Skip to main content

Canadian banks hold three of the top 10 spots worldwide for artificial-intelligence innovation, according to a new ranking.

Royal Bank of Canada RY-T, Toronto-Dominion Bank TD-T and Bank of Montreal BMO-T ranked third, sixth and ninth in the world, respectively, according to a report published early Tuesday by AI benchmarking platform Evident Insights Ltd. The rankings were based on several factors, including the number and quality of AI-related research papers, patent filings and investments into AI-related startups made by 50 of the world’s largest banks from November, 2023, through March, 2024.

“That was one of the biggest surprises when we ran the index for the first time, to just see how many of the Canadian banks sat so high, driven very much by their research and patent approach to AI innovation,” Evident chief executive officer Alexandra Mousavizadeh said in an interview.

“The banks that didn’t have that in the past are now moving towards centralization of research capabilities and applied research teams that can then scale AI capabilities across the bank, so research and patents are actually quite important, and that is where the Canadian banks shine.”

Where the Canadian banks really punch above their weight is not in the sheer number of AI-related patents they file, Ms. Mousavizadeh said, but in how much impact their patents are having on the development of AI banking tools worldwide. RBC, the report said, garnered 2.7 times more citations per patent than the index average.

“Having so many citations means that any bank that is looking at a particular use case, they will go rummaging around and they will say, ‘Oh, RBC had a really good patent on that,’ and they will cite it,” Ms. Mousavizadeh said.

“It means you have the ability as an organization to see what is on the horizon and patent it and it is an important patent, therefore it will get citations. That is one way of measuring whether you are punching above your weight.”

BMO had the largest increase in its average AI patent citations of all 50 banks in the index over the past five months, the report said.

“We don’t have a lot of resources to invest in so many different opportunities,” Lawrence Wan, BMO’s chief architect and innovation officer, said in an interview. “Rather, we try and harness the resources that we have to focus on the few places where we know that we can do well.”

All of that research has already translated directly into tangible benefits for consumers. Eric Morrow, BMO’s managing director of enterprise data science and AI, said one feature recently embedded in the BMO mobile app can predict whether a customer is likely to have a negative balance in the near future and will send an alert to ensure the customer is aware.

TD has offered a similar product, which it calls “digital nudges,” since 2020. AI features have been embedded in every line of TD’s business since 2022, with dozens of use cases ranging from predicting when customers might want to buy a home to detecting potential insurance fraud.

At RBC, the bank’s in-house AI research institute – Borealis AI – has been constantly developing new capabilities for the NOMI platform for customers that it introduced in 2021.

“More recently we launched in the app a service that predicts if you are about to make a mistake when you are making a bill payment,” Foteini Agrafioti, RBC’s chief science officer, who is also the co-founder and head of Borealis, said in an interview. “It is actually quite common that our clients might either add the wrong payee or the wrong amount of money, it happens quite a lot, so we used AI to train it from historical bill payments from our clients.

“These are very individualized, personalized AIs that then develop that intuition into how you spend money and then when something looks out of the ordinary for you, it will get flagged,” Dr. Agrafioti said.

Where Canadian banks did not score highly was in their investments in AI-related startups, Ms. Mousavizadeh said. TD paid US$100-million for Layer 6 Inc. in 2018 when it had just 17 employees, but the bank has made few external AI investments since then.

Layer 6 co-founder Tomi Poutanen actually left TD in 2022 to launch another AI startup called Signal 1 AI Inc., but he did so with the lender’s blessing and support. TD invested $4-million in the new company and Mr. Poutanen remains an adviser to TD.

Dr. Agrafioti said part of the reason why Canadian banks have done so well on the innovation pillar of the Evident AI index is because they base their work on academic foundations.

“The reason why I think our patents are so influential is because they all stem out of scientific research that was first published in academic venues, so by definition it advanced the field, it pushed boundaries on the science front,” she said. “It is a very foundational system.”

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe