CUSTOMER PROFITABILITY AND CUSTOMER RELATIONSHIP MANAGEMENT AT RBC

FINANCIAL GROUP
SITUATION
RBC is one of Canadas few full services, national and international financial establishments. Five
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).
RBC uses CRM as an important tool to analyse its customer in-order to understand their needs and
requirement and utilizes these insights to design products and marketing campaigns to promote it
to target segments. CRM helped RBC to maintain better relation and provide better service to its
customers.
CURRENT ENVIRONMENT
Throughout Canadas banking the past environment was always one of affable competition. In the
1990s with the coming out of internet banking and constant lowering of protection for domestic
banks transformed its oligopoly. Internet comes up with both threats and opportunities, but the
uprising of foreign players and political resolutions by the Govt was a caution call to Canadas bank
that they would countenance tough contest in the environment. Banks realised that financial entity
keen focus on customer needs is the differential point to sustain.
Competitors are coming up with new strategies & products to attract customers by making their
process customer friendly focusing convenience as primary preference. Primary strategies
implemented by competitors include redefining as multinational retail banks, virtual banking that
decreased cost of banks & also offered low price products to consumers, no fee-baking and
discount various products, easily accessible at supermarkets etc.
CRM PHILOSOPHY
Primary goal of CRM is to provide various kinds of information about customer once he calls or
visits. Details include his personal, biographical, interests (derived from forecasting) etc. CRM is the
power tool perceived as a primary & critical tool by various banking corporations. But only 35%
have actually implemented it their respective organizations due its drawbacks include: budget, lack
of commitment, technological infrastructure constraints etc. Companies which implemented CRM
were able to successfully retain customers and were able to design strategies which made
consumers repurchase products & services.
ISSUES

Value was not passed on well to the customer because of inappropriate communication
channel.
Deeper Analysis incapability. They were not able to deal with the exceptions if occurred.
CRM implementation was a costly affair. Also many organizations could not cope up with
the implementation.

Internally, the bank had resistance to become customer centric organizations. Employee felt
that their value in the company will decline.
Proper segmentation of customer was not done leading to non-identification of profitable
customers.

ANALYSIS AND WAY FORWARD

Important factors as per customer were trust, reassurance, comfort, understanding, mutual
benefits, and reciprocity. Bank had expertise on following factors ATM, Generic mail, convenient
hours, large branches and easy access to accounts. There was a clear mis-match between the
expertise of bank and what customer needed. Therefore CRM was implemented to bridge the gap.
Decision making is to be done on 4 models:
A.

Profitability

B.

Credit risk

C.

Client vulnerability: Probability of losing a customer

D.

Life time value of consumers

Customers can be classified as:

A.

Profitable

B.

Potential Profitable

WAY FORWARD

A innovative platform of payment system of bills should introduce with zero fees, so that no
switch cost for customer, and also reduce burden on banks ABMs.
Build up direct marketing campaigns, where we could educate customer include extra
benefited values they receive out of a product. (in case of niece stated in case).
Personal valuation in exceptional cases and should also try to fit into the obtainable system
by maintinag analysis.
Change Management: Employees should have been guided and trained on the benefits and
functioning of CRM) earlier so that they would have been motivated to embrace it and not
challenge it
Improve services like personal skills and care
Activity based costing needs to be incorporated. As per the volume of transactions the fees
might vary.

PGPME- Group 2
Shiva Kumar D
Ankit Giri
Sai Srinu
Prateek G
1|P a g e

Rahul Bisen
Atul Singh

2|P a g e