Canada\’s Outstanding CEO of the Year: Royal Bank of Canada’s Dave McKay

RBC lifer dedicated to advancing Canadian interests, passionate about innovation and a champion for key issues such as climate change

Published Feb 15, 2023  •  Last updated 3 days ago  •  12 minute read


Royal Bank of Canada chief executive Dave McKay at the bank\’s Toronto headquarters. Photo by Peter J. Thompson/National Post

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Bank executives aren’t always what they appear to be. The chief executive title conjures up an image of a stuffy numbers’ nerd focused on meeting targets, growing business lines and slashing unproductive expenses. Dave McKay, chief executive at the Royal Bank of Canada, certainly has banking in his blood. But when he’s not in the boardroom, you may find the 59-year-old catching a pick-up game on the basketball courts or jamming out on one of his 10 or so guitars.

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Part-time B-ball player, part-time gu
itar player and full-time RBC lifer, McKay has worked his way up through the ranks since starting a co-op work placement in 1983 while studying computer programming. Since taking the top spot at the country’s biggest bank in 2014, he has led the acquisition of City National Corp. in 2015, launched a youth-focused skills program in 2017 and, most recently, won the hand of HSBC Canada, Bay Street’s belle of the ball, after weeks of courting from the other Big Six banks.


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Those are just a few of the feathers in McKay’s cap, but he’s likely staring at his greatest challenges as the country grapples with recession risks and works out a collaborative green transition plan to combat climate change.

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But his accomplishments so far are why McKay was named Canada’s Outstanding CEO of the Year for 2022, as presented by Bennett Jones LLP, Caldwell Partners International Inc. and the National Post.

“RBC is one of the world’s largest and most sophisticated banks and Dave McKay has taken its performance to another level,” said Hugh MacKinnon, chair and chief executive of Bennett Jones and chair of Canada’s Outstanding CEO of the Year Advisory Board. “He is passionate about innovation and technology and is a steadfast champion of using them to shape the future of financial services.”

Dave is that rare and inspiring executive who merges work excellence with dedicated philanthropy

John Wallace, chief executive, Caldwell

Added John Wallace, chief executive at Caldwell: “Dave is that rare and inspiring executive who merges work excellence with dedicated philanthropy. He’s committed to advancing Canada’s interests both globally and locally, and is a real champion for issues such as climate change, preparing youth for the future of work and combatting inequities in the workplace.”

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The following is an interview with McKay in January that has been condensed and edited for clarity.

FP: How did you navigate the economic storm of the past three years?

Dave McKay: It brought out in almost every way the best of Canadians and the best of leaders. We work together better than we ever have before. It brought government together: there was the minister of finance, it brought the regulator together, it brought the Bank of Canada together with bank CEOs. I hosted a meeting twice a week with all those constituents, and from the very first days, we just talked through what was going on. It was all new. What was going on with the economy? What were the risks in the economy? What were the options to fix these things? And we had just fantastically productive dialogue and worked on great macro policies, and then implemented those very well through the system and in a really short amount of time.

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We levered technology like we’ve never levered before; it was just amazing how we could send, less our branch staff, 75,000 people home and we were functional on day one and fantastic by day five. It was just unbelievable; we didn’t miss a beat. And we ran the organization from home for the most part for a year and a half.

RBC chief executive Dave McKay at the bank’s Toronto headquarters. Photo by Peter J. Thompson/National Post

FP: What was the biggest lesson you’ve learned from those uncertain times?

DM: How resilient people are. We underestimate the resilience of society in general. All elements of society are incredibly resilient. We adapted quickly, whether it was to technology, to health-care risks, to pull together without a doubt.

FP: What’s another important lesson that jumps out at you?

DM: We learned that fundamental economic principles still hold today. When you print a lot of money, it’s inflationary. Those are really important lessons, because for a while there it felt like we thought we had reinvented economics. (The pandemic) accelerated trends. I don’t think it started as many new trends, we already had these digital capabilities, we just accelerated it. It accelerated the digitization and disruption of many business models. We’re going through a fundamental reimagination of our entire economy … innovation is disrupting every business model from transportation to health care to banking to commerce to manufacturing. Business models and value chains are being decomposed into pieces and then getting rebuilt in different places with different economics.

