In May alone, Royal Bank of Canada (RBC) has been recognised with the JD Power award for ‘Highest in Customer Satisfaction’ Among Canada’s major banks and scooped RBI’ s Award for Best Retail Bank North America. Neil McLaughlin Group Head, Personal & Commercial Banking at RBC discusses the bank’s winning strategy with Douglas Blakey
When Dave McKay, RBC President and CEO, tapped Neil McLaughlin to take the helm of RBC’s leading personal and commercial banking franchise, the long-time employee was honoured to be chosen. While he was proud of the work he was doing to support the country’s entrepreneurs as head of the bank’s crucial business financial services division, McLaughlin was ready to take on the new challenge.
Now as head of RBC’s largest business line, McLaughlin is in a position to help many Canadians realise their goals, everyone from the young family moving into their first home, to the newcomer looking to establish her roots, to the business owner planning an international expansion.
Since becoming Group Head, Personal & Commercial Banking last May, RBC’s Canadian retail division posted record year-end results, delivering revenue of $15.9bn and contributing fully 50% of RBC’s overall record net income of $11.5bn in 2017.
RBC’s impressive financial results included achieving all of its medium-term objectives, delivering a return on equity of 17% and returning a record $8.2bn of capital in dividends and share buybacks to shareholders.
Overall, RBC outperformed its global peer group, delivering compound annual Total Shareholder Returns of 12% over three years and 16% over five years making it Canada’s most profitable public company in 2017.
Building from the client-in
While there’s no doubt that the retail division is operating from a position of strength – RBC holds the number one or two market position across all key product categories in Canada – McLaughlin took the reins at a time of incredible change.
Under McKay’s leadership, RBC is undergoing a transformation across its five business lines to ensure the company’s relevance in a digital age. McKay’s plan includes investing in innovation both internally and within Canada’s wider innovation eco-system, simplifying processes and systems, and transforming the bank’s corporate culture so that it is more agile and adaptive and focused on building from the client-in, instead of the historic mainstay of the bank-out. The retail arm is playing a critical role in this transformation.
“We’re building a digitally-enabled relationship bank where the client is at the centre of every decision we make,” McLaughlin tells RBI. “It’s a multi-faceted approach where we’re integrating our mobile, digital and branch channels, investing in emerging technology and developing a more agile culture so that we can deliver better products and services to our clients when, where and how they prefer.”
That focus on client convenience and effectiveness has energised McLaughlin’s team who are accelerating the bank’s digital transformation, simplifying processes, and developing and delivering first-of-its-kind products and services to the Canadian market, many in just the last few months.
In the Autumn of 2017, the bank introduced NOMI, a new feature for the RBC Mobile app which happens to be Canada’s most utilised money management platform. NOMI uses artificial intelligence to provide clients with personalised financial insights to help them with their day-to-day needs.
Using NOMI’s predictive technology, clients are twice as likely to save as those employing traditional self-serve products. It was just one of the 22 new mobile app capabilities RBC released to retail customers last year – more than all of their Canadian competitors combined.
RBC’s investment in mobile technology is paying off. In the first quarter of this year, mobile became the retail bank’s number 1 digital channel, with 3.4 million active users, up 19% from a year ago, and 85% of financial transactions are now performed in self-serve channels. With the rising popularity of digital channels RBC is placing greater focus on data security.
“Data is becoming crucial to customising consumer experiences and how we protect, manage and utilise that data is equally important,” McLaughlin adds. “We’re committed to maintaining the highest possible privacy and security standards, and being transparent and explicit around customer consent.”
But RBC’s focus on innovation isn’t just about technology, the bank continues to look for new ways to add value and reinvent mainstay products and services.
In October, McLaughlin’s team partnered with another iconic Canadian brand, oil and gas company Petro-Canada, to offer clients instant savings on fuel purchases and loyalty rewards from both companies. What makes the offer unique is clients can realise the benefits using any of their existing RBC credit or debit cards, whereas in the past the benefits would have been exclusive to a specific, likely co-branded card.
“The power of this partnership and the program we’ve launched is that it’s incredibly simple to take advantage of,” says Deborah Gullaher, Vice President, Sales and Marketing, Petro-Canada. “Most fuel savings’ offers are either limited to a co-branded credit card, or involve minimum spends and annual rebates. We’ve taken away all of the complicated calculations, limitations and extra cards to make it possible for Canadians to enjoy instant fuel savings while they earn more points on any linked RBC debit or credit card.”
The evolving role of the branch
With technology and innovative offers, you might be thinking, what about the branch? RBC has the largest branch network in Canada, but there too McLaughlin says the company is innovating to tailor to their customers.
“Our branches continue to be a vital part of our presence in Canada, they are a key touchstone in the community,” he explains. “But today, we’re moving away from a one-size fits all structure and exploring new formats to meet and anticipate the changing needs of our clients.”
New Canadians represent a growing client segment for RBC and in April, the bank launched a new branch format that moves beyond banking and provides information, expertise and services to help newcomers on their settlement journey. The bank is also opening its On Campus format at universities across Canada to help young people navigate financial services for the first time and they are piloting On-the-go formats, which offer quick and convenient services in well-traveled commuter locations.
The industry has taken notice of the bank’s explicit focus on the client, with RBC taking home several coveted national awards, notably earning the JD Power award for highest in customer satisfaction among its main Canadian competitors for three years running and winning top spots for mobile app capabilities and separately for advice.
While awards are heartening, McLaughlin points out they only underscore that RBC is firing on all cylinders and the core changes essential to McKay’s vision are already paying off.
The right leader at the right time
Helping to lead that transformation is something McLaughlin’s 20 year career at RBC has well prepared him for. Learning the business from the ground up, he’s worked in credit cards and personal lending, marketing, channel strategy and importantly, lead risk operations for the Canadian retail banking division where he managed credit adjudication, fraud, collections, operational risk and commercial adjudication.
With his background as a foundation, McLaughlin has a view that is both thoughtful and customer centric. While technology may create the runway, he knows it will be people that will lead RBC into the future.
“At our core we are a people business,” says McLaughlin. “While technology will provide the tools and insights, it will be our people that build stronger relationships with our clients, and help them realise their goals. And no one has better people.”
Overall, McLaughlin is approaching the future optimistically with a real sense of purpose. “Dave has given us an incredible framework and the permission to make the changes we need to get to the next level,” he said. “We have the right vision, the right strategy and most importantly the right people. It’s an incredibly exciting time to be a part of RBC, and I’m proud to lead our retail team.”
“RBC leads for digital transformation”: JD Power
- Among the Big 5 Canadian Banks, RBC leads the digital charge with 49% of its customers in the digital-centric segment, while TD Canada Trust stands on the other end of the spectrum with only 36% digital-centric customers. Among Midsize Banks, Tangerine (93%) and Simplii (84%) boast the largest portion of digital-centric customers, with ATB Financial (32%) having the least.