David Bryan: Hello and welcome to CEO Viewpoints, a PwC Canada podcast diving deeper into key themes and Canadian insights from PwC’s Annual Global CEO Survey. My name is David Bryan, I'm a partner at PwC and I'll be your host for this episode. This year's CEO Survey focused on the global megatrends reshaping business and society. Joining me to discuss his perspective on the survey's revelations, including the pressing need for CEOs to adapt to rapid technological advancements and shifting economic landscapes, is Curtis Stange, President and CEO of ATB Financial. Curtis has been at the helm of ATB since 2018, steering the organization through a period of significant transformation and growth. We'll discuss his insights on how CEOs can lead with resilience and adaptability in an ever-evolving economic landscape. Curtis, thanks for joining me today.
Curtis Stange: Yeah, great to be with you, Dave. Thanks very much. I really enjoy doing these, so it's great to be with you.
David Bryan: So let's kick things off. Tell us a little bit about the journey that you had to your appointment as CEO of ATB, the largest financial institution headquartered in Western Canada.
Curtis Stange: Yeah, thanks. Thanks for that one. I mean, my 38th year of banking, I was 23 years with one of the five big national banks and had an opportunity to tour right across four different provinces. And it was really rewarding and exciting to work in different parts of Canada. And then a big opportunity came across my plate when ATB Financial called back in 2009, living in Calgary at the time, and was keen on doing something that was going to be unique with my career, knew that there was a possibility to stay with the National Bank, but was open to other ideas. Through about a sort of a ten week different get to know you period, I actually joined ATB back in September of 2009, and the role back then was to stand up a new line of business. There was some challenge in their small medium sized businesses and their agriculture portfolio which ATB, one of the reasons it was created back in 1938 was to help rural business and specifically farmers in agriculture. So I stood up that line of business and then was asked, after about 14 months in the role, to lean in to help get what was a complex SAP banking system implementation complete. We were moving from an old mainframe to a distributed application SAP banking system, and the project had been going on for about two years and it was wobbling as many big technology projects do. So I leaned in there and over about a period of the next six months, helped with the successful implementation of that SAP banking system and then was asked, you know, when you implement a big banking system, it's a good idea if you stick around and lead the technology group to get over all of the different bumps and hurdles that big core banking projects hit you. So I spent five years post implementation leading the technology team, payments team back office. Actually including the payments team was the Mastercard team as well within that. And that was some really cool times. It was an opportunity for us to innovate. So during that time we launched Apple Pay, so we were part of the big groups that launched Apple Pay, which was pretty cool. Back in 2015, we actually were the first bank in Canada for sure during the Payments Canada annual summit to move money over the blockchain. So we had a German bank set up on the other end and we actually moved, I think it was the equivalent of something like $20 Canadian over the blockchain back in 2015. And that was really cool. We stood up a Facebook chat bot, so lots of really cool things, as we were hardening that core and making sure that the core banking systems worked really well. We were innovating back then, which was really cool. And then in 2016, I was asked to come out of that role and take on what was a chief operating officer role. All of the lines business profit centers reported to me. We called it a chief client officer. Our focus and our passion on the client has always been there, but for all intents and purposes, it was a chief operating officer and did that for two years and then was asked to take on the CEO role in June of 2018. And have not looked back.
David Bryan: That's a great story and a couple things that really jumped out at me. And I had forgot about how sort of leading edge ATB was. And you know, when you reminded me of that blockchain moment in 2015, I remember when people were still trying to figure out what blockchain was all about, and ATB was really, was really leading the conversation around how that could be used to advance banking globally. Thanks for that reminder. And the other thing that really stuck out at me, Curtis, so you said 38 years when I was reading through some of the material, and I know ATB fairly well, I remember reflecting on 2019 and your leadership team set a ten-year strategic plan that was then endorsed by your board, and it was really an impressive read. And can you talk a little bit about where you are in that journey since you started in 2019 with that really well articulated plan?
