The news: In their earnings last week, Royal Bank of Canada (RBC) and TD Bank—Canada’s two largest financial institutions—flagged investments in AI R&D. This builds on recent data about banks’ deployment of agentic AI as well as detailed insights from JPMorgan’s and Bank of America’s public statements about their massive spending on AI and supporting infrastructure.

Why it’s worth watching: The scope of large banks’ AI investments is coming into focus. Business distractions that inhibit forward-thinking investments in technology are crippling in a race where the winners are only accelerating their lead:

• RBC spends over C$5 billion ($3.64 billion) per year on technology, including AI. The bank recently ranked No. 3 worldwide and No. 1 in Canada in a global study on large banks’ AI maturity, behind JPMorgan Chase and Capital One. RBC’s AI initiatives include the internal research group RBC Borealis, started in 2016. The bank has also extended Aiden, an in-house AI solution, to trading, employee and operational support, and data insights And it recently launched its AI assistant for employees.
• While TD is not forthcoming about its technology spend, we last forecast $4 billion ($2.92 billion) in 2026. In 2018, TD acquired the AI research firm Layer 6 and this fall opened an office in New York. The bank recently said it intends to find $1 billion total value from AI between cost savings and revenue growth. And it’s deploying AI-powered virtual assistants, including TD AI Prism, a predictive sales tool.

Despite its AI investment, TD Bank did not make the top 10 in the study that ranked RBC No. 3. TD Bank has been distracted in recent years by a number of issues:

• The failure of its $13.3 billion proposed acquisition of First Horizon Bank after US regulators declined to approve the deal.
• A fine of roughly $3.1 billion paid to US regulators after it pled guilty to criminal violations of the Bank Secrecy Act.
• Ongoing restructuring that included the sale of its stake in Charles Schwab.

Our take: Dollars spent on technology matter—so do how the money is spent and the number and severity of conflicting priorities.

Business troubles are metastasizing more quickly because of the rapid pace of change technological innovation is imposing on a historically staid industry. Technological advances in banking are not conducive to quick fixes, and the only viable strategy is heavy investment and intense internal focus.