RBC: Comprehensive Analysis Essay.

RBC's Focus on Technology Enhancements

Discuss about the Cash Flow Management and Manufacturing.

New waves of technologies have changed customer’s expectations on products and services provided in different fields. In contemporary society, traditional banks including RBC encounter an increasing customer needs for technology enhancements. In financial industry, Canada’s big five banks are inevitably challenged by online banks who provides user-friendly platforms, low costs as well as higher returns, for instance, EQ Bank, which is backed by Equitable Bank, and Zag Bank, which is supported by Desjardins Group (The Canadian Press, 2016).

“Having initially viewed the fledgling fintech industry as a threat, banks are now looking to embrace innovations and work with technology companies rather than be left behind as platforms such as blockchain, on which digital currency bitcoin is built, change the financial landscape” (The Canadian Press, 2016). Faced by disruptive technology like Artificial Intelligence, cybercurrency and blockchain, RBC’s senior management decided to invest in FinTech in order to serve the needs of future customers. Such proactive radical change reveals RBC’s determination on projects which seek the reinvention of company strategy towards major transformation of business operations (Dawson & Andriopoulos, 2014).

Royal Bank of Canada (RBC) is a premier Canadian bank providing expertise in banking, finance and capital markets to corporations, institutional investors, asset managers and governments around the world (Wikipedia, 2018). Its headquarter is located in financial district of Downtown Toronto. RBC has 17 million clients and more than 80,000 employees worldwide. In terms of scope, RBC was the largest Canadian company by revenue and market capitalization in 2011 with US$673.2 billion of assets under management in 2014 (Wikipedia, 2018). Below would be the author’s overall analysis on RBC’s current status while break-down of each aspects will be observed in later paragraphs.

RBC has “a focused strategy that targets high-growth client segments within the priority markets of Canada, the U.S., and in select global financial centers” (Annual Report, 2017). It takes massive efforts to build a Digitally Enabled Relationship Bank to enhance exceptional client experience. As talent management is essential to supporting RBC’s strategic objectives, RBC takes a comprehensive approach to identify and select talented human capital as well as invest massively in building innovation labs in North America. Research firm International Data Corp (IDC) has ranked RBC as the top Canadian bank which focuses on embracing FinTech strategies and initiatives (Zubairi, 2017). RBC has been spared no efforts in “acquiring expertise, funding external research, establishing a research organization, and focusing on artificial intelligence and big data”, while its CEO announced to spend 40 percent of overall technology budget on innovations such as AI and blockchain.at the same time (Zubairi, 2017).

Organizational Structure and Target Market

RBC’s organizational structure is tall in terms of hierarchical structure which guarantees consistency, quality, stability, and is easy to control under regulatory requirements. Like most banks, RBC is grouped by functions. RBC is trying to “simplifying the structure, redefining its leadership model and tapping into the strengths and talent of its employees” (Annual Report, 2017).

RBC focuses on various business segments according to geographic locations. In Canada, RBC expanded its insurance types, enhances wealth management franchise and “sees opportunities for further growth within Personal & Commercial Banking”. In the U.S., RBC bought LA’s City National Bank and successfully benefit from such cross-selling strategy (Almazora, 2016). To integrate into its customers’ digital lives, RBC has worked with various technology partners to “design and build products, processes, technology and services in a faster, simpler, more adaptable and cost effective way”, including transformational technologies of blockchain and artificial intelligence (AI). (Annual Report, 2017). RBC Future Launch, one of its most famous program, has invested $500-million in 2017 to empower Canadian youth for the jobs of tomorrow. As a transformational servant leader in the financial industry, RBC occasionally holds philanthropic events to enhance the growth of the local community, including fundraising marathon for breast cancer, etc. 

RBC has a culture that enhances diversity & inclusion and encourages innovation. (Values employees as assets - RBC Launch – hires and encourages top talents to return). (HR efforts in recruiting technology top talents) However, as it is expending the business, RBC hires a large number of contractors mostly for the back office jobs, with some receive insufficient trainings, work overtime thus turnover rate can be quite high. There was also an outsourcing scandal reported by CBC which “replaces Canadian staff with foreign workers” (Tomlinson, 2013).

To give the readers a clear picture of evaluation on RBC’s performance, the author would rate each of its aspects regarding innovativeness on a scale of 1 to 5 with 1 rated as excellent and 5 as poor. With an overall opinion comes first the author will provide in-depth analysis based on five criteria of STAR model.