Curtis Stange: Yeah, for sure. It was a bit tricky for management first off, and then the board to wrap their heads around a ten-year strategic plan, right. We had done, like many organizations have been in the flow of three-year strategic plan, which in my opinion are really three year operating plans. And I think that was the biggest ‘aha’ moment for us is, you know, we had been doing a lot of reading and a lot of research and different sort of aspects of strategic planning, and this notion of looking out further into the future was really important. And I think, you know, especially important in Canada and Western Canada and Alberta specifically, where a lot of the industries are longer term industries, that you've got to look out in a longer sense, to really get a true understanding of what cycles will look like. And then if you add on top of that the massive macro trends that were taking shape globally that were almost this ubiquitous, they transcended across many different industries. And that would include the rapid advancement of technology and Moore's Law, which I firmly believe in the rapid advance of artificial intelligence and massive data sets and changing consumer expectations in Canada, the regulatory bodies and these macro trends, economic trends included in that we needed to look longer than three years. And so we first of all, thought we could look at 20 years. And that became a little bit too difficult for us to do. But looking out ten years was the right thing to do. So to your point, we crafted that in 2019 and then implemented in 2020. And of course, the pandemic hit. But we're just now going into year five of that ten-year journey, and we are where we would have expected to be. There have been some things through the pandemic that we had to pivot on and focus in on supporting our team and our client base, and making sure that we as an organization survive through the pandemic as many organizations did not. So we were nervous back in early 2020 and through 2020. Having said that, banks overall and financially came out of the pandemic actually very strong. But back to the strategy. We fundamentally wanted to differentiate ourselves from our competition by providing a consistently remarkable client experience, and that might be something that is in the annual report of some of our competitors. But I think we're going about it in quite a different way. Like we would know as a regional player, we can't have product differentiation for a long period of time. That's not sustainable. You can't have scale as a regional player, and the client experience is where we need to anchor on. So we're anchored on two real primary client journeys. The first is our advisory offer, and then the second is our digital experience journey. And many times those journeys will intersect as clients receive advice digitally as well as face to face. And we really define our success, and as we implement those two primary client journeys across four stakeholder groups, we as a regional bank, we're a bit unique. And even though others will talk about being committed to a purpose and a purpose driven organization, we really live it like we have, our high level scorecard focuses on the success of our team members, and proudly, we were just named the fourth best place to work in Canada, the top bank in Canada. That's the point of our differentiation. We commit to good returns for our shareholders, and obviously we really lean into the communities that we serve and all that to service our purpose, that we exist to make it possible. It's going well overall on the implementation of these journeys. Again, we're in what we call the middle innings in year four, five and six. The first three years were all about hardening the foundation, and then the late innings will be about accelerated growth, where we thought we would be with a few pivots along the way.
David Bryan: That's super interesting. And I want to just go a little bit deeper on two things you said, if you don't mind. The first one, the culture and your customer service and sort of your trust relationship with your customers. How do you balance that with the new technologies? And then if we could go a little bit deeper, maybe talk a little bit about generative AI and how that impacts how you're doing business.
Curtis Stange: Yeah. So for us in organizations and we're not different than other I'm sure different than PwC, we try and balance short term delivery results for investing for the future. This is this unending balancing act for senior leadership teams and boards is how do you deliver the short-term results that keep the commitment of your clients and your shareholder and the communities that you serve with having the right investment for the future and those investments in the future? Like our strategy, sometimes you don't see the returns within a specific fiscal year. It takes a bit of a longer time. So, I mean, our balance is to deliver organic growth within our lines of business and our segments and continue to focus in on leadership and development of core skills and the skills that team members need to be successful today, while at the same time investing in just major big technology projects like Salesforce, where we are live, and thanks to the great partnership with PwC in our business segment, and we are live in our wealth