5.4.2 Company profile:
The Royal Bank of Scotland Group is one of the world's leading financial services providers and one of the oldest banks in the UK. Following the takeover of National Westminster Bank in 2000, the Group has continued to grow its business around the globe and, in addition to its strong UK presence, it has offices in Europe, the USA and Asia. By the end of 2002, it was the second largest bank in Europe and the fifth largest in the world by market capitalization. RBS has nearly 30 million customers worldwide and is the largest provider of banking services to small, medium and large businesses acros the UK. It is the second largest general insurer in the UK, the leading provider in motor insurance and the lead corporate bank in the UK (RBS website, 2007).
The Royal Bank of Scotland itself was founded in Edinburgh by royal charter in 1727.For several decades it traded solely from its head office in Edinburgh, but in 1783 it opened its first branch office in Glasgow, and went on to develop a large network of offices throughout Scotland during the nineteenth century. In 1999, the Bank of Scotland (main competitor of RBS) launched a takeover bid for NatWest. The Bank of Scotland intended to fund the deal by selling off many of NatWest's subsidiary companies, including Ulster Bank and Coutts. However, the Royal Bank tried to overtake this bid using a key differentiator from the Bank of Scotland's bid, the plan to retain all of NatWest's subsidiaries. On February 11, 2000, the Royal Bank of Scotland was declared the winner in the takeover battle, becoming the second largest banking group in the UK after HSBC Holdings. The NatWest brand was retained, although many back office functions of the bank were merged with the Royal Bank's
leading to over 18,000 job losses throughout the UK (Wikipedia encyclopedia, 2007).
After the merger of the Royal Bank and NatWest the businesses of the two groups were combined, and the big task of integrating their IT systems began. This was scheduled to be completed in 2003 but was finished in November 2002, four months ahead of target. NatWest's retail bank continues to operate as a separate brand on the High Street (RBS website, 2007). The bank was the 2005 recipient of the Wharton Infosys Business Transformation Award, an award given to enterprises and individuals who use information technology in a society-transforming way. On the other hand, the researcher was told that the full integration of IT systems with regard to producing the single view for customers did not happen as is was supposed to and that the databases of some businesses are separate!
5.4.3 Business Strategies
The RBS Group is split into 8 operating areas. Each operating area has several subsidiary businesses (Wikipedia encyclopedia, 2007).
(1) Retail Banking
This is the group's main UK business, offering personal and business banking services. Services are operated under both the Royal Bank of Scotland and NatWest
brand names. This area of the bank is currently undergoing changes and will be renamed 'Consumer Banking' in 2007.
(2) Wealth Management
This is the group's private bank division providing services to wealthy individuals.
(3) Retail - Direct Channels
This division is responsible for the group's credit card businesses in the UK and Europe; including internet and telephone based banking brands; and processing
facilities for retailers.
(4) Corporate Markets
This division consists of UK corporate banking which provides financing, leasing services and transaction processing to corporate customers. The global banking and
markets division provides debt and risk management to corporate and institutional customers in markets around the world.
(6) RBS Insurance
RBS Insurance is the second largest general insurance provider in the UK, as well as being a growing presence in Spain, Italy, and Germany.
(7) Ulster Bank
Ulster Bank provides personal and business banking services in Northern Ireland and the Republic of Ireland under the Ulster Bank and First Active brands.
This division includes the Bank's businesses in the United States, Citizens Financial Group and Charter One Bank.
Although the organization is huge, nonetheless senior managers do accept and discuss ideas offered from staff about improving their customer service through a communication strategy that cascades issues up the management levels. The organization also encourages communication between different levels and accepts ideas (they do have weekly sessions to discuss such issues) to be analyzed and sometimes used if proved beneficial. They do reward innovative ideas as well to encourage creativity among the staff. The researcher was given access to conduct her study in the marketing department of the retail banking area.
The Royal Bank of Scotland Retail Banking
The Royal Bank of Scotland offers a full range of banking and related financial services to around three and a half million personal and small business customers. The Bank has won many independent accolades for the level of customer service it provides, including "best buy" awards from Which? (a subscription-only magazine and website run by Which? Ltd).
