I do read those. We are going to launch- Do you really read all those books? Yes. We are going to launch, I'm really excited about this, we are going to launch, as part of this combined program, Dave's Picks. Oh, I get some reading to do. They are real subjects. We have a whole segment of people who really want to know what is one of the great CEOs in this country, what do you read? What do you think about? How do you get inspired? How do you unplug? Those are big topics for people today. Does a Bank of Canada quarterly monitor report count? We're working together. The idea is how do we enhance it and get some value from it. I'm looking forward to it. I love to read. I have a wide range of interests, so you're going to keep me on my toes. Exactly. It'll be fun. It sounds like. Look forward to that partnership. Thank you. It's a real honor because I read your Heather's Picks all the time. I'm reading "Shoe Dog" now. Fantastic, right? Heather's pick, yeah. Really great book. Fantastic. That's the Nike story. Phil Knight. Phil Knight. Yeah. Ed, we've had this wonderful co-brand relationship dating back many years now. I remember making the first pitch in 2003, and I was unsuccessful to WestJet and the previous leadership team. But this card has done exceptionally well. I think from a value proposition, been number one. Can you give the group a little bit of idea of what we've worked on and why we're so proud of our co-brand relationship? Yeah. Sure, Dave. I will just pick up on something Chris said. I love the idea of three dynamic Canadian organizations working with the largest Canadian bank. I am from a little island just off the west of British Columbia called New Zealand. But I am still very passionate about representing the most Canadian airline. I think the crux of our partnership with RBC is having it work at multi-levels. So it works at a brand level. The Brand Finance 2018 Study evaluated RBC as the most valuable brand in Canada, and WestJet was the strongest brand. So you have to have that brand synergy that there are mutual strengths and complementarity. There also has to be the transactional strengths at every level of the organization. My in-flight staff will announce on every flight that our joint property, our World Elite Card, is a powerful property and a growing property. The growth of the RBC MasterCard is growing at a stellar rate. It is growing around 22% a month. It is around a 30% CAGR rate over the last five years. So it is working at a transactional level as well as working at the brand level. It is something that, I have 13,000 staff, every single one of those staff will carry the card and buy into the proposition. It has to work at a grassroots level up as well as at a top level down. I think we have been selected for best travel card Yeah in Canada for the last three years, which is an astonishing track record. But we also have to project out, and it is wonderful looking around the room, looking at the degree of future projection that you are seeing in the room. Ours is a very capital-intensive business. I am looking at the life of capital assets now over the next 30 years. So we have to be thinking of partnerships with that kind of longevity as well. Yeah. Whether that is our airline partners. We are a global international operation. We are taking delivery of ten 787 Dreamliners from next year, which means that we cannot just think about taking Canadians to the world, we have to think about bringing the world to Canada. We can do that in conjunction with yourselves, in conjunction with our airline partners, but on a 20 to 30 year basis, not a short-term, pure transactional basis. It fits with your long-term. I love those planes. I love flying on 787 Dreamliners, so congratulations. Thank you. I look forward to that addition to your fleet. The partnership, as you said, building that number one card has been part of the growth story that you heard Sean and Neil talk about on the card side. Given the disruption that you all know is happening in the overall loyalty travel space, travel is still a huge, if not the single largest component of reciprocity and loyalty programs in Canada. So, a great opportunity for all of us. Absolutely. Kind of foreshadowed my next question. Back to Kris. You talked a little bit about where partnerships are going and how important they are to building platform and franchise capabilities. I will ask both you and Heather the same question. First, Kris. Yeah. You talked earlier, Dave, about just scratching the surface, and I think that's exactly the way to think about this. As a matter of fact, as Heather and Ed and I were spending some time talking before we came up on the stage and just seeing where technology is going, how we interact with customers, what customer value propositions look like, and how value chains are collapsing, and how we can bring more value to customers and use technology in a way that's very different. Suncor is a company where I know you've spent a lot of time thinking about digital and thinking about technology and how you can leverage that for the customer experience. That's happening in every industry. We were talking earlier, my industry is doing it, whether it's autonomous haul trucks in our mines, whether it's integrated operation centers, whether it's data analytics for maintenance. But also in our end user customer space, mobile payment. Right One-to-one marketing, thinking about how we leverage technology to make it easier, faster, and bring value to customers. Blockchain is a big topic that you know a lot more than I do about. So thinking. I think he probably knows more than I do. As we think about the future, the exciting part about this partnership, and I understand you are going to have some things that people can interact with here later today. Yeah. The exciting thing about the partnership and the thing that we really value with RBC is the technology forward innovation focus and the investment in the future and how we leverage technology in a different way. Reimagining what the future of business and retail, in our sense, looks like. I think that is the power of this. Just to pick up on one thing Ed said was longevity. Thinking in terms of longevity of partnerships as well. Not making partnerships transactional, but how you work together in a way that is actually going to build value and build on brand. I think brand is the other piece that is very important. That is the way we are excited about the partnership with RBC because I think we are very like-minded in those spaces, and looking forward to working together for many years on working through each of the phases. Things are going to look very different five, 10 years from now. For sure. than they look today. For sure. Yeah. Heather? Yeah. Yeah. I totally echo those comments. Look, basically, business is intensely competitive. I think it doesn't matter what industry you're in, business is intensely competitive for customers and for employees, for the best talent, technological talent, marketing talent, operational talent, supply chain talent, any talent. Highly competitive, which means there's huge pressure. There's pressure on the margins in business, and there's pressure on the cost of business. There's no choice, I think, and why we're so respectful of this. There's no choice but to find partnerships and create leverage where one and one can add up to four at a lower cost to the organizations and at a higher value to customers. That's the fundamental issue and why it's just so exciting that the Royal Bank would take this initiative and spur this kind of dialogue. I know it's going to be hugely valuable. Even this morning, just bringing us together, Dave, we were finding ways. It was quite a bit in the green room to figure. That is exactly. But I think that's the fundamental issue, right? There's huge competition. Yeah For resources and for customers, it places pressure on economics. You've got to find ways to change the value chain. You just have to. I think it is so great to hear you say that, because as we look outside our borders, the platforms are almost all foreign owned. Exactly. They are collecting more information and more insight Right on Canadians than Canadian firms are. It is an imperative that we band together as Canadian firms Right with insight into Canadians. Right to take control over our future. I think that's, for all of us, I think creating value, creating connectivity, connecting with Canadians as a team with shared philosophy around what we're trying to do, I think is so important. I think it's hard to find partners that share that spirit. You think it's easy, it's all about economics, but cultural fit and ambition play a huge role in sustaining a partnership. I think it's so exciting what we've heard. Ed, last point, we have a bit of an announcement to make. We do, Dave. First of all, I want to announce something that not even Heather's aware of, that I'm going to take Dave's Picks and put it as digital content on board WestJet aircraft. Oh, there you go. Could we discuss the possibility of physical? Could we just talk about maybe put some physical- Well, we're- Or a combo. Digital. It doesn't have to be combo. As long as I don't have to rage at people. I don't know. Or a combo. Thinking in terms of announcement of a joint product. Yeah. When we think about competition, it is extraordinary now. We look at the world of oil and gas, we look at the world of book retail that Heather's in, we look at my world, we have actually got the same competitor set. Yeah. We are actually competing with Amazon and Google. Exactly. I do not worry about what is happening in Montreal. I worry about Google. from a competitive mindset. We all do. That is what we are looking to build. That's what we do. This morning I want to announce, I'm the newest in my position of any of the four of us up in this panel. I'm actually on my 99th day. By your 100th day, typically, you're supposed to have delivered something. I actually only delivered this morning. We had to move the event up. Absolutely. If it had been Friday, it would've been a disaster. I really want to announce that RBC and WestJet have been working for many, many months on the next generation of our RBC World Elite Card. We're announcing a scheme this morning called Ampli, which is going