Tell us more about digital banking in Canada, and where it is relative the rest of the world.
It’s a very strange, paradoxical country. Canada is in the upper echelon of countries in the world for digital connectivity with ~93% of houses digitally connected, yet it is significantly behind in terms of mobile adoption. In fact, only until recently, the primary channel for banking was still the desktop.
The reason for this may be influenced by the BlackBerry. When I arrived here about 5+ years ago, about 55% of Canadians had a smartphone, compared to the UK or Australia, where that number was over 70%. That could be because Canada had, and continues to have, some of the world’s most expensive data plans. That said, when you look closer at the group that had smartphones, about half of them were Blackberry owners. So, this translated to about a quarter of Canadians had an iPhone or an Android and were heavily involved in app culture through Google Play’s or Apple’s app stores. As a result, banking apps didn’t get major traction early on.
I believe that for this reason, Canada has been on a different digital banking adoption curve – one that is more like a hockey stick (a very ‘Canadian’ trendline). While we still have significantly more users in online banking than mobile, it’s changing daily and mobile is accelerating at great speed here. I estimate Canada may be 4-5 years behind in mobile banking adoption relative other more digitally advanced jurisdictions. So, that may help set up the unique situation that exists in Canada.
What does digital mean for your institution?
I would say that it has changed over the time I’ve been here. When I arrived at RBC, it was a bank strongly organized in verticals. It’s the biggest bank and company in Canada, but it’s also number 1 in nearly every product and segment – retail banking, private banking, SME, commercial, capital markets. Generally, you don’t find many banks that are the largest across all segments. As a result, we have very strong and large verticals, which if they were listed separately would be major financial institutions in their own regard.
Digital, five years ago, was really just our online channel for retail and commercial banking. We had also just launched our mobile app, which was frankly about four years too late. For us, Digital was all about delivery for the bank and channel management.
Now, we are responsible for all banking interfaces and experiences. We are doing as much work to design and digitize the advisory experiences as the customer experiences. We are building reusable components across channels. All of our digital tools and experiences are based on a single stack, which is incredible to think about and took four years to execute. Leveraging our single stack technology gives us the flexibility to reuse and extend core capabilities rapidly across the bank. In doing so, it enables RBC to deliver innovative digital capabilities and products to clients in a way that is faster and seamlessly integrates to create the optimal client experience. It also positions digital as a “horizontal transformation force” for digitizing customer and advisory experiences at the same time within the same customer journeys.
What were your institution's digital priorities prior to the start of Covid and how have these priorities evolved since?
Covid has had a few impacts that come to mind immediately:
Firstly, I think it helped enroll the last segments of customers in our digital channels. And, that has been a huge part of any digital leader’s job for the past 10 years. Before Covid hit we had about 600k branch-only customers. We are now down to less than half of that. We have been able to digitize virtually all 7 million of our transacting customers. Around 85% of the bank’s active customer base is now digitally active. So, now we are more focused on “What channel are they using? Are they using mobile enough? And are we digitally activating when we onboard?”
Secondly, we have seen about five years’ worth of servicing and transaction migration to digital happen in the first 5 months of Covid. Over 94% of our payments and self-serve transactions are now digital. With this shift, the number one area we have been focusing on is how we connect customers to advisors. We now have about 2.4 million customers on our MyAdvisor platform. MyAdvisor provides clients with digital access to their personalized financial plans and can connect them to a financial advisor either by live video, phone or in-branch. In the wake of Covid, we adapted the platform to allow for an increased volume of client and advisor interactions, including video calls. We also expanded the platform to support a wider group of advisors to help meet every need. Another way we were able to connect advisors at home with customers who were also at home, was with our remote ID verification technology. We were able to roll this out to our advisors in about three weeks, which is ridiculously fast. This allowed us to serve our customers in a very distinctive way during the pandemic. We are maniacally focused on how we connect advisors and customers going forward and leaning into the more complex areas of automation.
Which channel(s) is a priority for digital investment? (e.g. Mobile app, social, online banking, chatbot, text chat with agent, IVR, ATM, Branch, voice in Contact Center)
Every bank in the world will talk about “mobile first” and we’re no different. We are a global leader in mobile in many ways with some distinctive capabilities. We probably lead in terms of artificial intelligence, automated savings accounts, and nudges. These capabilities are widely used by Canadians with over one million using artificial intelligence budgeting alone.