RBC concentrates on the fact that the cash flow in the company is more than the cash flow out of the company. They make sure that the cash is unlocked with their daily operations and that the clients are made aware of the expected payment dates and continuous follow up is done. Attention must be given to the most productive and efficient service must be targeted to get the desired cash flow (Kroes & Manikas, 2014). RBC deals with various financial services such as deposit certificates, term deposits, commercial papers and others which can help them to increase the cash flow in their bank and hence design a concrete cash flow management structure for future profit. There are certain existing cash management strategies that help RBC to manage their cash flow and business. They have an automated system for direct credit where users can submit their payments to any third party or to the bank at their convenient time.  RBC also has an automated system for direct debit where the business management can collect their recurring payments in their local currency from their customers. They have a bill payment collection service which enables the various business which are linked to the bank to enroll as biller on the Digital Banking Solution of RBC and this makes the name of the business to appear on the list of the acceptable payees. This helps the customers of the business to make payments easily to the biller. These strategies helps RBC to manage their cash operations smoothly.

Employee Retention and Talent Management

RBC targets those individuals who show signs of real potential to work with the institution. They should also show that they are capable of earning promotions within the timeframe that RBC has set for different designations such as senior managers, executives and others. The individuals should also be consistent about their tenure in RBC and should show long term commitment to the organization. There are 13 members in the board of directors followed by several others on different positions. The CEO of RBC is Dave McKay, with the chairman of the board being Kathleen Taylor. The board of directors along with the other influential managers of the company aim to retain their employees and give them promotion according to their performance and involvement in the organization (McShane & Von Glinow, 2013). RBC concentrates on certain policies and principles in the workplace which ensures that the employees succeed in their work and experience a good working environment. RBC promotes employment equity where equal opportunity is given to every employee to showcase their talent and develop themselves. They make sure that the employee are able to manage both their work life and personal life by arranging for flexible working hours without creating any impact on the organization. RBC has compensations plans according to the performance of the employees and aim to create an enhancing workplace for them. RBC also has many development programs which gives proper training to the employees so that they can expose themselves to more areas of work and can expand their talent horizon.

Product development is a major part of any organization to retain their existing customers and to gain new ones. The new product or service should by all means be better than the existing product for the customer to purchase it. RBC conducts a thorough research and development before bringing any new service into the market (Rogojanu & Badea, 2014). The R&D consists of four steps such as researching the target market segment extensively, designing the perfect solution to the new service, develop a sample service and test it among a few consumers and finally test the service among a large crowd and note the response. Internet is the best way to find out the occurring in the industry such as banking or any other. RBC has a stipulated social media person who takes care and informs about the position of the banking industry and the condition. It is necessary to understand the wants and demands of the customers and to provide such services which will make their experience more convenient and easy. RBC have been continually making all its services online so that consumers do not always have to physically visit the bank for minute jobs such as transactions. Consumers also gets their financial statements in their email id for which they do not have to continuously contact the bank to receive their statements. RBC makes sure that all information that could be shared with the consumers without any legal obligation is shared with them so that a transparency is maintained with the consumers.

Product Development Processes

Royal Bank of Canada along with its many subsidiaries operate under the brand name of RBC. They are one of the largest banks in Canada and also in the world based on market capitalization and assets. RBC provides a diverse selection of financial services which includes commercial banking as well as personal banking, management of wealth, insurance, investment and corporate banking and transactional services on a global concept. There are over 70,000 employees who are appointed ta RBC who offer services to more than 15 million clients across the world. RBC is divided into five segments of business namely Canadian banking, insurance, capital markets, wealth management and international banking. Canadian banking concentrates on the operations regarding the business banking and domestic personal and also on certain investments made by retail businesses (Beyhaghi, D’Souza & Roberts, 2014). It is operated mainly through three lines of business namely business financial services, cards and payment solutions and personal financial services. Wealth management consists of the US and International wealth management, the Canadian Wealth Management and Global Asset Management. Insurance comprises of the Canadian Insurance and various other insurance services that are offers through different channels which includes retail branches of insurance, call centers, career sales force and also through independent travel agencies and insurance advisors. International banking consist of the joint venture made by RBC and also banking in the Caribbean which offers a wide range of products and services to different individuals, business and institutions. The joint venture, on the other hand, which is RBC Dexia Investor services, offers integrated capacity of products to worldwide institutional investors. Finally, capital market consists of the global banking business which provides private as well as public companies, central banks, government and institutional investors a huge range of products and services.

The marketing capacity of RBC depends on the marketing mix that it adopts and follows to spread its products and services into the market. RBC has a wide range of attractive and quality products and services which makes it easy for the individuals and the institutions to invest, save and acquire loans from the international bank which serves more than 15 million people. RBC has been continually on the growth and have been able to provide the institutions and their clients with proper services so that they can get capital help from the bank and stipulate their own growth. Certain services provided by RBC are investment accounts, savings accounts, future and retirement planning services and personal, business and education loans (Devereux & Yetman, 2014).