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Banking is no different. The whole discovery process in banking has been intact for 300 years — 150 years in our case — where the customer, when they have a financial need, comes to a traditional bank channel. Bank channels evolved, but people told their friends, maybe their family, then they told their banker what was going on in their life and what their financial need was: from buying a home, starting a company, investing, retiring. And now that information is being shared with the planet almost by what you post in Facebook, what you post in various channels, whether it’s TikTok, Facebook, Instagram, WhatsApp, Google Search. Your whole life, and where you are in your journey, is being communicated to the world. Everyone else is reading your signals now as a consumer, as a small businessman, as a corporate leader. The whole world knows, and the world is acting on those signals and the monetization of those signals is changing form in our economy.

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That’s very disruptive to all industries including our own. Build a branch before and they came for 150 years. Build it now and they might not come, or you must go find your customer in a digital world and in the physical world. And we’ve reimagined our whole bank to do just that … and that accelerated during the pandemic and decelerated a bit post-pandemic. That thematic was a big part of our journey for the last seven years of my tenure as CEO, to reimagine the bank’s thinking about how that ecosystem is changing.

A Royal Bank of Canada branch in Ottawa. Photo by Chris Wattie/Reuters

FP: If you could go back and offer yourself a piece of advice on day one of taking the CEO role, what would it be?

DM: One thing that has differentiated me as I’ve taken this 30-plus year journey through the organization is I was always willing to take risks. But just what does taking a risk mean? One way I define risk is declaring a goal or an ambition where failure is noticeable. But if you can take a risk where nobody knows about it, is it really a risk? Risk to me is when something doesn’t go right and people notice or something goes right and people notice, so it’s got to be visible and noticeable to be a meaningful risk. And, therefore, as I went through my early career, I set a bold ambition, and I declared that bold ambition.

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When you do that, you attract a very different type of person around you. Because when you have ambition and you state it and you want to do exciting things, that attracts people who are like-minded who also want to do exciting things. Versus the opposite: if you’re conservative and you sandbag everything you’re doing and you’re always successful, but you don’t really take any risks, that attracts a different type of person as well.

FP: We called HSBC Canada the Bay Street belle of the ball when the Big Six banks were courting it. What ultimately made this the right match for RBC? 

DM: It’s a good match for RBC because it’s a good match for Canada. The HSBC deal is really good for Canada because it keeps all this capital in Canada. When HSBC Global decided to exit the Canadian marketplace, a Canadian buyer like RBC, paying $13.5 billion, does a bunch of things. One, it is really good for customers. We spend $5 billion a year on technology; $5 billion is a lot more than HSBC spent. We get to offer these online banking capabilities, mobile banking capabilities, partnerships with Vantage and WestJet, cents off at the pump, the credit-card lineup we have, the mutual-fund lineup we have. All these capabilities that we built over the last decade, we now get to offer to the HSBC customer, which is really exciting.

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The second thing is it’s good for Canadian taxpayers, because … when we do all this, we’re going to make 50 per cent more profit in Canada than the previous model because of the greater efficiencies, the greater activity within the client base. We’re going to probably, depending on your forecast of the business, pay upwards of $200 to $300 million more in taxes a year than today. That’s a lot of money. A quarter (of that incremental profit) gets shared with the taxpayer, then half of that gets shared with equity owners. We’ll pay 40 to 45 per cent of our profit out in dividends.

A HSBC branch in Toronto’s financial district. Photo by Brent Lewin/Bloomberg

FP: You took a stand last year that other bank CEOs and the federal government have to get more serious on climate risk. What are you hoping to see from the private and public sector to tackle this issue?

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DM: You’re starting to see businesses commit to a plan. At RBC, when we set our targets for the journey and our lending portfolio, we’re ascribing to a one-and-a-half-degree scenario, which means that’s the journey curve you need to be on to get this much carbon out by 2030 before you get to net zero in 2050. We’re doing a lot better job of (having businesses and governments work together) now than pre-pandemic for sure as we’ve really found an urgency to make a difference.

Another thing business and government can do is to think through how much pressure you put on the supply side to change, because right now I’d say the supply sides bear 99 per cent of the responsibility to change. You’ve got to change your product, or change your service, you’ve got to take the carbon out of what you’re selling. The demand side has proven to be highly inelastic and that’s “I’m not really willing to change my behaviour very much. I’m definitely not willing to spend any more money on a green product.” Our survey said it’s something like $50 a year or $200 a year that (people will) pay more for green. That’s not a lot. Therefore, the consumer needs to be encouraged to change their behaviour in some areas.