One thing I’m very bullish on is mobile dwell time. This principle is taken from retail, applied to this digital asset, and entails developing stickier relationships with customers and driving sales. Based on our research, I believe we are #2 in the world in terms of total mobile dwell time with customers spending over an hour and a half per month in mobile with us.
The reason why we do mobile first and focus on dwell time is because, for me, it’s a mathematical formula. We start with dwell time in a well-designed user experience, which leads to an increase in our Net Promoter Score and engagement. Strong NPS and engagement has a link to retention, along with the potential for clients to open up other accounts. We have an attrition rate below 2% for customers active in mobile—and I believe it’s due to the high-quality experience we deliver and our high dwell time. For comparison, North American banks typically report an attrition rate around 7%.
Additionally, we have built a configurable app that personalizes at both the macro and micro level. What I mean by that is: at a macro level, we’re creating unique experiences for specific client segments like students, entrepreneurs and self-directed investors, and we’re also using AI to tailor advice and insights at a micro or individual level. This is really exciting and we have a lot of banks coming to us, wanting to replicate it.
What benefits are you looking to generate from customer facing Digital initiatives (e.g. improve self-serve rates, nudge customers to cost effective channels, modern feel, marketing and brand, customer intimacy)
The philosophy at RBC has been more about how we free up capacity in our front line and point them on to acquisition in other spaces. For example, we are doing well at the moment in home loan acquisition. We are outperforming the market based on how we have been able to recalibrate our sales power to our clients more complex financial needs.
Have you found that the more "digital" a customer is this improves customer loyalty and profitability?
The number one thing I talk about is retention. We’ve been the leader in Canada for most of the past few years in digital sales, acquisitions, and cross sales. Digital has performed a very successful role at RBC. Our market share has as much to do with customer retention and engagement, if not more, than acquisition. So, while we are strong at cross selling and acquisition, we are also really strong in building exceptional experiences and delivering client value, which minimizes the number of customers who leave.
The role digital plays here is critical. We’re seeing how profitability is improving with the growing number of high-quality digital customers. For example, iOS customers are the most profitable in the bank.
What are the barriers to customer digital adoption? Have you invested in customer digital adoption initiatives? What were they?
This is a slightly contentious point, but I actually think we are close to done in terms of digitizing existing customers. We still have some transactions being done in branches, but it’s a small amount and most of them are digital now. You could throw a lot of resources at trying to convert that last small group, but it would be for minimal reward.
Does your bank have the required digital skills amongst existing staff, or have you had to recruit for these skills?
If you look at Canada specifically, it suffers from brain drain to the US. Silicon Valley is full of Canadians. We have done well in terms of building up world-class design, developer and digital product practices, however it has been particularly difficult to recruit product people and we have had to build this up internally. We have also set up a second hub in Montreal that has been successful and we’re excited to seeing this team grow in the years ahead.
The bottom line is digital people like to build things and see it in the market. Some other organizations have struggled with that over the years so that’s allowed us to position ourselves strongly in that regard as we continuously build and ship products.
Have you considered partnerships to accelerate time to market for digital initiatives?
We build most of our capabilities in-house and we tend to partner with Fintechs for specific needs such as identity and verification. We have a very strong agile delivery capability across all of digital. We are doing releases about every 20 minutes, whereas five years ago we were every 2-3 months.
There are specific partners that we have worked with to accelerate. Early on we partnered with Personetics out of Israel which was successful. However, we are also building our own AI capabilities with 75 AI scientists co-located in universities around Canada but we still lean heavily on Personetics for a lot of nudge and core insights.
What come next in terms of digital at RBC?
The next mountain that we are starting to climb is around digitizing things like trust and advice. We’re considering how best to build journeys where customers are connected to advisors in a truly omni-channel way. Canadians still want advice when they are buying a home or looking to invest. We also know from our research that Canadians have more anxiety about retiring than any country in the world. So, how do we connect with our customers and give them the best advice – and how do we digitize that experience so we can help them regardless of how they want to interact with the bank? It is a much more complex problem than just wiring payments or getting people onto a mobile app.