RBC Financial Group is one of Canada's largest financial institutions, providing personal and commercial banking, insurance, wealth management, corporate and investment banking, and transaction processing services. It has $270 billion in assets and serves over 23 million retail accounts. In the late 20th century, RBC implemented a customer relationship management (CRM) strategy to better understand customer needs and profitability in response to deregulation and increasing competition. This involved segmenting customers, measuring customer lifetime value, and using data to customize marketing, service levels, and product design. While CRM provided benefits, RBC also faced challenges in implementation including budget, technology, and inability to handle some customer exceptions.

1. Customer Profitability and CRM
at RBC Financial Group
By.
Arjun.G
Rithu.V.V
Krishna Sowjanya. R

2. RBC Financial Group
• One of Canada’s few full service, national and international
financial establishments
• 5 main area of services
– Personal and commercial retail banking (RBC Royal Bank)
– Insurance (RBC Insurance)
– Wealth Management (RBC Investment)
– Corporate and Investment Banking (RBC capital Market)
– Transaction Processing (RBC Global Services)

3. RBC Financial Group
• Canada’s largest bank in terms of assets and market capitalization
• $270 Billion in assets
• 23 Million Retail accounts
• 10 million personal, commercial, corporate and public sector
customers served
• 1300 branches, 4800 ABM’s, 1.4Mn online customers, 2 million
Telephone banking customers with 300 offices in 30 countries

4. RBC Financial Group
• The personal banking department covered consumers and
small business banking and loan, while large companies
earning $5 million to $25 million were covered by commercial
division
• RBC Royal Bank also provided Credit card services, Visa credit
and debit card through various programmes.

5. History of RBC
• Royal bank began in 1946, with the philosophy in mind ‘all
things to all people’
• It developed nationally and internationally through different
products and services
• In 1980, Canadian Govt allowed foreign competitors limited
access in the Canadian Market
• 1986-87 deregulation of financial industry allowed banks to
participate in banking, trusts, securities and insurance

6. History of RBC
• Royal Bank responded to these changes
– Main strategy was to purchase companies to assist them in
becoming a fully integrated financial service institution
– In 1989 Royal seized 50% of the mutual fund markets as they entered in to
the securities market
– In 1990 they acquired 70% of Marcil Trust company, which
helped them to enter Trust Industry

7. Current Environment
• Throughout Canada’s banking history the atmosphere was always
one of ‘friendly competition’
• In the 1990’s with the emergence of internet banking and
continuous lowering of protections for domestic banks changed its
oligopoly
• Internet posed both opportunities and threats, but the insurgence
of foreign players and political decision by the Govt was a warning
call to the Canada’s bank that they would face tough competition
• Banks realised ‘how the financial entity focus’ on customer needs is
the differention point’

8. Developing a CRM philosophy
• Benefits of a fully integrated CRM system
• Difficulties faced – budget constraints, lack of co ordination,
inadequate technological infrastructure
CRM at Royal Bank
• Started in 1997
• Importance of customer intimacy
• Importance of CRM platform

9. Reorganization around CRM
• Customer segments
Key
Growth
Prime
• Segments reflects complexity of financial needs,
commonalities in services and product requirements
• KEY- potential to provide higher levels of profits
• GROWTH - need high credits & financial advisory needs
• PRIME – mature customers

10. Customer profitability and potential
measurement at Royal Bank
• Experimenting with CPM since 1990
• Organized model which used aggregate data rather
than actual
• 1998 – developed a prototype
• Importance of “Value Analyzer “ – faster probability
calculations, high processing power

11. Using CRM for Decisioning
• After the assessment of profitability and life time
value, the decisions are made. The decisions include:
– Customized market campaigns
– Establishing levels of services
– Product designing and pricing.

12. Customized Market campaigns
• The data was used to segment (this could be based on age,
residing location, profession, risk taking capacity etc)
• It was also used to understand the likes/dislikes of customers.
To understand the kind of products they buy and what
products would be most beneficial for then based on their
transaction history and risk profile.
• To develop models to determine customer’s propensity to buy
the products from RBC group

13. Levels of service
• RBC also devised a set of customer treatment strategies
(pre-approved credit lines) based on the customer
segments.
• The category of a customer would determine how long
will they have to wait and what level of customer
representative will attend to them.

14. Product Design and Pricing
• CRM system used the CLV and profitability data to design new
products that could be more specifically targeted to certain
customers.
• This also helped account managers to price the product based on
the targeted customer and value derived by them.
• But problem is some exceptions can’t be handled by the system

15. Package Vs Fees
• It is a common debate of whether to charge
for a service as a flat rate package or to charge
a fee per transaction.

16. Problems
• 1. Drain On Profits Because Of Bill Payment On ABM’s
– For this problem, a new platform of bill payment system
should be introduced with no fees, so that no switching
cost for customers, also reduces burden on bank’s ABM’s.
• 2. Failing to communicate the value to the customers
– Develop direct marketing campaigns, in which we could
educate customers with “extra” benefits they get out of
particular product. (such as in case of the niece of a
customer).

17. PROBLEMS
• 3. Problem to handle exceptions
– Personal assessment in case of exceptions, as they occur
rarely. Should try to fit them in to the existing system by
analysis.
• 4. Payment of fees
– The pricing of fees should depend on the volume of
transactions.
• Can be divided into groups such as low, Medium, High.

18. THANK YOU