to be a frictionless mobile digital platform for seamless transaction between the two organizations. People can earn through RBC, they can redeem on WestJet, and vice versa. We're going to create this digital platform that will allow for multiple retail interactions through that platform. It will allow for Kris to operate through a scheme through that. It'll allow for Heather to operate. It'll allow for other retail or other manufacturing service providers to operate through a single seamless platform. One of the key features, I think, of the WestJet reward scheme has always been total transparency. It's a frictionless scheme. It's based on spend. It's completely transparent in terms of spend of dollar per point. It has no blackouts, no overbookings. That's the sort of transparency that we want to now create a platform that isn't owned by an intermediary. It's owned effectively by the founder partners and gives opportunity for great Canadian icons, as we have up on stage here, to interact on one completely frictionless mobile scheme. We anticipate this will go live towards the end of the year. Yeah. Frankly, I think in a highly volatile space in the world of travel-based redemption, this is going to revolutionize the whole world. Yeah, I agree. When you think about bringing Canadians together and creating value for Canadians, trust between partners is really critical, and no one wants to create another internal foreign-based platform that controls all the data. So having the ability to work as a consortium and as a group towards the benefit of all and having a physical platform to do that is, we thought, was very important. Hence the creation of Ampli and our partnership to launch this. Again, as we're going to welcome between here and in our announcement, a number of new partners to that platform. Yeah. As we work out data security and trust. I think that is a really exciting component of what we're doing. Hopefully, you got a feel for how partnerships work, how there must be a cultural fit, the ambitions of each organization. There has to be real value creation, and there has to be scale. I mean, Heather Reisman, you say you're small, but 8 million connections to Canadians is huge. There's not many programs in Canada that have 8 million connections. I think as we bring even the power on this stage, the connection to Canadians in itself can drive a differentiated outcome for all our firms. That's why we're so excited, and that's why we thought we wanted to finish this with an exciting announcement and three great leaders and great partners. Thank you. Thank you for taking the time for being here today. Thank you very much. So one last piece, which you are probably all ready for, is what is the financial impact of all of this? I am going to welcome our CFO, Rod Bolger, on stage to put together the financial plan and the financial outcomes and talk about our balance sheet a little bit. Rod, over to you. Bring it home. Thank you, Dave, and good morning, everyone. You have heard a lot about our strategies and our enhanced and advanced business models. It is my job today to pull it all together and hopefully give you a number of proof points. One word that comes to mind to me, sitting through all this today, as you have, is bold. Dave is a bold leader. We have seen a lot of bold leaders, both newer leaders to RBC and established leaders at RBC. If I was truly a bold CFO, I would throw out my slide presentation, throw out my prepared remarks, and just say, "Close your eyes. Look around here. You get all this technology, this brand, this customer growth. You get these high returns, this great history, the disciplined risk for 11 or 12 times earnings. Are you kidding me?" But I am not that bold, so I am not going to do that. I am going to make you suffer through my PowerPoint presentation. As we look out over our recent history, we have delivered consistent growth over the six and a half years shown. In fact, we have delivered 9% EPS growth when our medium-term objective is 7.5% growth. This period included the oil and gas downturn. I like to look at things over a shorter period of time, a medium period of time, and a longer period of time because I think consistency is one of the hallmarks of RBC. Let us look back more recently. We bought City National 2.5 years ago, so we have about six quarters with City National and both comparables. Over those six quarters, we've delivered five quarters of over 10% EPS growth, one quarter at 8% EPS growth, I'm adjusting out one-time gains, for almost 13% EPS growth over that timeframe. That compares with the 9% shown here for the six and a half years. That's all well and good. We've had a good run recently. The economy's been quite good. What about if we go over a longer timeframe, not only the oil and gas downturn, but also the global financial crisis? What if we go back 15 years? Then our returns are 9% from an EPS growth and 11% from a dividend per share growth. Now, we've enjoyed this sustained earnings growth with consistent shareholder returns, both on an absolute basis, as you can see on the left side, and a relative basis, as you can see on the right side. This consistently strong performance has been driven by solid client growth in the past, and it's going to accelerate, market share growth, expense control, which has been disciplined, and prudent risk and capital management. We've also consistently delivered strong double-digit book value per share growth, both on a tangible and absolute basis. We believe that driving sustained tangible book value growth and book value per share growth is essential for long-term return to our shareholders. Also recall that during the financial crisis, we did not cut our dividend. In fact, we paid out CAD 35 billion of dividends over the last 10 years. Now, we've been able to achieve this strong track record of earnings growth while maintaining a very disciplined risk position. You've heard a lot about our investment in technology, and a lot of that is for client growth. What we've also done is invest in technology for risk and credit. This will benefit us with lower PCL in the coming periods as we make better credit adjudication decisions. Should we have a downturn, we would expect that benefit to only increase. Now, the bottom half of this page also demonstrates our declining earnings volatility, and that is lower than in market average. This is by design. We have intentionally shifted our risk and our capital away from trading book into relationship client businesses. You can see that in the lower right with lower value at risk, as well as lower market risk-weighted assets. Now, I'd like to spend a minute on our strong diversification. We're spending most of today covering about 70% of our businesses, and I want to touch just briefly on the other 30%. First, let's start with Canada. Five years ago, everyone was expecting Canada to have slower growth than many of the global economies. Yes, we have faced lowering interest rates, which has put headwinds on our revenue growth. Yet the Canadian economy has remained strong, and we've delivered 8% earnings growth over that timeframe. Now we have the benefit of higher interest rates. We also have the benefit of continued strong immigration into Canada, those newcomers we've been talking about, which will help the economy going forward. Let's turn to international. 17% earnings growth. There's two primary drivers here. One, we've simplified our business model, taking out risk and complexity. We've also invested for growth. Two proof points come to mind. One is our Capital Markets business, which as Dave mentioned earlier, has industry-leading returns in many markets. Europe comes to mind, where we have double-digit ROE. Also, our Investor and Treasury Services business, where we are investing and gaining market share in Europe and Australia. Now we will move to the U.S., where we have had 16% earnings growth on mid-teens revenue growth. You are all well aware of the City National story, but we have also grown our U.S. Wealth Management and our U.S. Capital Markets business double-digit earnings growth over the last five years. As we get ready to celebrate our 150th anniversary next year, our businesses continue to evolve. I would expect a higher proportion of our earnings to shift towards wealth management as a segment and the U.S. as a geography. Now, we do remain laser-focused on costs, especially in operations in middle and back office. There is a number of proof points on this slide. You can see we have kept our Canadian banking operations flat while growing revenue in double digits. We have also made important decisions to streamline businesses that were not generating the returns that we were expecting. We have actually reduced our footprint and simplified the business for Wealth Management International. We sold off our home and auto manufacturing business for insurance. As you can see in the lower right, we have significantly improved the efficiency ratios in Investor and Treasury Services since buying out the joint venture partner in 2012, as well as our Caribbean banking business. While we have been cutting costs throughout the organization, we have also determined that we needed to invest for the future, and we have been doing so. You have heard from Mike on our investments in RBC Ventures, and this is going to help us, again, bringing Canadians with elements that they need, bring them into our business, and help us achieve premium market share growth and premium volume growth and add new clients. We continue to invest in areas with three primary focuses. One, better serve our clients. Two, drive operational efficiency. Three, reduce risk. You can see the proof point that Bruce mentioned, 25% CAGR on digital app dev. That is helping us today better serve our clients and grow market share. We talked a lot about the investments we have made in driving through efficiency, and this is a virtuous cycle for us. We have been making this investment. This is not new. We have been doing this for the last three or four years. We are now getting dividends today, and that is helping us invest today for the future. It is not a one-time headwind. It is not an excuse for why our earnings have not shown that consistent growth. Cyber risk, as you heard, is arguably the top