management segment and looking at now expanding that into capital markets and then into our retail group. We're looking at a complete review of end to end lending, which is a massive, will be a several hundred million dollar, multi-year project for us. And then our digitization, which is massive for us. So lots of real meaningful, major projects that consume a lot of your discretionary capital, a lot of the focus and energy, and then a lot of unique things that we're doing that get quick wins. We launched W by ATB to power the growth of women-led and women-owned businesses, a first home savings account, which was really cool for us. And so there's been some unique, one-off quick tactics that have got us some quick wins within the marketplace. And then again, still driving towards that long term strategy. And proudly, I would say proudly, we now can say that we have the strongest balance sheet of any regional bank I like to say in Canada, our CFO says in North America, and that would be against our peer group in North America. And probably through that hardening the foundation, those early years and building the strength of our balance sheet, we were in a position to pay a $100 million to our dividend, first ever to our shareholder, which was a huge milestone for us. So really cool. And I think to your point, just if I can lean now into Gen AI, I and this one was, I mentioned those big macro trends that we were looking at as we crafted the strategy. Gen AI was one of them. And that's only for four and a half, five years ago. This is a massive evolution of AI in the Gen AI. The good news is we're in really good shape. A, we have a very adaptable culture that you highlighted. And then secondly, part of that hardening the foundation for us in the early years of the strategy was very much focused on data and AI and incorporating and implementing the tools that are required for us to lean in and generate value from, which is our biggest asset, which is our data that we have. So we're running a number of proofs of concept, some driving efficiencies, some improving the client experience and all making sure that we do it in a very ethical manner. We for several years have had an ethics committee and the ethics committee, largely, while it covers the entire company, largely it focuses in on data and AI, and we have the head of our data in AI quite frequently at the ethics committee talking about the different models and tests that we're doing to make sure we're doing it in the right way. But we see this one, Gen AI as a real, almost a level setter, where small banks and regional banks can accelerate, if they do it properly, they can really accelerate and close the gap in the offers between us and the big banks. So very exciting.
David Bryan: Yeah, it really is interesting because I know when entities first started talking about AI and Gen AI, it was almost seen like a something that the tech guys did. And then it evolved into a little bit of a tool that you could play with ChatGPT. And now I know for us and it sounds the same with ATB, it's being incorporated into some of the big decisions that you're making on system implementations or how you do business going forward. And just how quickly that's evolved is so surprising to me.
Curtis Stange: It is. And our strategy is about going fast and going slow. So the going fast side would include, we have upwards of almost a third, we've got about 1,500 team members that we can see have downloaded one of the ChatGPT tools and would be incorporating it in the boundary conditions that we've set obviously, but would be incorporating it into their day to day work, right? So that's the go fast. We've got this adaptable culture, we've got a bit of an innovative spirit, and we're letting team members run with this. And then at the same time we're going slow, which is the part of our strategy where we will land on a specific tool. We're going to have Gen AI technology incorporated by the end of our second quarter of this year at scale across the company. That's a big step for us. And so I think, again, just making sure that all of our team members can utilize this type of tool is really important. And then also in the go slow is by that time, directionally, we will have anchored on where we want to scale Gen AI in a certain part of the company and really lean in and whether that's in our client care, so our telephony offering, you know, where we get what 100,000 calls in a month or we decide to scale it into some part of our client experience outside of telephone banking, or whether we go hard into our back and middle offices. I'm not sure, but we'll decide that within the next couple of quarters and then begin to implement. It's super, super exciting for us and hopefully it can help us further our differentiation from our competitors.
David Bryan: So we're both based in Alberta, and one of the subjects that comes up regularly is sustainability and ESG. And ATB has published a dedicated sustainability update, and I’d just love to hear your perspective on ATB’s stance on the energy sector, because it's so important to us in Alberta. And then how do you balance that with supporting Alberta businesses, and then that broader concern around non-renewable energy and ESG that might be coming from other stakeholders? I'd love to hear your perspective on that.
