Rbc Case
RBC Financial Group Case 1. At the start of the 21st century, RBC was Canada’s leading bank and largest bank in terms of assets and market capitalization. It was a full-service bank with five main lines of business: personal and commercial banking, insurance, wealth management, corporate / investment banking, and transaction processing. The commercial bank of RBC (Royal Bank) accounted for nearly 50% of the company’s net income and had an extensive delivery network with branches, Automated Banking Machines (ABM’s), point of sale terminals, mobile sales staff, and 1.4 million online banking customers and 2 million phone customers. The bank also had an extremely strong international network.
The bank had an overall strategy of being “all things to all people.” It took them several years to get to this point where they were at the start of 21st century.
With the upstart of internet banking and other similar more specialized avenues for personal banking, “all things to all people” concept became significantly more difficult for RBC to employ. For example, RBC would have a tough time competing with these internet and virtual banks because these specialized banks were able to offer better rates on deposits because their costs were lower as they did not need physical infrastructure like how RBC did. Even though RBC was universal, these more specialized banks would have an advantage in their specific areas as they could offer customers unique advantages that RBC couldn’t. RBC simply did not have the resources to compete with these specialized banks.
2. Lifetime value computations were a way of assessing the future or potential profitability of a customer. This could be done in a couple of ways: 1. Assume that the current profitability percentile of the customer would remain constant throughout their projected lifetime and calculate the present value of those profits. 2. Factor in age, tenure with the banks, number of products held, probability of
The bank had an overall strategy of being “all things to all people.” It took them several years to get to this point where they were at the start of 21st century.
With the upstart of internet banking and other similar more specialized avenues for personal banking, “all things to all people” concept became significantly more difficult for RBC to employ. For example, RBC would have a tough time competing with these internet and virtual banks because these specialized banks were able to offer better rates on deposits because their costs were lower as they did not need physical infrastructure like how RBC did. Even though RBC was universal, these more specialized banks would have an advantage in their specific areas as they could offer customers unique advantages that RBC couldn’t. RBC simply did not have the resources to compete with these specialized banks.
2. Lifetime value computations were a way of assessing the future or potential profitability of a customer. This could be done in a couple of ways: 1. Assume that the current profitability percentile of the customer would remain constant throughout their projected lifetime and calculate the present value of those profits. 2. Factor in age, tenure with the banks, number of products held, probability of