RBC FINANCIAL GROUP

Banking on precision

by Jackie Zack

hen Merchants Bank of Halifax was incorporated in 1869, there were no such things as ATMs, computers, bankcards, credit cards or online banking. The company focused on financing for fishing, shipping and timber businesses, as well as retail operations coming to the area from Europe. The lack of technology didn't slow the company's growth; by 1901, it had successfully transformed itself into a national institution and was renamed The Royal Bank of Canada.

Over the century that followed, the bank evolved into Canada's largest bank and global financial services institution, complete with the latest in banking technology. In fact, in 1961 it was the first Canadian bank to install a computer. Today, operating as RBC Financial Group, the company that began with just a single office has 1,300 retail branches in more than 30 countries, serving more than 12 million personal and commercial banking clients. Rounding out RBC's capabilities are 4,500 ATMs, more than 87,000 POS terminals and well-developed telephone and Internet banking programs.

Art D'Silva RBC's senior manager, Information Architecture & Strategies

RBC's five main lines of business include personal and commercial banking, wealth management, insurance, corporate and investment banking, securities custody and transaction processing. In Canada, RBC ranks number one in areas such as wealth management (with the leading full-service brokerage operation), mutual funds and securities underwriting (corporate and investment banking).

In the United States, more than 2 million clients use RBC's personal and commercial banking, mortgage origination, insurance, brokerage, and corporate and investment banking services. Globally, RBC has a major presence in transaction processing, and its retail networks extend into the Caribbean and the Bahamas.

Clearly, such phenomenal growth and widespread success has presented major challenges for RBC. With so many diverse customers spread over such a wide geographical area and using such a variety of services, RBC had to find a way to unify its marketing communications and better understand-and respond to-its customers' needs.

Smart money
Integral to the Canadian banking environment is the idea that all customers, regardless of their account balance, are viewed as important and, as such, they all have the right to products and services designed and priced explicitly for them.

The concept is a key component of RBC's philosophy, and as far back as the 1970s, RBC began using state-of-the-art methods for collecting and analyzing customer data.

"RBC had some foresight many years ago to develop a CIF (customer information file), providing profile information about our customers and the products and services they used," explains Art D'Silva, senior manager, Information Architecture & Strategies.

The CIF helped the bank consolidate information at the client/account/branch level. But even though RBC had this technology in place, it still faced challenges in its ongoing commitment to marketing effectiveness and customer satisfaction. That's because these tasks require more than just data collection; the company must be able to use the data to create timely, actionable business intelligence.

RBC made a huge technological leap by becoming one of the first financial institutions to recognize the power of data warehousing. In the early 1990s, RBC implemented its first data warehouse, based in part on the Teradata Database. The system helped gather and analyze data about daily client transactions, allowing decision-makers to refine the company's sales and marketing efforts based on broad client segmentation.

"The bank required a holistic view of our client, from a marketing perspective," explains Mohammad Rifaie, who manages RBC's Enterprise Information Solutions Group. "Our customer relationship management program was the driving force behind data warehousing. CRM and a holistic view of the client require an integrated data foundation, and they require historical data to know more about the clients so we can service them better."

Still, as RBC's clients and competitors became more sophisticated, the need for a more integrated, one-to-one CRM strategy became apparent. A 1997 study revealed that not only did bank customers want modern services such as around-the-clock call centers, but they also wanted to feel "understood" and "valued" in their banking relationships.

In response to this, RBC's focus shifted away from marketing to broad client segments; instead, it began integrating customer information, sales processes and enterprise information in order to develop one-to-one client dialogues and highly targeted CRM campaigns.

To support its new CRM strategy, RBC added Teradata Value Analyzer to its existing Teradata-based data warehouse, a move that gave the company access to accurate and continuous information about individual client value.

The company used the resulting information to streamline important decisions, such as when and how to develop new pricing and marketing strategies and how to identify new and better business opportunities.

"In the past, we really were not able to be as precise in measuring and understanding the value we provided to our clients and the impact and significance of the value that each and every one of our clients has on RBC," says D'Silva. "We measured the effectiveness of our products on their own."

He continues, "It was only with the Teradata implementation some eight years ago that we moved toward the modern-day notion of data warehousing. With the deployment of our Teradata-based Marketing Information File, we were finally able to bring a lot of information from our CIF and services systems together to enable our analysts to develop more effective models and to do so in a much more timely fashion."

Data dividend
Teradata technology has played a part in helping RBC meet its objective "to capture the full potential of our customer base through the use of customer information to deliver the right solutions in a consistent, professional manner at every point of contact." RBC's clients are grouped into categories based on criteria such as channel preferences and current and potential profitability. Within those categories, clients are further sorted into thousands of micro-segments, for which separate strategies are developed and tested. The strategy generated dramatic increases in direct marketing campaign return rates.

With CRM successfully underway, RBC decided in 2000 to consolidate all of its existing systems onto the Teradata platform. "The main driver behind consolidation at that time was to eliminate data duplication, eliminate redundant processes and reduce costs," Rifaie explains. "We looked at internal drivers, internal business intelligence and data warehousing requirements, and we found a better fit with Teradata."

D'Silva adds that the decision to use Teradata was also based on the platform's ability to process huge volumes of data, as well as the company's knowledge and willingness to work with RBC to develop an effective enterprise data warehouse solution. Along with supporting CRM applications, RBC uses Teradata to address a number of business requirements.

RBC also utilizes Teradata for operational purposes such as bankbook reconstruction, which used to be a time-consuming, expensive, "cut-and-paste" process that took anywhere from one to three weeks to complete. RBC will soon be able to process bankbook reconstruction from as far back as six years via a Web-based interface, and it can present a report to the client in as little as 30 seconds.

Further reducing costs is the fact that many new projects have been deployed without the need for acquiring new data elements. "The idea that we are pushing-and that we are successful in implementing-is 'ETL once, use many times,'" says Rifaie. "So the data sharing we use has been tremendous for us."

Future payoff
There seems to be no limit to RBC's success with its CRM endeavors. "(The RBC Data Warehouse Environment) has enabled much more effective client strategies and a stronger client focus," says D'Silva. "We've seen huge benefits in a variety of areas, from improved effectiveness of our branch operations, to improved customer service, to improved design and effectiveness of our eBusiness channel. All of our efforts are centered on furthering RBC's vision of always earning the right to be our clients' first choice."

RBC has clearly recognized the unique challenges of servicing Canada's wide geographical area and unique clientele, and its success in the global marketplace is a direct result of its willingness to embrace change and make the most of new technology.

"Information and knowledge of RBC's businesses, its clients, its products and services are at the heart of the organization's ability to be successful," D'Silva says. "The effective and efficient use of Teradata technology enables RBC to provide the 'right' information to the 'right' people at the 'right' time to make the 'right' decision."

RBC Financial Group's industry-leading people, business processes and client strategies, coupled with that kind of technological power, enable the organization to maintain the entrepreneurial spirit it created nearly 140 years ago. T

Jackie Zack's business and technical articles have appeared in various trade journals.

GLOBE ILLUSTRATION BY SIMON SHAW
PHOTOGRAPH BY MICHAEL COOPER

Teradata Magazine - Q3 2003