Curtis Stange: Yeah, we just completed what turned out to be almost a year long process of knitting together an energy strategy. We needed to take a look at that. This is a big sector for Alberta, clearly, and will be for decades to come. The economy in Alberta is now what I would call well diversified, based on the investments of various governments over the last decade, really since the collapse of the energy price back in 2014. So I think we're well diversified and energy is still going to play a role. And we're looking at it in a very pragmatic way as a business that has watched the transition of a variety of sectors before and had to morph and adapt to our value proposition, our services, our credit profile and advisory profile before, and we're going to do the same thing to the energy sector. But in our opinion, it's vital for the energy industry to have access to capital and liquidity and ATB Financial will continue to advocate for Alberta's energy industry as it is today. Full stop. Right. And we're also the largest lender of renewable energy in the province. So we have now put almost $1 billion of our balance sheet and committed finance to renewable projects encompassing wind, solar, hydroelectric initiatives, all situated in Alberta and then some into British Columbia. And so I'm not sure that the listeners would know that Alberta also disproportionately has had more renewable projects invested than any other province in the country by a long shot. It's not even close when you compare the renewable investment in energy to Alberta and the other provinces. So I think that's important to know. And then we will be there. So we know that over the coming decades, we're going to have to shift. And as we work with organizations in the traditional energy space, that shift is already happening. The acknowledgment of knowing that you have to be committed to ESG. And we have in the build up and the ESG index or some of the small cap and medium cap organizations in the services space and in the exploration space, we help them on the advisory side, they give them a scorecard of how they're doing against ESG, because they will know that they will be as liquid on their demand in the capital markets, and they might have to be a bit of a more premium for their capital if they're not in that space. So that big recognition in the sector, that ESG is prominent, and we want to help advise energy companies on how they can move forward with the financing part of their ESG strategy. So we're very committed to that. We launched the Carbon Certificate training program recently, which helps enable access to carbon offsets for our ATB capital markets clients. And right now, again, as I said, we feel we can do both traditional and renewable and then watch obviously from signposts that encourage us to transition with the industry. But again, that's a long way into the future.
David Bryan: Yeah, it's a really great story, though, and I and I really like the way you tied in how ATB can be an enabler or a partner or supporter with your clients as they go through this journey. The other comment that really stuck with me, and we tend to forget about it, is the amount of investment that Alberta is making into renewables. If you don't mind, I want to talk a little bit about your profit and your growth. You mentioned it earlier, but there was a lot of economic volatility in 2023. But ATB achieved its highest total revenue ever. And you, even as you mentioned, announced a dividend to your shareholder for the first time. Can you touch a little bit for our listeners on how you drove that profitability? And was it through efficiencies? Was it growth, the mix of both and especially during those challenging conditions? I'm sure the listeners would love to hear if there's a secret sauce somewhere.
Curtis Stange: Yeah. I don't know if there's a secret sauce. I think it is in strategy and culture for sure. We hit a milestone of over $2 billion, ending our last fiscal year, which just ended March 31st, which is a good big milestone for us. And I think to your point, it's not been an easy journey over the past six or seven quarters in banking. Having said that, banks generally make a bit of a spread as rates go up and then give back some of that spread as rates go down. And the industry didn't grab on to a lot of the spread, predominantly because of the inverted yield curve, and banks on the spread business tend to lend out a little longer and invest a little shorter. So on the lending side, we just did not grab the spreads that we would have historically. So that put a bit of pressure. And then like other industries, we were fighting inflation, a slowing economy. The higher rates that slow down some of the activity in the consumer in the business space for sure. So that 2023 was a bit tricky for us. There's no doubt about it. On balance, Alberta's economy has experienced record population growth, revitalized energy sector, proven its resilience, relatively speaking, to other areas across the country. And so that combined with some of my earlier commentary about how we're executing against the strategy and these short term wins, along with our long term investment equated to our year actually being quite positive for us. And again, I can't reinforce enough that we define success across the four stakeholder groups. And as I look back on the year, the question I have with my boss as the chair of the board is all about balance. And did we move forward with the culture and the evolution of our culture, and the major transformations we've seen in our culture in the past several years? Did we move that forward? Did we move forward on the client experience, and as a result, did we keep pace with what we would look at from a performance in an organization related to the economics and the return to the shareholder? And how are we doing on the greater good strategy as it relates to giving back to the communities that we serve? This is really important. And while each quarter might look a little bit different in our emphasis and how we're driving it forward, certainly at the end of a year or the end of a second year, we look at how we're doing in balance. But financially, paying the dividend was a major milestone. Having a balance sheet that is the strongest in Canada, slash peer group North America is really cool. I actually had a chance to speak to about 200 team members yesterday in our small business space, and they might get tired of me talking about the strength of our balance sheet, but we measured that in common equity tier one. And really, that's basically you take the risk weighted assets that we have, which is really our loan portfolio overtop of our retained earnings or our common equity tier one capital. And you get a percentage and the regulatory floor for us happens to be about 7%. We carry about 12. And why that's important is because it gives you dry powder to do and have strategic flexibility as an organization, right? So we're in a market for what potentially could be a bolt on acquisition into our wealth management business. Large capital levels can help you do that. If in fact, there is an accelerated growth, which we forecast in Alberta and in business, and there's a lot of drawn demand for loans, we need the spare capital, the excess capital in our balance sheet to be able to grow our balance sheet really quick. And I think an example of that is even in 2023, even though it was at slightly lower margins for us, and we had budgeted to grow about $2 billion in loans and ended up growing 4.1 billion net in loans, and that was both retail and business. The economic volatility was one thing, we had major headwinds, but we made the right decisions on the revenue side, implementing our strategy, and we had to make some tough decisions, like many companies, on the cost side too.