Retail banking operates:
• a 650 branch-strong network throughout Great Britain
• a 24 hour telephone banking service
• a fully fledged Internet banking service, the first on the High Street
• tailored accounts to suit everyone from the financially excluded to the affluent
• a network of 1700 ATMs, many in convenience locations like railway stations,airports and shopping centres
• an award winning business current account and network of dedicated business relationship managers.
The Bank offers almost every financial product - from mortgages to stakeholder pensions - online. It was the first bank to develop a basic bank account for the financially excluded, the Key Account, and also offers a basic business bank account (RBS website, 2007).
5.4.4 Difficulties and Obstacles
The biggest challenge in managing the business network of the bank is the size of it. The bank does not have any CRM program as a branded software package, but there are aspects of CRM in almost everything they do. The culture of the bank as described by the interviewees relates to its size, especially when the merger happened between RBS and NatWest; it became a huge organization and staff are still trying to cope with this huge change.
The bank has a number of different brands and each brand has its own business plan and hence it is very difficult to apply CRM to all these different brands because they all have their own different objectives. In marketing they are structured around different products.
They have teams who are responsible for loans and others responsible for mortgages and so on. Each team will then develop their own marketing and business plans which are then fed into what they call customer planning, as illustrated in figure 5.2. The role ofcustomer planning is to take all different plans and turn them into one customer plan that is customer friendly and serves all the objectives of the different products. It also meets all the different channels' income need. At this point they use software called “Market Switch” that helps them to do the analyzing, modeling and simulating of the different plans. The software can also give numbers of customers interested in a certain product, number of contacts made with a certain customer and so on.
The concept of being a “customer-centric” organization has existed since the year 1991 in the bank. The problem is that if they start their plans with the customer and build them up, they might not end up with good plans that integrate smoothly with the business plans they have. “The biggest problem we face is that different brands of the group have different databases that are not all connected. What we fear is that integration may cause a huge problem on account of the size of the organization”, said the senior manager. The bank decided not to undertake a CRM implementation project since they believed that it had become just a buzz word and that the failure rates of CRM implementation were high enough to make them reject implementation of such a project. They are happy with the tools they have, which seem to actually be producing the same benefits of any branded CRM software.
Data cleansing is not carried out on a regular basis. It existed as a project three years ago, but there is no ongoing process for data cleansing.Difficulties sometimes ensue because of end-users miss-spelling and not feeding the system with accurate data. Another problem is that, due to the rules of security, the bank cannot change any information in any customer's account without his or her permission. This is why they might wait for long periods of time until the customer can be contacted
and permission received for the change to be made. This sometimes makes it difficult to provide faster and better service. The problem of customers moving and not changing their address does not occur often however, because when a person is moving the first priority is to supply a new address for the bank account because this is very confidential it relates to their financial status and income.
5.4.5 Data and Segmentation Schemes
RBS' warehouse is called UKBMIS (United Kingdom Bank Management Information Systems) and it is fed from all the different channels and operational systems the bank has. The data warehouse is a read-only database and information cannot be altered or changed. The bank's marketing division has its own database, called DMIS (Direct Marketing Information Systems) which is a rich source of customer information with full contact history of customer selections. This database is used in marketing activities and a tool called the optimizer is used to generate campaigns and produce customer plans. The tool is an excellent one in targeting certain levels of customers for certain products. It also provides reports and numbers about customers that help in marketing activities and contacting the customer. Extensive customer data enables the bank to target customers for the right reasons at the right time using the most appropriate channels to maximize contribution.There is no segmentation process in the bank as to levels of customers with varying privileges. They have segments of customers but the difference in the service is minimal. Customer portfolios involve mainly private and business customers. These two different types of customer do not vary a great deal in terms of the service they receive but private customers are paid more attention and the bank makes life easy for them. Business customers receive all the services they need but not in a luxurious way!
To identify some of the benefits of being a private customer, here are some of the products, services and rates offered to them:
• 24 hour telephone assistance from trained private banking advisers
• A wide range of flexible lending options
• Insurance and protection for the customer and his possessions
• A number of savings and investment opportunities
• A choice of current accounts to meet the customer's needs: with RBS private banking a customer has a choice of two exclusive current accounts:
- Royalties Private
- access to best financial, security, travel and leisure benefits.