risk that any company, let alone a bank or RBC, faces. Keeping our clients' data safe is paramount to our purpose statement of helping clients thrive. It is also essential to preserving our strong brand value. Despite all this increased technology spend on new innovations, on client acquisitions, and do not forget about the regulatory headwinds that we faced and had to deal with coming out of the financial crisis, we do continue to drive efficiency across the board. Now, many of you have heard me say that we do not manage our efficiency ratio at the top of the house, and this slide shows the math on why that makes sense. Over the last five years, we have driven down our efficiency ratio in all five of our businesses, driving positive operating leverage. Yet at the top of the house it went up, and we are okay with that. Another key proof point on here is that operating leverage scales to revenue growth. Yes, costs are essential and we manage those, but it also scales to revenue growth. You can see this huge correlation between the segments efficiency ratio improvement to the five-year CAGR on the revenue growth. I mentioned earlier, we are expecting wealth management to increasingly become a higher portion of our earnings. Given the higher efficiency ratio there with the compensation structure in those businesses, we would expect there to be upward pressure on our overall top of the house efficiency ratio, all while we are committed to continuing to drive down the efficiency ratio in all five segments. I mentioned our well-diversified business mix, and Dave mentioned earlier that one of our core strategies is driving premium returns for our shareholders. You can see that both our return on equity and our return on tangible common equity are industry leading. There are multiple reasons why this is the case. First of all, we have a strong market position across, and market leading position across most of our businesses, especially here in Canada, as you heard today. Second, we have a fierce focus on strong capital management. Additionally, most of our growth has come organically, one client at a time. Our use of acquisitions has been quite limited. You can see by adding the yellow dot for wealth management that we will make acquisitions if they make sense strategically, operationally, and financially. Of course, there has to be a strong cultural fit as there was with City National. Do not forget that our recent buyback activity has added over 100 basis points to return on equity recently. In Q2, our top decile return on equity of 18.1% likely would have been in the high 16s had it not been for our buyback activity. Of course, returning capital to our shareholders is a core element of our capital deployment strategy. Over the last three years, we have returned CAD 20 billion to shareholders with a 60% payout ratio in terms of both dividends and buybacks. This strong ROE and prudent capital management puts RBC in a position of strength. We are holding the dividend payout ratio at 45% because when you combine that again with our prudent risk management as well as our fortress balance sheet, when the next recession comes, our strategy is to retain the dividend and not ding that. I will spend a moment on our strong core deposit franchise, both in the U.S. and in Canada, and this helps us keep funding costs at an industry-low level. After 10 years of headwinds, we are finally starting to see the benefits of the higher interest rate environment. What we've modeled here is simply taking in the interest rate increases that have happened to date in Canada and the U.S. and modeling in two of the three that the market is forecasting by the middle of next year. You can see two key points. One, it's almost CAD 2 billion of additional revenue. Two, most of that has already taken place with the interest rate increases that have happened. Please bear in mind that should mortgage volume slow in Canada, this well more than offsets any impact from that. Since our last Canadian banking investor day eight years ago, we've improved our efficiency ratio 400 basis points. I won't mention the interest rates again. Yet we've also, through the execution that Neil mentioned and the team have delivered, we've doubled earnings over that time frame, which is an earnings CAGR of double digits, 10% in that environment. You may recall that our commitment at that investor day in 2010 was to take our then efficiency ratio in the high 40s and bring it to the low 40s. We also said we would grow at a premium to market in terms of volumes. We achieved both of those. While we're certainly happy with our past performance, we do want to raise the bar and set additional stretch goals for us so that we can deliver that continued shareholder return. That's why Neil outlined the 2 million new customers from organic measures. Mike mentioned the 500,000 new customers from ventures, the new banking customers. He mentioned that's conservative. I think it's conservative. We're going to get that figure higher. You also heard about the additional cross-sell opportunities that we had between Neil and Doug and bringing more of the bank as one RBC to our clients. We've driven the efficiency down again with lower interest rates, and now we expect it to improve even further. We also recognize we might be in the late innings of this economic recovery. Given that, recall that we will scale operating leverage to our revenue growth, and we're also in a much stronger position than our competitors in terms of scaling investment as well as our cost base if that downturn happens. With client growth, the economic headwinds that we have today, and the efficiencies that we're going to drive, we expect to drive our efficiency ratio below 40% in the next couple of years. Two years ago, we had an Investor Day for City National, and we outlined our aggressive growth targets there in terms of earnings, and I'm happy to say that we're on track to meet those. In fact, we're ahead of schedule, but we also didn't anticipate U.S. tax reform. Even without the tax reform, we'd be ahead of schedule. When you shift to our non-U.S. wealth management businesses that Doug outlined, we have been able to drive down our efficiency ratio. We haven't disclosed this previously, but it was about 73.5% a few years ago, down to 69. And we expect to continue to drive it down with those industry-leading positions that Doug Guzman outlined, as well as the technology enablement that we have and the new solutions we're delivering to our clients and to our advisors. Then, as I mentioned, we expect to extend that leadership position across Canada and drive the efficiency ratio down into the low 60s from the 73.5% level that it was just a few years ago. We will be providing additional disclosure. I'm sure you'd like to hear that so you can get a bigger report each quarter. We'll drive additional disclosure so you can track our progress against these objectives going forward. In closing, we've had a great history of exceeding our financial objectives, and we're prepared to not only meet but exceed them going forward in any economic environment. As you've heard from all of our speakers today, we have differentiated model, strengths, and scale. I hope you take away a few key things. One, in the last few years, we have invested heavily in technology for our clients and in new talent, and that puts us in a good space for continued growth. Now we have a lot of momentum to both improve revenue as we grow premium client growth as well as efficiency. Finally, we believe we have the right focus on what matters to Canadians most to continue to drive shareholder value and client value. With that, I'll turn it back to Dave. Thanks, Rod. We've thrown a lot at you. We started about three hours ago saying, how does the market leader grow? How does the market leader thrive in this new world? I think you've seen from the privileged assets that we talked about, the investment in those privileged assets, the loyalty programs, the scale that we have to continue to build, the client scale, the data scale, the technology capability, AI capability. But on top of that, our ventures in moving ahead and reimagining the role that we can play in clients' lives, attracting and connecting with 5 million new Canadians through those platforms alone that we struggle to connect with. We struggle to reach them through traditional and non-traditional advertising channels. We struggle to get them to try our product, even though we're number one in J.D. Power, in mobile, number one in branch, the best people. We have the best platform. We have the best value. Clients have told us that. Experts tell us that. But we couldn't create the trial. I hope you see through today's discussion, today's presentations, that we can create that trial through partnerships, through ventures, through new channels, MyAdvisor and others, through new value propositions and reconnecting. This is a new world. This is a secular change. Finally, the platform, the RBC platform that we've invested so heavily in, we think we can unlock and lever in the future. We've seen the growth trajectories. It's great to have a tough CEO that keeps everyone honest, and we've already raised the bar in this meeting. So that's the proposition, that this is a unique secular opportunity to grow through our existing channels, to lever those platforms, to create a new funnel of client attraction. When we get them in and we get them inside this incredible franchise, we keep them, we nurture them, we grow them. That is what we think is so different and why you can feel the excitement and why it is everything from AI to technology to partnerships is intertwined across all our businesses. Every leader who got up and spoke today talked about the integration. It is deeply embedded in our DNA. You heard our partners saying, "Partnerships are deeply embedded in RBC's DNA. I can feel it." That is a differentiating factor. Allowing us to get to know clients, to discover clients helps us manage risk at the end of the day, and that we are not getting adverse selection, that we are building relationships and we are partnering with clients that fit our risk profile. We can get ahead of that curve. This is a new business model. This is a model that is designed to capture the secular change