David Bryan: You talked about, and we haven't talked at all about this, but you did mention it a couple of times and it's one of your four pillars is culture. Teaming is a word you used a lot, that high performing culture, that sort of feeling of working together towards the goals of the organization. How do you foster that?
Curtis Stange: I love this like as I was evolving through my career, I really found that I really anchored on strategy and you really appreciate it as you take on bigger and bigger responsibility with different types of scale and people and complexity and teams that you know what? Honestly, it truly is all about culture. And I've always anchored on being a high relationship leader and anchored on the success of people. You really begin to understand it. And the intersection of the importance of culture and strategy and how one will be a major enabler or a major dis-enabler, or wind in your face, if you will, over the long term, I really fundamentally get that. But how we've done it is when I took the reins over, we had a culture of high care and quite a supportive culture. What was missing was what we call this little pixie dust, that performance and accountability. And so this is where the four stakeholder groups would have been out of balance. The culture would have been, quite strong and quite positive, but we wouldn't have been getting great feedback from our clients all the time. Our profitability, the strength of our balance sheet, our strategic flexibility wasn't there. However, the commitment to community is something that's been there, I think, from the beginning for the last eight decades or so. But how we did it was we redefined our why, what, how and who. And our why is our purpose. We exist to make it possible, no matter how much the world around us changes, one thing is going to remain constant, and that's our definite resolve to embrace what we say is the art of the possible for Albertans and their businesses. The second is what we talked about earlier, which is our strategy. That's our “what” and again, putting together that team of experts, in the strategy back in 2019 and evolving to where we're at today, we're in really good shape. And again, the first of its kind for ATB in a ten year strategy. And going into year five, we're feeling quite confident. So that's the “what,” the “how” is exceptionally important to us. And we built upon a real sort of balance of top down, bottom up of reinventing what are cultural traits and values needed to be in the organization? What does that look like as an evolution of those cultural values to make sure that they were the right ones we were focusing in on, rewarding the line to get us to the culture we needed to enable us to get to the strategy and get to 2030, so that “how” is exceptionally important for us. And to give you the strength of that, we incorporated that right into our performance enablement system. We basically narrowed it down to four cultural traits, one ATB, keeping us aligned on our goals as a regional bank is exceptionally important. Driven to perform is the second one, being client obsessed and then champions of belonging. So those four cultural traits make up the “how” in the why, what, how and who. And then finally the “who” for us was we reconstituted the value proposition externally to our clients and we went now, two years ago almost with the powering possibility brand value proposition to our client. We look back on it and we go, we now have this complete package as an organization that 96% of our team members, through surveys, would say they understand the why, what, how, who. They understand what they need to do to bring it to life and understand how their role individually in the company can help ultimately bring our purpose to light, of powering possibility for our clients and existing to make it possible for those four stakeholder groups. So that's a really high level, that’s the package of how we kept driving towards a high cultural and important external recognition for us, but making sure that in check we have the other three stakeholder groups.
David Bryan: So as we head near the finish line, Curtis, I want you to dust off your crystal ball for a second and just try to envision ATB’s trajectory over the next 5 or 10 years. And what does that look like? And then also, I'd love to hear what you perceive as some of the challenges that ATB’s going to face to maybe some of the more traditional banking models as we see things like open banking and those kinds of things. And so if you could stare deep into your crystal ball and let me know what it says, the listeners and I would love to hear it.