- Private Bank Account
- a straightforward current account offering credit interest and a private banking branded cheque book and debit card (RBS website, 2007).
Not having huge differences in services between different types of customers makes all RBS' customers happy with the service and happy with the bank. Segmentation is used in marketing when the bank wishes to target a certain type of customer for a product that they know will not appeal to other types of customer.
5.4.6 Managing Customer Portfolios
The bank has a customer contact strategy, illustrated in Figure 5.3. Starting from the total customer base, RBS only target personal customers for marketing activity. Once other base segments have been removed, they check the eligibility for the customer to be contacted through the marketing channels available to them.
Personal customers may be eligible for mail, telephony or network contact. At the same time a customer may not meet the eligibility criteria for the channel for a number of reasons, including:
- No consent to market to them
- Invalid address/telephone number
- Bad credit/risk
Customers are targeted for campaign activity in a number of different ways:
(1) a contact could be initiated based on an event that has happened to the customer. An example could be if a customer has recently re-paid a loan or moved home. This is called “event based targeting”.
(2) Using analysis of past purchasing behaviour, they build predictive models that identify the profile of likely future purchasers and target them accordingly. This is called “propensity model based targeting”.
(3) Targeting customers using a number of different attributes, including age, type of products currently held, geographic location and channel preference. This is called “expert rule targeting”. In practice, what happens is that customers are targeted using a mix of the above methods.
The bank has different contact channels that they use to contact their customers Optimiser: allows execution of complex range of campaigns to be mapped to the
customer/support planning and simulation Sales case database: allows for cross channel coordination of customer contacts in real time. Mail channels include direct mail which is the biggest volume channel. These are a test and learn approach with high information content. Direct mail gives the opportunity to follow up using other channels (prompts, telephony and network leads). Triggered mail is highly targeted and relevant using customer events as the trigger with high impact and low cost and volume. Another mail channel is statement inserts/messages which establish a high volume/low cost channel. Statement inserts/messages are good for high information content (regulatory messages, newsletters, etc).
Telephony channels are basically the inbound calls, outbound calls and telephony prompts. An inbound call is a call from a customer to a central telephony unit for any
kind of enquiry or as a response channel for other channels (direct mail, statement inserts, the Web). Inbound calls give the ability to cross sell multiple offers to satisfy customer needs and this is a good conversion rate from call to sale. An outbound call is a good follow up channel to encourage action and a good pipeline tool to encourage a sale. During an outbound call the member of staff receives a sample dialogue on the screen on how the conversation should be structured and this helps the member of staff to lead the call and build relationships with customers Prompts (figure 5.5) are a high volume channel that can deliver a well targeted personalized opportunity to the front line when the customer is present. Prompts appear with telephony channels, in branches and at ATMs. The contact is non-intrusive and acts
as an excellent hook for the member of staff to engage with the customer. RBS help the branch network to prospect their customers by providing quality leads through opportunity reports and prospect reports. Opportunity reports are a daily electronic feed of event driven opportunities to the relevant branch which are low in volume but high in quality. According to the opportunity report the branch will attempt to contact the customer by telephone to discuss the opportunity. Prospect reports are a
Actioned Recycled Interested Not Interested
monthly paper-based delivery of a more generic type of targeted opportunities to the relevant branch which are high in volume and good in quality. The branch will also
contact the customer to discuss the opportunity. Online channels are basically the online banner ads (to support key marketing campaigns) and links to latest offers. Email gives the ability to deliver marketing campaigns faster but this method is not professionally used by the bank and is not used often. A new sales functionality to be piloted (not yet used) is software that allows targeting of customers who are surfing the website and to engage them in an online chat session with a sales adviser. Current functionality allows the bank to deliver static generic messages that appear on screen when the ATM is not in use.
Contact management is the ability to understand when and where the bank is deploying opportunities through the multiple channels available and manage this to maintain a
quality customer experience. The basic contact rules are:
• Maximum of 3 items of direct mail per quarter
• Maximum of 1 prompt per month
• Maximum of 1 telephone contact every three months
• Maximum of 1 network lead opportunity per month
Certain opportunities will by-pass contact rules where staff feel it is in the customer's interest to be contacted. Examples include event driven contacts through trigger mail and opportunity reports. All customers are given the option to opt-in or opt-out of central marketing activity which gives the customer the freedom not to be bothered by mailing and contacts that he/she does not want.