in our society, and we are incredibly excited about this. I am going to stop there. We are going to bring up a group executive that is just presented in addition to Helena Gottschling, our head of HR, because talent is so important to everything we do, and you are going to see the talent in this room as we open up the booths in a minute. We are going to take your questions for, I think, Dave, roughly half an hour or so. We are running a bit over time. Let us bring the chairs on stage. Let us invite a group executive up, and we will take any questions that you have. Are there enough seats for everyone? Okay, so I will open it up for Q&A. I think we got Rod right here. We have a microphone that is going around. Hi. Thanks. Good morning. A lot of talk about rewards today. I am just wondering if that, the planning scenario at this time is for a static interchange ecosystem throughout the next 5 or 10 years. Maybe more importantly, considering the themes of the day, do you think you would benefit if it really dramatically changed because other competitors will have to respond more aggressively where your scale might allow you to offer a still better competitive rewards program relative to those competitors? Yeah. Good question. Really good question. I tried to address some of that when I talked about how RBC Rewards is different. At this point, interchange is something that we have thought about. When we look at our proprietary program, this idea that we manage the economics, that there's no renewal risk, that we're not really tied to a third party for a vast portion of our portfolio, it does give us the strategic flexibility that if we needed to make some changes. I would agree in terms of this idea, we don't pay a middleman. There's no margin that we're paying somebody else to run this program. Our cost per point, we don't go out and measure this in the minutia. But conceptually, you'd have to think our cost per point is less. There's not another private entity that's generating returns. I think, whether it's interchange or it's just competitive dynamics, this idea that we can steer this and we manage it, and frankly, picking up on Dave's point, our clients know how valuable it is. The idea is to start to get prospects to really understand the value that our clients are seeing in it. I think what I would add to that is that the value of the partnerships you heard on stage 2 is we use each other's margin to help create greater efficiency. There's a limited number of partnerships in the market where you're going to participate with a Petro-Canada to offer cents off of the pump and lever each other's margin, which again adds to your scale capability to create value propositions for your clients. Both Neil, margin to play within our own program, margin with partnerships, I think lead to creating more value at the same price point. So it's a strong competitive proposition. Next question. We have one right here. Hi, good morning. You talked a lot about partnerships and just wondering whether you feel like you have the right amount of partnerships. Are you looking for more? If you think about it, the changing world and changing customer preferences, is the real prize partnerships with some of these larger players, global players that you referenced, Amazon, Facebook, Google? Is that something that's on the radar screen? You had pure Canadian players on stage, but in terms of your outlook for global partners with significant operations in Canada, how do you think about where the partnership story is going and how to win in that? Yeah, I'll talk high level and maybe Mike, you can jump in on Ventures and on Ampli a little bit. Certainly, the premise is to create value for Canadian consumers. If there is a non-Canadian partner that can create value for our customers, whether it is in the venture sector or in Ampli or our own RBC Rewards program, absolutely we're going to consider. We have partnerships with British Airways. We have partnerships with Cathay Pacific. They have created value for our customers. So as we think about the partnerships of the future, if they can do both create value, but they also have the connectivity. Each of the partners on stage brought a connectivity angle to Canadians. So it's much more powerful if you can create value and add connectivity, I think is a turbocharger. I think we'd be open as you'll hear more announcements of partners that will join the Ampli program as we get closer to launch. We wanted to focus on these three partners today. So I think it's both, absolutely, in the context. But one of the goals is to build a counterweight to some of the non-Canadian platforms. Right? So that's the strategy here, is to take control of our own destiny, to understand Canadians' needs and to meet them in an efficient manner in a Canadian solution. I think, and not be beholden. Certainly, it doesn't stop you from partnering with another platform, but not be beholden to that platform and to seeing your customer and accessing your customer only through their platform in the future. The whole strategy here is to build your own control mechanism and understand your customer, and be able to contact them directly in a digital world. Over here. We have one over here. Is that me? Yeah. How should we think about the cost of acquiring a new customer in this new digital way through the ventures and partnerships versus the traditional means? Is there an element of that scaling up over time? Yeah, great question. Mike, do you want to talk about bringing them in earlier in the funnel and much lower cost of- Yeah getting to know a customer I think you will find generally with RBC Ventures, the cost of acquiring is going to be significantly lower than a bank customer, and then we will have the job internally as they become users, to convert them over time. From just an economic perspective in RBC Ventures in total, those numbers are fully embedded in the numbers that Rod put out and the goals that Neil put out. We are managing it as an integrated strategy. We will do, when customers are in RBC Ventures, let's say they are basic users of RBC Ventures, we will use rewards and other things to migrate the customer. Each of them will have slightly different connection points back into the bank, and we will optimize them as we have them out there and as they scale and mature. But obviously all with the goal of introducing them to high-value RBC products that make sense for them. You heard Heather Reisman talk about that on stage, too. I mean, this is a much higher ROE on marketing investment to be targeted by understanding a customer deeply, what will resonate, then what type of card or what type of mortgage, what price points, where in the stage, and not wasting effort messaging Canadians who are not ready to receive that message. Those are a lot of the learnings. I gave the example, and Neil and I worked together on this. Actually, you were in charge of direct mail at the time. 24 million pieces of mail is a scatterplot strategy. Very expensive cost of acquisition, longer payback periods. When you are targeted and you have a deep understanding, it is a much more efficient play for all partners, including ourselves, as we look at our own channels. This is a new world of efficiency, and part of that you will see in the lower efficiency ratio. Yeah. I will just add to that in terms of sort of the new world of connecting with clients. We talked a lot about data and digital. The reality is digital marketing, we gave an example during the presentation. It is things like that where we understand the value proposition that we have to offer and whether it is an acquisition bonus or what it is. Rather than just going out and dropping direct mail and having long periods to test, we can put these out and test what is resonating with clients. What are they seeing as relevant and valuable? This testing goes on every single day with our tech stack and our marketing scientists. That way, we optimize our return, and we actually set very specific targets so we know exactly what our cost per acquisition is and what the value proposition would support. It is a much more exact science now. I think on the other side, the client is getting a lot more relevance. They are not having a mailbox full of mail that they were not interested in. We have number 3 over here. Is that me? Okay. Sohrab. Hey, thanks. I just wanted to build on that for a second. You've talked about the 2.5 million dollars of new customers to be acquired over the- 2.5 million people, yeah. 2.5, yeah, people. Yeah. What's the size of the pie there? What's the population growth that you're assuming over there, and how much of that incremental population growth do you see capturing? In other words, I'm trying to get a feel for the market share gain implicit in that, number one. Then number two, just to build on Adelaide's point, how many iPad equivalents do you see having to hand out to get those incremental customers? I'm glad you've noticed our campaign. Yeah. We've taken a look at these targets. We haven't put them out there without really taking a step back and looking at what's achievable. Part of it, we're starting to see this trajectory as some of these assets we're talking about are taking hold. We will still do the type of product promotion you're referencing. But it's this idea that there's more, there's inputs into the top of the funnel. We can reach out and access clients we never could before. Right now, when we talk about a 2x to 3x lift in the client acquisition, that's where we're sort of ramping up from. We're seeing some of that early. We said we've got a 13% lift in everyday banking accounts already this year. And things like Ampli and the ventures, these actually haven't even started to hit our flow yet. Those are all opportunities still in front of us. We're building up those numbers off of things like the traction we've seen with WestJet, the traction we've seen with Petro-Canada, and then how we're using data and digital to connect more. Haven't actually worked backwards from what's the population growth number, more so in terms of what are the assets, what's trajectory, and what do we think is possible in terms of the efficiency of a new world where the value props that we have and how strong the retail bank is can be more