An IT failure affecting thousands of Canadians may have stained RBC’s reputation earlier this year, but Teradata on Tuesday held up the bank as an example of how organizations can use software to get more profit out of their best
In a Web-based seminar, Teradata showcased RBC Centura Bank, a wholly owned subsidiary of RBC Royal Bank of Canada, as a customer of its Value Analyzer, a tool that links revenue and expense data to actual customer transactions and interactions within a company. RBC has been a customer for more than a year, and one of its executives said the software has led to major changes in the kinds of products and services it offers customers.
RBC has been working on improving profitability among its customer base since the early 1990s, primarily for marketing and customer care activities. After about seven years, however, the bank revisited what it was doing and started to think about how it could use available data rather than digging for more, said Cathy Burrows, director of enterprise information and customer management support of RBC Centura Bank.
“”It’s not about building software as much as it was the ability to customize the business rules and be able to leverage the details that existed — all of the event details that the organization already had access to,”” she said.
RBC used Value Analyzer, for example, to determine that 60 per cent of the accounts in one of its service packages were not profitable because of a high number of transactions through its ATMs. Although customers were putting envelopes in the machine, those transactions were taken out at the end of the day and posted in the same way it would be handled in a branch.
The bank considered introducing new fees but decided they would be unpalatable to most consumers, Burrows said. “”We could have introduced new technology, and I’m sure we would all agree NCR would have been very happy to replace the entire ATM network for the bank to replace the paper envelopes with an electronic funds transfer process,”” she said. “”That capital investment was not feasible at the time.””
Instead, RBC enhanced the service package by including telephone and Internet access in addition to the ATM and branch access. At the time, those services were available only for an extra monthly fee. “”The organization, by doing this, actually got thank-you letters from customers,”” she said. “”It was more than acceptable based on the value they perceived in that particular package.””
RBC has since used Value Analyzer’s data to introduce courtesy overdrafts for certain personal banking accounts, among other changes. Burrows, who worked as a Teradata consultant before joining RBC, said the benefit of Value Analyzer is that it takes information that exists at the account level — balances from core processing systems, for instance — and assigns activity-based costs to figure out account profitability. The results are then aggregated to offer insights about specific products or customer segments.
“”There is no dispute or discussion trying to rationalize the potential differences between customer profitability or product profitability,”” she said. “”While there may still be a difference in the way you set business rules, the emphasis here is having one consistent response.””
Kathleen O’Reilly, a partner with Accenture’s communications and high-tech market unit, said 70 per cent of the customers her firm works with struggle to reach their best customers — assuming they even know who they are.
“”For years, all customers were created equally. Even if they weren’t, you’d want to focus on your highest-revenue clients, but you couldn’t even consider losing customers,”” she said. “”Now organizations are looking much more carefully for the ‘right’ customer base and to extract more value from each relationship.””
Getting to that point means more than simply choosing Value Analyzer, Burrows added.
“”One of the decisions that comes into whether an organization needs to develop these capabilities is whether you want to invest in software development versus resources for planning and leveraging the information and business rules that are customized in your organization.””
NCR released the most recent version of Value Analyzer, 3.0, in March.