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That will help us reduce the risk of the journey and the cost of the journey. Because if you just leave it all to the supply side, which is service delivery and product owners and value chains, it can be very expensive to change and risky. If we combine that with behavioural change in demand and consumption, then we can de-risk this journey. No business can do it all by itself, but in partnership with government, we can get the right policies in place and, therefore, it is about de-risking this journey and ensuring an orderly transition. The No. 1 risk of failure is a disorderly transition.

FP: Now for something completely different: What do you do for fun? What are some of your hobbies?

DM: I played basketball and I coached a bit of basketball. My son played basketball, my daughter played volleyball and I loved watching the kids. Now the kids have grown up. Throughout the year, though, I’m an avid guitar player. I love playing music, I find playing music incredibly cathartic at the end of a long day. I probably have 10, 12 guitars, and I love YouTube — it’s awesome. Thanks to YouTube, I can play along with anybody or play any song. It was a lot harder when I started in college, because we didn’t have YouTube, so you played by ear mostly, listening to often-scratchy records that you played over and over again. Now, it’s so much easier, so much more fun.

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FP: If you could have a jam session with any musician, living or dead, who would it be?

DM: Right now? Well, everyone knows I’m a massive Pearl Jam fan. So, it’d be Mike McCread
y, lead guitarist of Pearl Jam, and/or Eddie Vedder of Pearl Jam would be pretty cool at the end of the day.

I\’m all in on Canada and I\’m all in on RBC

Dave McKay

FP: What have you been reading lately?

DM: What have I been reading lately … the HSBC strategy? It’s a lot of internal stuff. A lot of my reading is consumed by keeping up with what’s going on in the world. I do like books on leadership. I’ll try to pick up a book on leadership from successful leaders, obviously … but even some leaders who have faced challenges. There’s so much to learn from, whether it’s Jeff Emmons’ new book, or David Rubenstein, who wrote a great book on leadership. Ray Dalio has written some great books, as well … he did a brilliant job talking about how to read the world and economy around you.

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FP: What’s next for Dave McKay?

DM: Getting HSBC implemented and approved at the end of the day. It’s a big year ahead of us, it’s a big acquisition for us. Getting it approved and implemented and taking care of the customers and employees is a big part of that. And then continuing to help the bank adjust to a changing future and helping our communities, country and bank thrive and in a fundamentally changing world. The technology curve’s accelerating the size of the impact; it’s getting bigger and bigger. The climate journey and helping Canada and RBC get the climate journey right is really important to me, important to my kids, important to our country. I’m all in on Canada and I’m all in on RBC.

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• Email: | Twitter: StephHughes95

Selecting Canada’s Outstanding CEO of the Year

Celebrating its 33rd anniversary this year, Canada’s Outstanding CEO of the Year award was established by executive search firm Caldwell in 1990. This highly respected award honours an executive in Canadian business who exemplifies integrity, insists upon excellence, earns the trust of o
thers and has built a globally competitive organization. It is the preeminent recognition for Canadian CEOs.

Canada’s Outstanding CEO of the Year advisory board comprises more than 20 of the country’s most respected business leaders and academics, including past honourees of the award. The board meets annually to select the current year’s recipient based on five key criteria: vision and leadership, corporate performance, global competitiveness, innovation and social responsibility.

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The 2022 advisory board members are:

James Balsillie; Charles Brindamour, CEO, Intact Financial Corp.; Marie-P. Charette-Poulin, corporate director; Dean Connor; George Cope, chair, Bank of Montreal; Patrick Daniel, chairman, Daniel Family Foundation; Paul Godfrey, executive chairman, Postmedia Network Canada Corp.; Linda Hasenfratz, CEO, Linamar Corp.; Krystyna Hoeg, corporate director; Dezsö Horváth, dean emeritus, Schulich Chair in Strategic Management, Schulich School of Business, York University; Harold Kvisle, former CEO and president (retired), TransCanada Corp.; Eric La Flèche, CEO and president, Metro Inc.; Jim Leech, chancellor, Queen’s University; Hugh MacKinnon, chairman and CEO, Bennett Jones; Nadir Mohamed, former CEO and president (retired), Rogers Communications Inc.; Gordon Nixon; Philip Orsino; Calin Rovinescu, former CEO and president, Air Canada (retired); Indira Samarasekera, president emeritus, University of Alberta; Lino A. Saputo, CEO and president, Saputo Inc.; Guylaine Saucier, corporate director; Frank Vettese, corporate director and CEO emeritus, Deloitte Canada; Donald Walker, former CEO, Magna International Inc. (retired).


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