transparent to clients. But here's the new value proposition that we didn't really talk about on stage today, and here's a concept that we can take to in kind of version 2.0. You invite everyone into Ampli, into your partnerships at a bronze level for free. No requirement. You build the connectivity through ventures. You get to know them. But then why couldn't there be a silver and gold and platinum level where each partner puts more value on the table, but they must have one financial product to get into silver. They must have a financial product to get into gold. They must have this to get in. It's not different than your concept of multi-product rebate. You could build cascading levels of value with your partners that helps bring the customer in, and you share the burden of incenting the customer through your joint initiatives. A completely different way of helping once you connect to that customer, moving them through a value proposition, graduating them based on how much they use within the system, and rewarding them. I think there are other ways and other tools that we're going to have at our disposal now as we think about reinventing through ventures and partnerships how to incent a customer at the right time with the right proposition to buy a financial product. But the difference here is that we're no longer trying to just convince you to buy a financial product to start your relationship with us. That's the game changer. That's where a big chunk of the economics start, that we already have connectivity. We've already created value for. We're building a relationship. We're getting to know you, and we can target you exactly. That efficiency alone versus trying to find you in the worldwide web, trying to find you on search and outbid our competitors in search, YouTube search for that. You have to change the game, and that's how partnerships and this model completely change this game and become a growth story. Dave, if I could just have a follow-up to that. Yeah. The 10 or 12 million customers were your customers. They started off as your customers uniquely mapped to Royal Bank. You're now sharing those customers. You're co-branding. The next 5 million, whose customers are those? Well, you heard Ed has 5 million customers. Many of them are unique, not RBC customers. You heard Heather has 8 million loyalty program, but 20% of those are RBC. So Mike's 5 million are new relationships to RBC. Through these ventures, through Ownr, through FinFit, through Butter, through all of these ventures, those are new connections. Those are people we cannot convince to walk into our branch today who turn us off because as soon as they see an RBC advertisement, they say, "That's not for me because I am a customer at another bank. I am not ready to buy." But by creating that relationship, you bring them into your relationship fold and it makes it much easier to understand their needs and find them at the right time with a value proposition. So that is where the new customer growth is coming from. Ventures, 5 million partnerships, a couple of million leveraging each other's databases with client permission, and that is where value creation is so important. It is the sharing of resources that creates a completely different value proposition than trying to constantly pull the same levers of incentives, price, and risk. It has to change the game. This is a game changer. I have one right here. Hi. Light is a bit bright. Sorry. No problem. These are probably for Neil. Firstly, a couple of references to Netflix, Uber, companies that have obviously been very successful in getting their customers to move away from traditional sources of the product they provide. In talking to your counterparts in Canada, we have heard the opposite, that attrition rates for banks within the Canadian segment have been extremely low. Do you think as it becomes easier for customers to access products via digital means, those attrition rates move higher? Because it does not sound like it from your customer retention comments in the previous questions that our customer acquisition comments that higher attrition rates is part of the thought process. Yeah, I think it's a great question. Dave mentioned a bit of this frustration, right? My belief is that there's actually this perceived high switching costs, and we don't have competitors who aren't formidable. But the switching costs or the perceived switching costs have been too high. In a higher sort of churn environment, I believe we come out the winner. We've been asked the question about what do you think about open banking or some of these things that could lead to higher churn rate. I think there is acquisition costs that come with that, but I believe the better bank comes out the winner at the end of it. Some of the new things we're talking about is really about us disproportionately trying to get higher churn rates on our competitors. But I believe that's the opportunity, especially with digital engagement and to try to get this message across that it is worth switching, that there is something better and that client isn't benefiting from it now. One that's maybe more looking for a real-world example, I think it was Rod mentioned, and a few of the other banks have as well, that as we go through the increased spend on technology, the increased data you have on your customers, we should see lower loan losses through the cycle. If I have a credit card or an unsecured line of credit with RBC, what steps can the banks take or can the bank take to nip any potential credit loss in the bud based on what you see from my financial situation? Mary on budget. Mary. Yeah. We will go back. I would say 15 years ago, we looked at this, we were a very traditional sort of credit scoring models. More than a decade ago, we started to bring in the cash flow data as a predictor in terms of when do we think clients are in trouble. There is a number of levers, and we have playbooks that we put together well in advance of any downturn. A more recent example would be when we saw the oil situation. We had a playbook we could take off the shelf and look at these levers. It is this ongoing scoring to understand the predictability of the probability of default. We kind of think about credit risk management as actually quite a predictable risk now versus something like we had other conversations about cyber and op risk and those sorts of things. We actually feel very confident in our ability to manage credit risk, and the tools we have now is an unbelievably powerful set of tools, even if we just compare it to what we had 10 years ago. We can do things like if we start sort of early on. We have an early prediction capability, and if the customer has not even gone into default one cycle, we just see things. We can reach out with a relationship call and just check in more about sort of relationship and advice and just see if we can help them if there is something going on. For example, a declining behavior score for proprietary models or reduced cash flow. Beyond that, then we get into more sort of later stage or more severe levers for unsecured credit lines. We can look at taking back line decreases and those sorts of things. Those are steps that start to get further severity, and we would take them with a lot more caution based on client relationships. I would say sort of net-net, feel very confident in our credit risk management, and part of it is analytics, and part of it is the data. Just to bring Neil's point to life. Just imagine the two worlds. We are trying to acquire a customer through bidding on Google search or YouTube search. Do not really know about the credit risk of that customer. We know they are interested in credit cards versus acquiring that customer through FinFit, where they aggregate their financial information with us. We see their credit bureau because we are pulling it. We know their credit risk, and therefore, who are you going to make the offer to? Well, you have a lot more knowledge about the FinFit customer who is using your FinFit app and which customers you want to make an offer to versus bidding on them somewhat blindly in Google search. The second thing I will say is you heard Foteini say it. These great models that we built over the last 10 years that have outperformed, which are being enhanced with AI and bringing in information from the net and from other sources to enhance them with better predictability. That is why ventures and partnerships are so important in seeing the risk versus bidding on a customer in a digital channel that you don't necessarily see. It changes the risk equation completely. Hi. So my- Am I looking? Sorry. Yep. Over here. Sorry. So sort of touched on my question already. Yeah. You obviously have a lot of access to data. I know there's a lot of sensitivity now on that data, especially in Europe. You have a lot of partnerships that you're also developing, so you're gaining more and more access to that data. I'm just curious to know, and sorry, Sohrab did already ask this, in your partnership, who determines who actually owns that data, aside from the customer obviously, or the consumer? Do you think you'll actually get to the point where you have so many partnerships that you have data almost on every Canadian citizen, and that the regulator may step in on how you manage that data and how you use it to maybe influence that consumer or customer? Yeah, that is the question to ask. So great. Thank you for asking the question. It starts, and I'll open it up to anyone on my team who wants to jump in on this. It starts with the fundamental belief that the customer owns their data, and there must be complete transparency and customer control over who gets to see that data and how it's used. I envision a dashboard for the customer. The customer has to see value for that data, and they have to determine if there's enough value creation for them to continue to provide their data or opt out. I think that is the founding premise to whether we're collecting data internally or collecting data with third parties through an Ampli or other platforms where we're sharing with customer consent. It's got to be transparent. They have to see value, and they have to have the optionality to turn it on and off. I think that is the founding premise, that the customer is at the center of all of this. If you can't create value, I would expect that they're going to turn it off, and they won't share it. We're in a new era of customer value creation. The important message here is we're not building all these things to collect data. We're building these things to create value for Canadians and to connect with Canadians. Data happens to be a byproduct, and we take our responsibility to protect that data from a cyber perspective and to create trust around how that data is used is mission critical. The whole strategy here is about connectivity and value. For the first time in the banking industry's history, we are able to build our bank from the customer in versus the bank out. That is the strategy here. This is not about, hey, we need tons of data. We have data to create value, to create customer relationships, but that is the goal here is the former. We have to protect it. We have to use it with customer consent. We have to demonstrate value. If we do all of those things, the customer has shown historically, and I expect them to continue to do this, that they are willing to provide their data. Anyone else want to jump in on that? Bruce or Rod, you. No, I think you have it today. I think the other thing is I would not underestimate the richness of RBC's data that we have today. As Neil was alluding to, we have relationships with clients over years. This time series data on how clients have behaved, how they will behave, and the ability to predict when they could get into trouble, and the bank to actually connect with them quicker and more proactively with the right strategy is key to us. I think any institution that has the richness of the data set that they already have is in a position to provide a better day for their customer than anyone else. It is not just you hear about Amazon, Google, and everybody else trying to capture all this data. Well, what they do not have is the trusted relationship we have and the information these clients have already shared with us. We are protecting that. We enrich it to some extent because we know patterns that they live in their life so that we can actually provide a better day. Without that core capability, I do not think you can provide as good an outcome for our customer as we are able to. Blaise has one in the back here. Maria, we had two upfront. We have a question actually from the webcast. Why don't we go to webcast first? Great. Thank you. We have a question from Mario Mendonca. He asks, "The bank's many advantages in domestic retail banking has led to superior revenue growth over the long term. However, the earnings growth gap has not been as wide as expected, largely because operating leverage has lagged slightly." The question is, why have the many advantages not translated to superior operating leverage? That's a great question. I think you're certainly seeing volume growth, customer response through awards, and market share have responded. But I certainly agree, our NIE trajectory is elevated, and that's planned. We believe, as we just described for the last three hours, that we are in a period of enormous secular change. We see in front of us a unique opportunity to transform our model, to invest in these capabilities, to compete not only with traditional competitors, but potentially new competitors, and reposition ourself for strength and take control of our destiny at an important moment of time. We also see that we are at the late stages of an economic cycle, and therefore, as an organization, we are investing and acting with an enormous sense of urgency to change, to compete while we have these economic tailwinds to reinvest in our platform. You heard all the things that we're working on are going to be a lot more difficult to do when we hit the next credit cycle and the revenue growth's not there. You'll ask the same questions, why are you running such massive negative operating leverage if you haven't invested in the things we're doing? We've accelerated our NIE spend, and it's elevated because we want to capture the secular change for the long term, with the ability to manage it down, through the next cycle. If others aren't making those investments now, then when will you make those investments? Two, as Foteini and others said, there's a limited amount of talent to accomplish some of these really important things. If you don't grab them and nurture them and build now, you're going to miss the cycle. If you don't grab these partners now, there's not enough to go around. That sense of urgency, yes, our spend's elevated. It won't be elevated forever. In fact, I think we guide it to better operating leverage in the latter half of the year, and we're getting a lot of big things done quickly now while times are good, giving us enormous flexibility to grow our franchise at lower NIE rates in the future. That's why they're elevated, because we sense the secular opportunity and we're going for it. Great. Maria. Hello. A question from me. Thanks for taking my question. Question's for Doug. I believe Rod mentioned that he thinks wealth management will be a larger part of business going forward, alluding to potentially acquisitions. So Doug, my question for you is, what do you think RBC at this point is missing from a capabilities perspective on the wealth management side? Then secondly, you talked about your AUM split pretty much down the middle between retail and institutional. How do you think about the business economics between those two categories, and which one do you favor if you had to choose one of the two? Yeah. I don't think there are gaping holes in current capabilities. The customers are telling us, both institutional and retail, that they appreciate what we're doing. We're delivering returns. You can certainly add, I pointed in one of the slides to investments in alternatives, unconstrained type approaches, overlay macro type approaches. So we'll continue to build those. We'll continue to build out ETFs. There's product innovation every day on the product side. In terms of growth and acquisitions, we've got a strong preference for organic growth. Obviously, the City National acquisition stands as an exception to that, but that's a very important platform and capability we've got in the U.S. Would we sit up here and say never to another acquisition? No. But you should expect that the standard for anything like that is really, really high. If you can deploy capital in an organic way, the returns are much higher than having to pay 20-something times earnings, which we did at City National, and that probably marks 60%, 70%, 80% higher mark to market today than it did then. Strong preference for organic over acquisition. I still feel like we've got domestically a market share opportunity, notwithstanding where we sit. The patterns tell us that the increased requirements for investment looking forward encourage me that that will continue to be the case. Retail and institutional, we like them both. There's no question that there has historically been more margin pressure on the institutional side than on the retail side. If you stitch together the story, the story around the retail customer in general is delivering more to them. Do I think that all of those individual prices for individual things we do will decline? Probably over time. Let's take MyAdvisor as an example. Don't quote me on this, but we ballparked that the ability of an advisor in that channel, which is actually Neil's channel, to handle clients might be two or three times the volume of clients that an individual client can handle today. To make the extreme example, if we've tripled an advisor's capacity, well, we've dropped the unit cost of production by two-thirds. If I've dropped the unit cost of production by two-thirds and I've gone somewhere that is very hard for our competition to do, I may prefer a world where actually price comes down. Because the combination of my price times my volume persists. We like them both. The build-out of our U.K. Global Asset Management investment capability in GAM that I spoke about has resonated for both channels. We've been able to bring to our Canadian retail clients very well-performing, in the case of global equities, weaving in strong ESG influence. It's resonated with retails, got that consultant track record, got a rating now working institutionally. I'd see them both growing together over time. But strong preference for organic growth. I'll just clarify that combined with the elements that Doug Guzman talked about in terms of the growth trajectory for the Canadian and the Global Asset Management business, the trajectories that we laid out for City National, when you combine those, we just organically expect that growth rate to be higher than the growth rates, which are also good for the other businesses. I want to go here and then to Gabriel Dechaine. Right here. No? Oh, here. Here, Gabriel Dechaine, then yourselves. A question probably best for Neil. You showed the J.D. Power ranking, which shows RBC on top among the larger banks, but you are significantly behind Tangerine, you are behind Simplii Financial, and the value proposition for those two online platforms is the fact that Canadians would be paying zero in some cases on the fee side. How do you view that? It looks like it is a growing trend among millennials. That is going to clearly become a more important segment of your customer market. What is the risk here? How would you look at that risk, and what do you do to offset that potential pressure going forward? That is a good question, and we do notice that. A couple of comments, I guess, as we evaluate those results. We do not necessarily compare ourselves to those players, and one of the reasons is the value propositions are just entirely different. What we are offering is every single channel, contact center, app, online, into a branch, financial planning, and we can go on and on. Those players are offering a small subset of that. For the most part, there are very few primary banking relationships for those competitors. Usually, I have a secondary account there. I may have parked some money, may want CDIC insurance on another tranche. So it is a very different thing. In terms, maybe your second part of your question, in terms of are they going there because it is free? Again, we are framing