Customer Profitability and

CRM at RBC Financial

Group
By.
Arjun.G
Rithu.V.V
Krishna

RBC Financial Group

One of Canadas 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)

RBC Financial Group

Canadas 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 ABMs, 1.4Mn online customers, 2
million Telephone banking customers with 300 offices in 30
countries

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.

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

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

Current Environment
Throughout Canadas banking history the atmosphere was
always one of friendly competition
In the 1990s 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 Canadas bank that they would
face tough competition
Banks realised how the financial entity focus on customer
needs is the differention point

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

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

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

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.

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 customers

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.

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 cant be handled by the
system

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.

Problems
1. Drain On Profits Because Of Bill Payment
On ABMs
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 banks ABMs.
2. Failing to communicate the value to the
customers
Develop direct marketing campaigns, in which

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.

THANK YOU