In order for channels to work together the use of software allows for a single opportunity to be made available through multiple channels to maximize the opportunity of
contacting the customer. Once the customer has had the opportunity deployed (i.e. by visiting a branch and receiving a branch prompt), all other live opportunities are removed from the other channel. Coordination between different customer contact channels (RBS document, 2007)
This way the bank eliminates the probability of annoying the customer with many contacts about the same product or service.
5.4.7 Evaluation of the System
RBS try to ensure that the marketing and selling material does not mislead customers. The retail marketing teams make sure that all material is fully compliant with regulatory and legal requirements. It also ensures that the terms and conditions of all products and services are made obvious and that charges and exclusions are not hidden away somewhere in the fine detail.
The customers are provided with full details of all charges when they open an account. Personal customers are given clear information when fees will be charged. They receive written notification of any changes to charges 30 days before they are applied.
Customers can opt out of receiving promotions at any stage. When introducing new products to the market, the bank makes sure that they do not target customers to whom those products may not be relevant or appropriate.
The bank adheres to UK Data Protection legislation. The employees are given ongoing customer data training so they understand how carefully such data needs to be handled. Any customer can ask to see the information the bank holds about them at any time, in accordance with the Data Protection Act. In order to test the quality of service and evaluate customer satisfaction the bank uses focus groups and face to face interviews to learn more about customers' priorities and to try out new ideas. "Mystery Shopper" research is also used to test the quality of the service for all main retail products (RBS website, 2007).
The Royal Bank of Scotland and NatWest are provided with regular results from a postal customer satisfaction survey, which receives over 55,000 responses every month. Customer satisfaction surveys are also conducted by telephone and in 2005 the group conducted more than 56,000 surveys in this way (RBS website, 2007). The Royal Bank of Scotland and NatWest also held more than 100 customer service discussion groups in locations around the country and more than 21,000 telephone
interviews were conducted by the market research interviewers. With regard to customer complaints the bank has dedicated, trained personnel to handle complaints, and there is a Group Customer Relations Unit to handle issues that escalate, as well as complaints addressed to the divisional chief executives.
Different businesses in the bank are responsible for ensuring that their systems, processes and policies comply with the Group Complaints Policy. The Group Customer Relations Unit receives complaints data and subsequent service improvement plans from the businesses every month. This ensures that the complaints, and the steps taken to improve the service, are monitored at the most senior level.
5.4.8 Internet Presence
The RBS website is rich in information and data about the bank and their brands and they also have annual reports available to the public in downloadable PDF files. The website is useful for customers, businesses and even researchers. RBS was the first high street bank to launch internet banking in the UK. It is secure and convenient to use. It enables customers to:
• manage their money online 24 hours a day,
• check their up to date balance on most accounts and royal bank credit cards, transfer money, pay bills, set up standing orders,
• transfer money instantly from their royal bank savings account to their royal bank current account,
• keep a record of their finances,
• transfer money to a friend's or family member's bank account, anywhere in the UK, whenever it suits them,
• save time paying essential bills without the need to call into the bank or post office,
• set up a standing order online to make regular transfers to whomsoever they want,
• securely order new cheque books and pay-in books online (RBS website, 2007).
RBS is planning to continue to upgrade and expand further the retail branch network and maintain high levels of customer satisfaction at Royal Bank of Scotland and NatWest retail operations. They are also planning on improving 'first time resolution rates' for personal customers contacting the bank with a query. Furthermore, they want to develop and launch innovative products and services with additional social or environmental features.
Although the bank has a good reputation for its customer service, it still has some gaps that have to be dealt with. RBS need to develop and maintain a knowledge base of customer behaviour that captures every interaction the customer makes with the bank and their response. The bank's customer data is patchy and spread over multiple systems.
Having multiple databases makes it hard to recognize the owner of customer data. There is also a split between front office and back office operations that is impacting the service proposition and data quality.