EXECUTIVE SUMMARY
Industry Knowledge
Banking industry considerably contributes to the Canadian
economy over the years. Key macro issues affecting the industry consist of:
economic factors, legal controls, environmental issues and current trends.
Company Knowledge
RBC is the biggest bank in Canada, and also one of the
biggest bank of the world in terms of market capitalization. With a wide
variety products and services provided as well as the largest ATMs network, RBC
has posed important impact on the industry and the economy.
Product Knowledge
RBC has designed a competitive package for newcomers to
Canada, including: first bank account, first credit card, first home in Canada,
cost-effective international money transfer, and additional benefits.
Competitive Knowledge
In comparison to the similar package of the main competitor
(TD), RBC’s package for newcomers to Canada has more options and more
beneficial for customers, including: Visa and Master cards (TD: only Visa),
9-month fee waived (TD: 6 months), first home (TD: not included in the
package), additional benefits.
Customer knowledge
The target market of the package includes permanent
residents, who have been settling down in Canada as their second home. Secondary
market consists of foreign workers, international students, business owners,
and refugees.
Anticipated
Objections
5 possible objections include: Stalling
objection, No-need objection, Money objection, Product objection, and Source
objection. Salesperson would provide appropriate responses for each objections.
BANKING INDUSTRY KNOWLEDGE
Banking industry plays a crucial role in the Canada economy.
The banking system of Canada is well managed and regulated. During the world
economy crisis in 2009, there was no banks in Canada required special bailout (Phaidoninternational, 2016) .
Economic factors
affecting the banking industry (D'Costa, 2017) :
-
Interest rate: the increase of interest rate
will increase the industry profit margin.
-
Aggregate household debt: includes outstanding
market debt hold by consumers. The increasing demand for personal loans will
add more revenue to the industry.
-
Corporate earnings: corporate earnings represent
the credit demand on the financial market. The higher corporate earnings, the
higher fees generated by banks.
-
Customer confidence: this factor strongly
relates to the Aggregate household debt factor. The higher confidence of
customer in the economy, the higher aggregate household debt, so higher
industry interest income.
Legal control
affecting the banking industry:
Regulation for the banking industry tends to increase. All
Canadian banks has to comply with Basel III requirements according to the
Office of the Superintendent of Financial Institutions. This regulation is to
increase capital requirements and reputations for the Canadian banking system
globally, so boosting industry profit (IBIS World, 2017) .
Social and/or environmental
issues (Labatt
& White, 2002) :
-
Banks have been liable for the environmental
pollution of the companies that had defaulted on its loan, so badly affect the
industry profit.
-
To encourage enterprises to maintain and improve
their commitment to the environment, banks provide them with favourable
interest rates on loans, so reduce the industry income.
-
The environmental impact would limit the
feasibility of projects, so to restrict the approach to bank loans, which
negatively affect the industry revenue.
Current trends:
During the last few years, Canada banks have shown a steady
growth in market capitalization. The industry trends have been determined by
the biggest banks including: the Royal Bank of Canada, Toronto-Dominion Bank,
Canadian Imperial Bank of Commerce, Scotiabank, Bank of Montreal and National
Bank of Canada because they hold more than 90% of the industry total assets.
Industry revenue is expected to continue growing at 0.3% per year over the next
5 years (IBIS World, 2017) .
RBC KNOWLEDGE
RBC is the largest bank in Canada in terms of assets. RBC
was founded in 1901, headquarter in Toronto. RBC is one of the leading
diversified financial services companies in North America, providing a wide
variety of financial products and services. In spite of the worldwide crisis in
2009, RBC overcame the trough without any special bailout (Phaidoninternational, 2016) . This is due to the
management expertise and the firm’s capital potential.
The firm has about 79,000 employees and 16 million clients
all over the world. A huge client base and a strong labour force allow RBC to
build up a good image in the industry. Moreover, RBC
ranked highest among Big 5 Banks in Customer Satisfaction in Canada (J.D. Power Canada, 2016) , recognized
at one of Canada’s Top 100 Employers in 2017 and Greater Toronto’s Top
Employers 2017 (Yerema & Leung, 2016) . These awards also
create a good reputation for RBC.
Over the years, RBC has maintained competitive costs and
diversified services, such as: free account fees for students and newcomers;
discount fee for youth account; free credit card fee; favourable interest rate
for small and commercial business; flexible choices for mortgage payments and
rates; flexible and affordable cost for credit line; flexible terms, no early
payment penalties and skip-a-payment option for personal loan, etc.