Curtis Stange: Yeah, man, oh, man, sometimes that thing's a bit cloudy, isn't it? As you look into 2030, it's only now five, six years away here. That's definitely our biggest focus right now. There's going to be new factors to consider. And you mentioned open banking as an example of one of those faster payments comes along with open banking. And I think the investments that Payments Canada and the banking industry are making in faster payments, in real time payments will be important for us. The legacy part, you mentioned legacy. The legacy is going to be grounded in the commitment of our four stakeholder groups that I spoke of earlier, and that's really important for us. And I can come back to that communities in a minute. But just to touch on that challenges to the traditional banking model and especially us as a regional bank. As a regional bank, we don't have scale, so we're high cost. That's part of our commitment to rural Alberta as well, there's some real economic benefit to being committed to rural Alberta. One of them is that spread business I talked about, there's an awful lot of deposit business that we would garner from being having a branch located or an agency located in some of the small branches in the province. So very beneficial to us, and they're definitely high cost model. So there's no doubt the thing that, one of the many things that can keep me awake at night would be the fact that we've got a high cost model. We have to be very effective at executing against our strategies and very efficient, because big players with scale and fintechs with lots of venture capital and lots of money in the background can come in and impede on the profit centers and profit pools that are in the model that we deploy today. So that keeps me awake at night, independent of cyber and all the major other things that that we all face that we're all protecting ourselves against. But, you know, going back to the legacy, if I can, for a second, the community strategy for us is anchored in what we call being in business for the greater good. I championed a lot of that as the CEO coming in not because of my position, but because of my passion for a lot of things, most particularly mental health. And we incorporated enhancing and evolving access to mental health as one of our many anchors in our greater good strategy. And I'm pleased to say that as an organization, we're being recognized externally, partly through Great Places to Work as being an organization that is supportive of mental health needs. And I think that one for us is we fundamentally believe that individuals, consumers and businesses, and you're already starting to see it today, will deal with you as a business for your core value proposition, but will it help enable you to differentiate yourself as what you do beyond your core value proposition? Or we like to call it beyond banking. And that's where our greater good strategy comes in. It's the right thing to do to give back to the communities that we serve. And we think it can help with competitive differentiation, for sure.
David Bryan: That's really interesting. And I love that comment about what are you doing beyond your core strategy or beyond banking. So in our last question, I was going to ask you to confess your loyalty to either the Oilers of the Flames. But I realize that's a completely unfair question. So I won't put you on the spot, but I will toss to a little bit of a softball because we'd all know what the right answer is. But any predictions for the Oilers in their 2024 Stanley Cup run that's going on right now?
Curtis Stange: Yeah, so I'm a hockey fan overall. And for your listeners, I think I spend half my time in Calgary and half my time in Edmonton and love both cities and love hockey. I think the Oilers have a real strong chance to go deep into the playoffs here. They've been a bit hot and cold through 2024, but if they get on one of their hot streaks, the skill level they have, top to bottom of their roster is pretty impressive. So I'm going to be away and traveling for all the games in this second round, so I'm not going to be able to get to any of the games in Edmonton for round two. So hopefully they get to round three so I can actually get back to watch the games. It'd be fun to watch.
David Bryan: Perfect. You said it perfectly. It's going to be a lot of fun to watch this next series with Vancouver. So that concludes this episode of CEO Viewpoints. And I want to take this brief second here to thank you, Curtis, so much for your time today. We really appreciate it. And we really appreciate you being so open and transparent on ATB and the amazing journey that you're on.
Curtis Stange: Thanks very much, Dave. Appreciate being with you.
David Bryan: So stay tuned for more insights from Canadian CEOs. If you've enjoyed this episode, you can subscribe to our series on Spotify or Apple podcasting platforms. And please feel free to leave us a rating or review on Apple Podcasts. This podcast has been prepared by PricewaterhouseCoopers LLP, an Ontario limited liability partnership, for general guidance on matters of interest only and does not constitute professional advice. Thanks for listening.