this within a value lens. We are looking in terms of our value propositions we referenced earlier. They will need to change, and we are going to change a number of them next year. There are things we provide right now that we think some clients aren't seeing the value in them, and there are fees attached to them, and we think we need to demonstrate that there is value we can provide. Some of these new value propositions here today will be part of that formula. All that is rolling into this trajectory in terms of our other income, and we are seeing mutual fund revenues drive that. We are seeing in the credit card business drive that. But you are seeing a relatively sort of low single digit from sort of account fees. So I think that attaches to your observation. Okay. Can I just answer that too? Of course. Your question points to a really important strategic shift in that if we continue to be the same thing to customers that we always have, we will see margin compression. Right. We have to create new value and rebundle value and change the value chain. I mean, that is why we articulate this whole strategy to say if we are still that last inch and we keep doing the same thing for the next 50 years, yes, our margins are going to compress. But we are rebundling value through ventures, through partnerships to create a different value proposition that we can put a price on. And we are counting on that new value creation to continue to engage Canadians. It is the right strategy. Okay. Thanks for that. But I guess the bigger point is, if I am a Tangerine customer, can I not just walk into a wealth management branch if I need an RBC Wealth Management branch if I do need something that is a bit more closer touch point? And so I guess, is it fair to say that there is a subset of your fee-based revenue that is going to be a risk regardless of what value proposition you do offer customers going forward? But a Tangerine customer is largely a savings customer that is static. It is not a dynamic customer. They are not really competing in the core checking business. To Neil's point, they do not have an omni-channel experience that attracts that core everyday banking customer. If you look at the numbers that they put out, it is largely a static client base that is there for premium interest rate and non-active money. And it has been that since the beginning and largely that today. Therefore, as Neil is saying, we are competing on a very different premise for the core checking business. So I do not know if you are trying to insinuate the core checking customer is going to move there. They are not. They haven't, unless they redefine that to an omni-channel experience. So we feel very comfortable competing with this omni-channel experience with these rebundled value propositions against it is free and simple. Maybe just the last point on that. In terms of omni, we referenced scale this morning and this idea of getting a consistent experience channel by channel by channel. These are not light investments. And so, you have a small franchise with just a couple thin relationships, then the customer says, "Well, are you going to be at first? Can you keep pace as the cost to create fantastic consistent experiences gets higher and higher?" And then you are just back to, well, if I can have something that I have everything I can get at Tangerine, but I can get a lot more at RBC, and Tangerine starts falling behind, then where are clients going to go? So I think that is another way we are looking at it. How do you invest in cyber? How do you invest in data? How do you invest in all this if you don't have the revenue line? Hi, Gabriel Dechaine, National Bank. I got a numbers one and then a follow-up on the ventures, more fun stuff there. On the numbers, you talk about CAD 13 billion to CAD 14 billion of discretionary capital. I want to tie that to the commentary you made about how you're managing your expenses, your spending, investing in the good times, and you're ready to dial back in the less good times, down cycle, I guess. Do you take the same view when it comes to using capital to make acquisitions? Our priority is, I think as we've all articulated, I think Doug just articulated, is we see such significant opportunity in the U.S. and in Canada with this new strategy for organic growth, that organic is our priority and we'll allocate capital to build up our lending book in retail banking and in commercial banking. Selectively, we said we're going to use our balance sheet to grow capital markets. We've kind of a low single-digit growth target there, 3%, 4%. So modest growth. We don't need a lot of balance sheet to lever that relationship. So capital will go towards building out our balance sheet for organic growth kind of first and second. Asset prices are really, really expensive, and we don't have strategic gaps per se in our U.S. wealth offering, in our capital markets offering, in our Canadian Wealth Management or our Canadian. We've been very disciplined. We see all the same opportunities everyone else has bid on. We've been very disciplined in our capital management, and therefore we're looking to create long-term sustainable shareholder value, and therefore we'll return that capital to shareholders if we can't find a more productive use for it. We have enough growth opportunities to meet the objectives that we've stated, organic growth opportunities that we don't feel a need to buy growth with capital. Okay. Appreciate that. On the ventures, you mentioned, Dave, about having met with mixed success, I guess less success attracting customers through apps and online offerings because people see the RBC logo and they may- Our competitor's the same way, right? Right. Your existing customer turns off other brands. If you're switching gears to this ventures strategy to win customers in a differentiated way, how do you- I guess avoid looking like a closed architecture offering when ultimately, that's what it is, to get them at the back end, I suppose. Do you want to talk to that? Yeah. The branding strategy and- Yeah. Each venture is very different. You'll see some of that when you head over and look at them. We promote them two ways. Internally, we do promote them with RBC, so it'd be Drive by RBC. In the open market, we'll promote it as Drive. RBC is obviously still there, it's just not as pronounced in the headline. As far as bringing people into them, the path by which we will eventually connect them to RBC differs depending on the nature of the app. In something like Drive, we want to start by getting 20 million Canadian vehicles in the app and being useful. Those people will buy another car. What we're trying to do is put enough value on the table so we're the choice for financing when they do. Now, from that, there is then a bridge into Neil's business where that loan that is now an RBC client, will get a richer set of offerings, be it a great card or a discounted checking account, because now we have multi-product rebate. I would just say each of the ventures is unique in terms of how it plans to get customers and how it plans to monetize them through banking. Be happy to describe some of them to you offline. There is an example of how it might look within Drive. Within FinFit, it may very well be using our AI engine to predict what is safe to save and then giving you a vehicle to save it. We may ask you, "Would you like to save this in a high-yield savings account, or would you like to save it in InvestEase?" as an example, and then seamlessly take the customer into those. Then from there, when they are in the bank platform, do what we have done for the last 30 years, which is really good at taking a client with one product as the means by which they got here, and then multiplying that through our large and diversified distribution with more insight on the customer and so forth. Okay, thanks. Here. Asset management. Just on the ventures. It looks a lot like freemium models that then monetize into financial services and products. Would you ever envision some of these ventures to just have a subscription model that drive other sort of fee growth? Do you see them sort of scaling even beyond Canada? Can these ventures go beyond the U.S. and Europe as well? I love that question. Me too. Mike Dobbins, did you plant that? I did. I appreciate you giving it. To answer the first part, some of the ventures actually do charge money. Ownr, for example, are paid services. We will rebate to an extent, when you come into RBC. Our primary purpose is to grow the RBC client base as we pursue these. There are some of these that we run thinly. We do not want to have friction on the front end that affects user growth. There is some where the value that is in there is actually being provided by partner margin to some extent, as Dave has indicated, and some do charge. As far as outside of Canada, yes, absolutely. We have a digital bank as well as City National. I think right now it is a $4 billion digital bank. It mostly supports snowbirds, but it is highly digitized. Like every part of it is digitized, whether it is how you open accounts, apply for loans, mortgages. Probably has somewhere in the vicinity of 400,000 clients. If we were, for example, to take a venture and we wanted to still be able to monetize through banking, we could quite easily do it through either the direct bank or in certain cases like Ownr, which is a business proposition. It probably worked quite well in our City National franchise, which is a bank for entrepreneurs, and something like that could be just extended, and the capabilities are not. There is no geographic bound for how AI would render a logo. Extending some ventures to the U.S. would be as simple as connecting to the state of Delaware for incorporation or something. Right. Yes, they have that optionality. It fits right on top of our U.S. digital bank wonderfully. That is where our focus is. Given the asset prices in the United States, we see a disruptor opportunity, whether FinFit, Ownr, small business, higher-end consumer, but a digitally based bundled value proposition that we think can be a disruptor. We did not talk about it today, but we are really excited about that optionality. If you think about like a FinFit, which is just this really cool product, with the extendibility of safe-to-save