PRODUCT KNOWLEDGE
This report aims at RBC’s Package for Newcomers, focusing on
permanent residents, to Canada. This product is available to newcomers to
Canada within the last 12 months and to those who arrived between 1 and 3 years
ago but moved from another bank using CustomSwitch (RBC Royal Bank, 2017) .
Feature, advantages, and benefits of the package
§
First credit
card: the first credit card has no
credit history requirement, which is applied for permanent residents
arrived in Canada within the last 12 months, and free annual fee for the
following types of cards: RBC Cash Back Mastercard, RBC Rewards + Visa, RBC
Visa Platinum, RBC Esso Visa (RBC Royal Bank, 2017) .
§
First
bank account: newcomers can open an RBC No Limit Banking account without
monthly fee for the first 9 months (after
that $10.95/month), unlimited
transactions, unlimited free e-transfers (RBC Royal Bank, 2017) .
§
First
home in Canada: RBC has provided newcomers with mortgage, without credit history requirement. To be
eligible for first home mortgage, the permanent resident must have been in
Canada for less than 5 years. This product may be also applied for temporary
residents (RBC Royal Bank, 2017) . By making a minimum
35% down payment on the house value, newcomers to Canada would be able to
offered mortgage for their first home with no income proof, no credit history
required (Gulbinski, 2015)
§
International
money transfer: cost $13.5 CAD/transaction, maximum limit of $2,500 CAD per
day (may be allowed to increase up to $10,000 CAD if the customer completes
additional authentically process and his/her mobile phone number has been added
to RBC profile) (RBC Royal Bank, 2017)
Besides
the above products, newcomers to Canada can also choose additional benefits
from RBC as following (RBC Royal Bank, 2017) :
§
First car
in Canada: newcomers may be able to
buy their first car with the RBC car loan although they do not have credit
history. Requirements to be eligible to RBC personal car loan include:
·
Permanent resident (also applied for foreign
workers) have to be in Canada for less than 3 years
·
Minimum 25% down payment
·
Maximum term 60 months
·
Maximum loan $75,000 CAD
·
Cars are less than 4 years old
§
Foreign
exchange: newcomers have been offered a preferred exchange rate for the
first 12 months of the RBC Signature No Limit Banking account or RBC VIP
Banking account. To be eligible, newcomers have to arrive in Canada within the
last 12 months and those who arrived from 1-3 years ago but moved from another
bank using CustomSwitch
§
Guaranteed
Investment Certificates (GICs): newcomers may enjoy a preferred interest
rate on selected GICs (redeemable, non-redeemable, one-year cashable GICs) for
the first term of a minimum one-year term and a required balance of minimum $1,000
CAD.
§
Small
lock box: newcomers can enjoy the use of lock boxes which are free for up
to 2 years.
§
First
business in Canada: RBC will offer a $50 for every new business account for
newcomer’s first business in Canada (This is not applied for RBC Royal Bank
Small Business eAccount).
Benefits of Service support and
evidence/stats/testimonials
§
RBC
ensures the technologies and security mechanisms for security, safety,
confidentiality and integrity of customers’ information and banking
transactions. The bank also employs several measures to ensure online security,
safe communication, protection against fraud, and online banking security (RBC.com, n.d.)
§
RBC
is not only the largest bank in Canada but also one of the largest banks in the
world in terms of market capitalization (RBC Royal Bank, 2015) . Therefore,
customers are able to easily approach the loan for their first homes and first
automobiles.
§
RBC
has provided $2.5 million to support newcomers and refugees to Canada. RBC
would use the fund in skills development, settlement, employment readiness (RBC Royal Bank, 2015) , indicating that the
bank has considered newcomers as an important customer segment that needs to be
focused on.
§
According to J.D. Power 2016, RBC ranked highest among Big 5 Banks in Customer
Satisfaction in Canada. Seven factors were used to measure customer
satisfaction, including: product, personal service, self-service,
communication, financial advisor, problem resolution, and facilities (J.D. Power Canada, 2016) . This achievement
shows that RBC has a good reputation through its services quality.
§
Over 200 languages used in RBC branches (RBC Royal Bank, n.d.) . This is truly a
benefits for newcomers to Canada since they have come from different countries
all over the world, and English/French is not the first language for many of
them. Communicate with their languages would impress them and it is definitely
an advantage to get them approach the package.
§
With more than 4,200 ATMs across Canada, RBC has
the largest combine branch in the country (RBC Royal Bank, n.d.) . This is a benefit
for customers having accounts opening at RBC
§
RBC has online and mobile banking which is
convenient for customers to access their accounts anytime and anywhere (RBC Royal Bank, n.d.) .
