The RBC Financial Group was the largest bank in terms of asset and market capitalization and a huge customer base but was not doing well in terms of profit, talking about the scenario of that time is Canada’s finance industries in flux from changes in banking regulations, many smaller banks changed their focus away from retail banking or were acquired by larger banks. Internet banking was a threat as it made a way for foreign banks to enter the domestic market.Non-traditional competitors entered the market with specialized products. The bank was struggling with the seven out of eight ranking among financial institutions in the bank’s internal value for money study.
The Canadian public increasingly wanted value and personal service from its banks. The competition among the leading financial institution was fierce as industry responded to deregulation and new niche market entrance. The major quest being, turning the unprofitable customers and products into profitable ones.The aim is to establish CRM at RBC financial group was to integrate all the data related to a customer: this includes all customer contacts, transactions, accounts and interaction history with the customer.
The bank was trying to use the CRM tools, good news is that the latest reports of customer profitability reports are more comprehensive and accurate than with the bank’s old profitability model. In 1997, a research was conducted to know what aspects of Banking they valued most.Now we have the real customer profitability numbers, and through our customer relationship management (CRM) tools, there are a lot of customers’ preferences and needs, the question is, “What do we do with this information? How can the bank derive value from CRM and customer profitability? How can we turn the unprofitable customers and products into profitable ones? Is there a way to enhance the bank’s value in the eyes of the banking public?”How a financial institution focuses on customer needs is the differentiation point in the industry right now? Competition Analysis – Strength: RBC is one of the few full service provider’s national and international financial institutions Large customer base and Infra structure It is Canada’s largest bank when measured by assets and market capitalization Can implement CRM, has it can afford capital and Ancash the benefits of that Weakness:All things to all people, not customer centric Opportunity: Can rely on CRM data and generate the required information Internet banking, to provide a ease in service provided Threats: Banking sector deregulation, nontraditional competitors entered the market with specialized products and low cost Internet banking was a threat as it made a way for foreign banks to enter the domestic banks Problem - Major losses in the personal checking accounts Part of the problem was our inability to fully communicate about how things would work There was not a lot of understanding between the department groups about what each could bring to the table The information given to branches was limited to a profitability ranking that continued to use the three bucket system, detailed information on segmentation was not disseminated to the branches CRM is not completely reliable in some cases, if complete data is not available Use of ABM’s by low bank balance customers.How could the bank solve the problem of Reich and McLaughlin Whether to use flat rate charges or fee per transaction for any product to a customer Recovering recover costs and making profits while providing the type of service its customers would value and keeping customers that the bank valued Changing the perception of the customers about the service, so that the service offered to them was more valued as compared to others banks Analysis – The CRM access could be provided to its personal banker’s staff to access all the data about the customer like address, age, email, phone numbers and account balances, history of interactions.
Provide them insights to design innovative and targeted products, to package and to price them. So that they can provide better solution for these customers The major issue is that the customer feels that the service offered by the bank is not a good value for money, to make them feel the reality keep the measurement of service that is offered to them Limit premium services to eligible customers based on the value that they generate Communication among the groups, i. e define each role and the success credits should be distributed among the different service groups, this makes them feel that they are involved in the success of the bank Being a new customer CRM system does not have lot of information about McLaughlin.Hence Reich should evaluate his customer’s profile and try to fit him/her in the existing classification system. In this particular case he can choose to bundle credit card along with the loan on a special rate for the lady Using the flat or fee per transaction could be done this way Low volume customers perceive flat rate as high.
Thus their transaction volume should be considered and they should be given the product on usage fee basis which would at least cover the costs. The medium volume customers should be suggested to pay one time flat charges calculated based on total costs in providing product and services to all such medium volume customers. However, this should be limited up-to a maximum usage of … (some value). Above which they pay fee per usage.
The high volume customers get a premium but flat one time charges, which are usually higher than what medium level customers pay