Global Presence

The spread of the Royal Bank of Canada is global which has made it easier for the bank to grow slowly and cater to a wide audience and share their services with them. They are present in both developed and developing countries and operates in almost 41 countries. RBC abides by the rates that are set by the central bank of each country especially for developing countries. The taxes, loans rates, savings interest rates and investment rates are all decided according to the rates that are set by the central bank if every different country. RBC like every other banks, depends on the word of mouth promotional strategy and entrepreneurial collaboration.

RBC is a global bank which operates in Canada, the United States and 56 other countries like Argentina, India, Chile, New Zealand, Panama, Vietnam and others. RBC has concentrated on an excellent growth strategy which is realized from its presence in many different locations around the globe. In the year 1882, RBC opened its first ever international branch in Hamilton, in Bermuda. They sold the branch in 1889 to The Bank of Bermuda. They next opened a branch in Havana, Cuba in the year 1899 and by the year 1925 have already established 121 branches in the area. In the year 1907, they opened its first branch in Puerto Rico to participate in the existing sugar trade which was occurring between US and Puerto Rico. They opened several other branches in many areas throughout the years such as in London, Jamaica, Barbados, Dominican Republic, Grenada, Antigua, Dominica, St. Kitts, Nevis, Montserrat, Tobago and many others. In the year 2000, RBC added North America as the key to their strategic expansion. They became one of the largest international trust companies in the Channel Islands. In the year 2006, the Life Insurance Company of RBC opened a representative office in Beijing, China. Their latest venture had been to acquire thePrivate banking business of Coutts of Latin America, Caribbean and Africa.

References

Almazora, L. (2016, November 3). RBC stands by profitable cross-selling strategy. Wealth   Professional. Retrieved from https://www.wealthprofessional.ca/news/rbc-stands-by-       profitable-crossselling-strategy-216477.aspx

Anderson, D. (2018). Cases and exercises in organization development & change. 2nd ed. Los      Angeles: SAGE.

Beyhaghi, M., D’Souza, C., & Roberts, G. S. (2014). Funding advantage and market discipline in the Canadian banking sector. Journal of Banking & Finance, 48, 396-410.

Dawson, P., & Andriopoulos, C. (2014). Managing change, creativity et innovation. 2nd ed. Los      Angeles: SAGE.

Devereux, M. B., & Yetman, J. (2014). Capital controls, global liquidity traps, and the international policy trilemma. The Scandinavian Journal of Economics, 116(1), 158-189.

Galbraith, J. R. (2014). Designing Organizations: Strategy, Structure, and Process at the      Business Unit and Enterprise Levels. (Third Edition). Jossey-Bass.

Kroes, J. R., & Manikas, A. S. (2014). Cash flow management and manufacturing firm financial performance: A longitudinal perspective. International Journal of Production Economics, 148, 37-50.

McShane, S., & Von Glinow, M. (2013). M Organizational Behavior. New York, New York: McGraw-Hill/Irwin.

RBC Global Asset Management invests $20 million to establish in-house Innovation Lab. (2017, June 28). Retrieved from https://www.rbc.com/newsroom/news/2017/20170628-gam innovation-lab.html

Rogojanu, A., & Badea, L. (2014). The issue of competing currencies.

Royal Bank of Canada. (2018). 2017 annual report of the Royal Bank of Canada. Retrieved from https://www.rbc.com/investorrelations/pdf/ar_2017_e.pdf

Royal Bank of Canada. (2018). In Wikipedia. Retrieved June 10, 2018, from htps://en.wikipedia.org/wiki/Royal_Bank_of_Canada

Royal Bank of Canada. (2018). RBC Environmental Blueprint: Policy, priorities and objectives. Retrieved from https://www.rbc.com/investorrelations/pdf/ar_2017_e.pdf

Thompson, P.J. (2016, June 8). Royal Bank of Canada eyes new tech talent with ‘innovation lab’ launch in Silicon Valley. Financial Post. Retrieved from             https://business.financialpost.com/news/fp-street/royal-bank-of-canada-eyes-tech-talent- by-opening-innovation-lab-in-silicon-valley

Tomlinson, K. (Apr 06, 2013). RBC replaces Canadian staff with foreign workers. CBC News. Retrieved from https://www.cbc.ca/news/canada/british-columbia/rbc-replaces-canadian- staff-with-foreign-workers-1.1315008

Zubairi, A. (2017, March 3). Report: RBC, Scotiabank Leading Banks in Canada For Embracing FinTech Innovation. betakit. Retrieved from https://betakit.com/report-rbc-     scotiabank-leading-banks-in-canada-for-embracing-fintech-innovation/