COMPETITIVE KNOWLEDGE
Competitor – The Toronto-Dominion Bank (TD)
TD is the second largest in the Big Five Banks in Canada (RBC
is the largest), with assets value of CND$1.3 trillion as at April 30, 2017. TD
has also ranked as one of the world’s leading in online financial service
firms. TD has been providing a wide variety of financial products and services
in 3 sectors: Canadian Retail (personal and business banking services,
brokerage, mutual fund, investment management, insurance, etc.), U.S. Retail
(retail, small business and commercial banking services; vehicle financing;
brokerage), and Wholesale Banking (integrated capital market products and
services to corporations, governments and institutions) (TD, n.d.) .
The product that has been provided to newcomers to Canada by
TD is New to Canada package, which consists of:
-
Checking account: customers can choose an
Unlimited chequing account or all-inclusive banking plan. For Unlimited
chequing account, customers will enjoy unlimited transactions, free monthly fee
for 6 months, free ATMs fee for all ATMs in Canada, free interact e-transfer
fee.
-
Saving account: customers will get a bonus rate
for 6 months, and no monthly account fee by choosing one of these three saving
accounts:
·
TD Every Day Savings Account: This is the
account with no limit on the account balance. Benefits of the product include:
ü
1 free transaction per month
ü
Unlimited free transfers to customer’s TD Canada
Trust personal deposit accounts
ü
No monthly fee.
·
TD High Interest Savings Account: This is the
account that limits the account balance of a minimum $5,000 and its interest is
higher than the TD Every Day Saving Account. Benefits of the product include:
ü
All transaction fees (except Foreign ATM fee)
have been waived if customers keep their monthly balance of minimum $25,000
ü
No monthly fee
·
TD ePremium Savings Account: This is the account
that limits the account balance of minimum $10,000. Benefits of the product
include:
ü
Unlimited free online transfers to customer’s TD
Canada Trust personal deposit accounts
ü
No monthly account fee.
-
Credit card: newcomers are eligible to own their
credit card without any credit history, with limit up to C$5,000. Within the
first year, customers will get C$20 off credit card fee by choosing one of
these types of credit card: TD Aeroplan Visa Infinite Card, TD Aeroplan Visa
Platinum Card, TD First Class Travel Visa Infinite Card, TD Platinum Travel
Visa Card, TD Cash Back Visa Infinite Card.
-
Money transfer: customers using Visa Direct will
be waived international transfer fee for the first 6 months (one
transaction/month).
Comparison between RBC’s Newcomers to Canada
package and TD’s New to Canada package
RBC
Newcomers to Canada package
|
TD
New to Canada package
|
Products included
in the package
|
|
§
Chequing account
§
Credit card
§
Money transfer
§
First home mortgage
Plus: additional benefits
|
§
Chequing account
§
Savings account
§
Credit card
§
Money transfer
|
First bank account
|
|
RBC No Limit Banking Account:
§
No monthly account fee for 9 months,
after that $10.95/month, no minimum balance
§
Unlimited transactions
§
Unlimited free e-transfers
§
ATM fee:
ü
RBC ATMs in Canada: free
ü
Non-RBC ATMs in Canada: $1.50
ü
ATMs outside Canada: $5.00
|
TD Unlimited Checking Account (or All-inclusive Banking
Plan):
§
No monthly account fee for 6 months,
after that free of charge for maintaining a $4,000 minimum balance (for
Unlimited Checking Account) in the account at the end of each day of the month, otherwise $15.95/month
§
Unlimited transactions
§
Unlimited free Interact e-transfer
§
ATM fee:
ü
All ATMs in Canada: free
ü
TD ATMs inside U.S. and Mexico: free
ü
Non-TD ATMs inside U.S. and Mexico: C$3.00
ü
ATMs outside U.S. and Mexico: C$5.00
|
Credit card
|
|
No annual fee on selected cards, options include 3 types
of Visa cards and 1 Master card
|
$20 off credit card fee for the first year for selected
cards, options include 5 types of Visa cards (no Master)
|
Saving account
|
|
Not included in the package
|
Customers will get a bonus rate for 6 months, no monthly
account fee for selected saving accounts.
|
International money
transfer
|
|
Cost $13.5 CAD/transaction, maximum limit of $2,500 CAD
per day
|
Visa Direct users will be waived international transfer
fee for the first 6 months (one transaction/month).
|
First home in
Canada
|
|
RBC mortgage for first home buyers is available for
application if the customer make a minimum 35% down payment on the house
value, without income proof and credit history required
|
Not included in the package. However, newcomers can also
apply for first home mortgage at TD with minimum 35% down payment, no income statement
required
|
In general, both RBC and TD have similar products in the
packages. In details, TD has stronger ATM network than RBC’s. RBC has offered
more credit card options than TD since customers can choose either Master Card
or Visa Card while TD has only included Visa cards in the package. However, RBC
has provided additional benefits for newcomers so customers would have more
choices to consider.
