Amid a digital revolution that is changing norms in nearly every industry, Royal Bank of Canada is investing heavily in a new division that will fundamentally alter the way it targets and attracts personal and commercial banking customers.
At an investor conference on Wednesday, Canada’s largest lender unveiled RBC Ventures, an arm designed to lure clients using unconventional means – initiatives the bank hopes will make Canadians much more likely to switch financial institutions, something they are currently reluctant to do.
For decades, RBC’s retail and personal bank pursued clients using traditional sales methods, such as mailing millions of credit card offers directly to Canadian homes. Bank branches also served as large nets that attracted millions of people. Once customers were inside, multiple products could be offered.
Until recently, these tactics were rather lucrative, helping the personal and commercial bank dominate RBC’s bottom line, delivering 50 per cent of total profit. In the past few years, however, RBC executives realized the nature of relationships between customers and companies was changing – and rapidly. Everything from voice-activated home devices, such as Amazon Echo, to ride-hailing apps, such as Lyft, established new norms for client interactions.
To augment its outreach, RBC decided to build businesses in this RBC Ventures unit that reach clients well before they consider whether they need a banking product.
Instead of simply advertising small business loans, hoping that clients would reach out when they were ready to start new ventures, the bank has built a new business in-house. Ownr walks potential business owners through all the steps necessary to set up a company − everything from arranging all of the legal documents to designing a corporate logo. The hope is that, at the end of the process, the customer will also tack on an RBC small business loan.
“We’re broadly re-imagining the role we play in a client’s life,” Mike Dobbins, who runs RBC Ventures, said in an interview.
At the moment, RBC Ventures has seven such businesses in the market. Another is Arrive, a concierge service for newcomers to Canada that will walk them through all of the important steps before moving here, so that they don’t have to scour government websites for all of the required paper work. It can also help them arrange schools, and possibly even a home.
Twelve more ventures are currently in development.
The seeds of RBC’s new mindset were planted three years ago, when a group of executives hunkered down to discuss how technology was transforming nearly every industry. The underlying message was that banking would change, too. “We had to try something different,” RBC chief executive officer Dave McKay explained. “And we saw a secular opportunity to do that” – a result of such widespread digital disruption.