Lack of skilled staff is exacerbated by early retirement, Dave McKay said
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January 12, 2022 • 12 hours ago • 3 minutes reading • 8 comments
Financial companies face a major challenge after the coronavirus pandemic shook the labor market, according to the head of Canada’s largest bank: They can not raise enough talent.
With technology companies “reinventing our society” through artificial intelligence, the Internet of Things and the blockchain, the demand for staff with math and coding skills is so great that banks are struggling to hire the people they need, says the Royal Bank of Canada’s CEO Director Dave McKay said in an exclusive interview.
“We’ve never faced more competition for talent, and it’s especially acute in engineering, artificial intelligence, data, math and coding,” said McKay, 58. The shortage of skilled staff is exacerbated by early retirement, he said.
The talent shortage is severe in both the United States and Canada, the two countries from which RBC derives about 85 percent of its revenue. The United States “could attract the best and smartest, and you have historically, but you do not risk doing so” in part because of restrictive immigration policies, McKay said.
In Canada, meanwhile, the borders are open to newcomers, but high housing costs threaten to scare away the skilled workers needed to fill those vacancies, he said. That’s one of the reasons why RBC decided to open a technology center last year in Calgary, the center of Canada’s oil industry, where real estate is far cheaper than in Toronto, New York or Silicon Valley.
Canada does not have enough engineering education places at its universities, and it often cannot retain the international students it accepts at these schools because they return to their home countries or move elsewhere, McKay said.
We pay for the education as taxpayers and we lose the talent
“We have the ability to reinvent everything from medicine to education, to banking, to trade, transportation and climate. We reinvent the world, and we do not have the talent to do so,” McKay said. “We pay for education as taxpayers, and we’re losing talent. “
These services, while accessory to Royal Bank’s core banking business, help draw new customers into the system and provide great opportunities for cross-selling, he said. They are also crucial to Royal Bank’s strategy to defend its turf against e.g. Alphabet Inc., Apple Inc., Amazon.com Inc. and Shopify Inc., which backs their way into financial services, he said.
In addition to investing in RBC Ventures, the bank is also seeking to acquire asset management firms in the United States and Europe. But he has no interest in buying a US retail banking company – as rival Bank of Montreal is trying to do with its proposed $ 16.3 billion deal with Bank of the West – because it would take at least $ 30 billion ($ 24 billion) from capital to acquire the scale needed to be competitive, he said.
The increase in COVID-19 cases caused by the Omicron variant is the biggest risk in the short term, he said. Limiting the health risk will be the key to getting the economic recovery on track, he said.
“Omicron is a real challenge for the next eight weeks or so,” McKay said. “I hope it’s eight weeks, but we expect to get through this, and we expect growth to recover.”