Comparison between dealing with TD and RBC
Service support
|
RBC
|
TD
|
Branches and ATMs
|
The largest branch and ATM network in Canada (2,800 ATMs)
|
1,150
|
Number of employees
|
Total 80,000 (52,488 in Canada)
|
Total 86,000 (58,000 in Canada)
|
Working hours
|
New open on Saturday at many brances
|
Open earlier, later and 400 locations open on Sunday
|
Languages
|
Over 200
|
Over 200
|
24/7 banking
|
|
|
US Banking
|
Not available
|
More convenient as offers cross-border banking services
|
In general, both RBC and TD have offered similar services.
TD has stronger international ATM network, but RBC has the largest branch and
ATM network in Canada. RBC has programs to support newcomers and refugees and
achieved highest rank in customer satisfaction among Big 5 Banks in Canada.
Besides, RBC has also been recognized at one of Canada’s Top 100 Employers in
2017 and Greater Toronto’s Top Employers 2017 (Yerema & Leung, 2016) . These facts have
created a good image and reputation for RBC to approach the newcomers to Canada
segment.
CUSTOMER KNOWLEDGE
Specific target market for RBC newcomers to Canada package
is permanent residents. Other segments would be considered as secondary market,
including: foreign workers, international students, business owners, and
refugees.
Buying authority, key
buying needs, and major buying motives
Immigrants represent around 20% of the population. The
largest portion of immigrants has been come from Asia (including Middle East).
Most of them have been living in mainly four provinces: Ontario, British
Columbia, Quebec and Alberta (Chui & Flanders, 2016) .
As newcomers to Canada, their key buying needs would be:
reliability, service quality, and affordable cost. Permanent
residents-newcomers are those who commit to settle down in Canada, so major
buying motives include security and protection, comfort and convenience.
Relationship of the
product and service support’s key features and benefits to major buying needs
and motives:
Product and service support features and benefits
|
Major buying needs and motives
|
Employ
technologies and security mechanisms for security, safety, confidentiality
and integrity of customers’ information and banking transactions.
|
Security and
protection, Reliability
|
No credit
history required for credit card and first home mortgage
|
Convenience,
service quality
|
Competitive
monthly fees for accounts and money transfers, free annual fee for credit
card users
|
Affordable cost
|
Awards on
customer satisfaction, top 100 employers, etc.
|
Reliability
|
Largest branch
and ATMs system in Canada
|
Convenience and
comfort, service quality
|
Longer working
hours
|
Convenience and
comfort, service quality
|
24/7 online
banking and mobile app
|
Convenience and
comfort
|
More than 200
languages used
|
Convenience and
comfort, service quality
|
ANTICIPATED OBJECTIONS
1. Stalling objections:
Customers may need more time to decide or simply want to get
rid of the salesperson.
Appropriate response should be encouraging customers to talk
about their concerns with a positive attitude.
Example: “I have to think thoroughly about this. I will come
back next time”
Response: What are the concerns you have to think about? I
am very pleased to help you with any of the questions or issues you may have.
2. No-need objections:
Customers may think that they do not need to use the banking
services at the moment or simply want to get rid of the salesperson.
Appropriate response should be making questions for the
objection.
Example: “I am not interested in the package”
Response: May I ask why you are not interested?
3. Money objections:
Target customers are new to the country, they have a lot of
difficult in the beginning years of settling down their new lives, so cost is
very important.
Appropriate response should be admitting that RBC price is
not the least expensive on the market due to its reputation, image, size as
well as competitive advantages and benefits that RBC has always committed to
customers.
Example: “The package is good but your fee is too expensive”
Response: Could you please tell me what did you compare to?
4. Product objections:
Customers may have heard about a competitive package on the
market or knew someone else using it.
Appropriate response should be citing RBC’s awards on
customer service quality, testimonials, competitive advantages, etc. to
convince customers. Tone used should be positive, and should never slander
about competitors.
Example: “Other bank has better package for newcomers”
Response: Are you talking about product features, benefits
or service quality?
5. Source objections:
Customers may have been using services at another bank and
may not want to change to RBC.
Appropriate response should be trying to gather information
of the concern by asking questions.
Example: “I think I won’t buy this package from RBC but from
another bank”
Response: You must have reasons for the
decision. May I know what they are?
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http://www.cba.ca/Assets/CBA/Files/Article%20Category/PDF/bkg_banksandeconomy_en.pdf
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Mississauga, Ontario, Canada.
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