in a savings vehicle, Neil talked about the success we have had within the bank. That on its own can be an interesting value proposition, in the U.S. and a way to attract reasonable cost or low beta deposits into a solution like that. All things that are certainly there for us as we grow and mature these ventures. Okay, we have one here, and we'll go here next. I'll look on this. Did we have over Oh, you want to do that one first? You've been waiting a while. Okay, one, two, three. Sorry. Okay. There's a bunch of hands up. Thank you. First of all, I want to say I'm a university classmate of Doug Guzman's. Yeah. I'm amazed. Sorry sitting here to Be careful where you're going. Apology accepted. I'm amazed to be sitting here at a business function with Doug Guzman, and I'm wearing a tie, and he's not. Secondly, I just had a Intrigued by the thread of the discussion here about the huge investment you've made in technology and in artificial intelligence and machine learning, and discussions about how you think it's making you a much better underwriter of credit risk. I'm curious to know, obviously the measure of all the financial institutions, their success is measured through downturns and recessions and how well they perform from a loan loss perspective and things like that. Do you think you have a competitive advantage In all the upfront technology investments that you've made that are going to make you less reactive in a downturn and allow you. You've talked about how high asset prices are and things like that, and the great opportunities are always created in downturns. Do you think you're going to be more flexible and adept at maybe taking advantage of those than you otherwise would been if you hadn't made all these investments? I would say yes, because that's exactly what happened through the last recession. The investments that Neil talked to in leveraging our understanding of clients into credit adjudication and collection capability gave us a material lift in predictability and management. You saw us heading from 2004 through 2007, we were by far, by 20% to 30%, the fastest growing bank in Canada on the retail side, consumer and commercial. On the consumer side, that outperformance, we had the lowest volatility of losses through that cycle, through the financial crisis. We have that data. Therefore, the predictability, we are picking the right clients to partner with. We've taken that same model, which I don't think other banks have even replicated yet, and we're enhancing that same platform that already performed in the last cycle much better with lower volatility. We're enhancing with AI. We have a booth behind you, group risk management right there, that you will be able to see it, and you can talk to Foteini and her team over here. Foteini's had a slide. We are enhancing all our models with AI, but it already starting as having proven that we can outgrow the market and have lower volatility through a cycle. We can send you that data, but we have been talking about that for five or six years now, how the platform that we are leveraging already outperformed, and we keep reinvesting in that knowledge. Plus AI on top, I would say I can never predict the future, but based on the past, we are feeling pretty good. Through Ventures, our ability to partner with clients where we can see their risk more clearly versus traditional methods of marketing. All that combined, I think, tells a very positive risk story in how you grow your franchise. Somebody is here. I cannot see with those lights. Right here. Over here, number 2? Yeah. Thanks a lot. Hi. Yep, there we go. Thank you for taking my question. I actually had a follow-up on RBC's purpose statement and specifically with the helping clients thrive part. And I was curious if there are any strategies or initiatives in place currently or that you expect to undertake that will help your clients thrive in a rising rate environment, either on the digital side or the data that you have access to or on the branch level, and how that might relate to either wealth management, capital markets or retail banking specifically, maybe with managing higher debt servicing costs. Great question. Why don't we, certainly why don't you start on that segment? And Doug Guzman, if you want to talk about that from a wealth perspective. Yeah. I think we very purposely included some comments while making sure that our borrowing customers get into homes they can afford. I think this starts with this idea that we're the provider of advice, and providing advice around debt solutions is a big part of that. It's also come out in terms of the confidence you're hearing about the quality of the mortgage book. Absolutely we can be there, and whether it's around helping clients in terms of their interest rate sensitivity, in terms of what we believe rates are going to happen, and what is their absorption if rates were to go, just choosing fixed and variable or maybe a combination of both in our HELOC product. I think these are things we're doing right now. Then you flip it around, we start to overlap between Neil and Doug Guzman's business. If it's a client that's got investable assets, what does that mix look like? I think it does come down to this is the advice value proposition, that a full service retail bank with a full spectrum of wealth management capabilities, right from a very small getting started investor up into ultra high net worth. Was there anything else you want to add? Yeah, a lot of what you'll see in this corner, if you have the time, is focused around, we continue to push really hard on advice, discovery-led discussions with our investing clients. We didn't even mention myGPS, which is a planning tool that we rolled out to our IAs a couple of years ago that facilitates them sitting with a client and making a life plan. The InvestEase, which you'll see over there, is very much focused on goals, risk tolerance. All of them are. The industry has shifted that way in no small measure as well. The exercise isn't about maximizing returns. It's about actually helping people get what they want out of life, getting your kids through school, buying a second home if you're that kind of customer, retiring when you want. The investments in technology are making us better at that because we can reach more people with plans on MyAdvisor. One of the anecdotes I use with MyAdvisor is we can now reach all our clients if something happens in a market, and you'll get a text on your phone, and some will have heard me say this before, but it'll say, "The market's off 8% in the last two weeks. Don't know if you noticed. You should know your portfolio is off 3%. Remember, you're balanced across these asset classes. More importantly, you're still on track for your goals. Do you want to talk to your advisor?" You'll hit yes on your phone. We'll say, "How about Thursday at 4:00 P.M., or do you want sooner?" You'll hit sooner. You'll call in. The advisor has your information on the screen and hopefully get you comfortable with where you're sitting. If you think about what we've done, we've changed that advisor to spending all of their time advising. No longer are they leaving voicemails trying to figure out which client wants to speak, which one doesn't. We've triaged how much you care. We've triaged if you care and how much you care. We're getting clients that really want to speak to us at the front of the queue, those who are more relaxed at the back of the queue. We've touched everybody digitally with information, which is more than we used to do. A lot of these investments are to the clients thrive piece. I think actually on that statement, we tend to lean more on the community as being the new part of it. Good question. All of these investments are really, I think, helping clients manage their affairs and their lives through, in my case, investments or banking products and the else. Or ventures. You can see how aligned RBC Ventures is to create more value for customers. Partnerships like Petro-Canada, that money off at the pump every time becomes even more important to the average Canadian the next cycle, the next recession. So helping us thrive by solving problems and creating value. The strategy is consistent with our purpose. We have time for one more question. Middle, right here. Right here. You've been waiting for a while. Sorry. Hi. Last question. Hi, Dave. Brian Holzer with Foyston, Gordon & Payne. Just on Ampli, just notionally, is this a club that's quite exclusive just to RBC partners, or do you envisage this being something much larger internationally? This is a curated club that creates value, that has like-minded partners who have the ability to bring connectivity and value to Canadians with the goal of building distinct competitive advantage for a limited group. There will be different types of partners. There will be a permanent group of partners that are creating everyday value. There will be partners that come in and out that create seasonal value in different categories. So there's going to be a core group, then there's going to be a range of partners that create tactical value. So it's going to be a very dynamic. It has to be dynamic to maintain Canadians' interests. So that's kind of a mixed answer, but certainly there will be a core group that will create consistent value to attract Canadians to that. I think we're going to stop there. Thank you for your great questions. Really good questions. We could probably go for another hour, but we will all be around. We are going to break for lunch now. We are going to open the booths. I think this is going to be one of the highest. You will be able to touch a lot of the themes that we talked about today, and we came out in a Q&A are going to be visible in each of the booths. We have really put a lot of effort into bringing our top talent here for you to poke and prod some of the themes to see it in real life so you can touch it and say, "Okay, Royal Bank has built this. This is live," or, "This is version 1. Here is where version 2 and 3 are going to be," to really help bring the strategy to life. Thanks for your attention today. Thanks for coming. There is lunch outside and the booths are open. Thanks very much.

Data Source: Quartr Last updated: Jun 13, 2018

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