What is the digital landscape like in Canada at present?
Christopher Higgs: Canada is a couple of years behind the UK in areas such as open banking. The number and reach of start-ups in the space hasn’t hit quite the same level. But open banking is certainly coming to Canada and we expect to see a proliferation of start-ups over the next 12 to 24 months.
Consumer appetite for anything that eases the banking experience is high. Nobody gets up in the morning and wants to do banking. Anyone who can make this easier therefore has an opportunity to win business, which is what we’re trying to do.
RBC has actively embraced digital transformation. What are the biggest benefits you’re seeing from your approach?
C.H.: We’ve taken a very consumer-centric approach to our digital developments – so client in, rather than the traditional bank out method. The focus is on understanding both our end-clients’ as well as our branch and contact center employees’ pain points and solving those.
As part of our program we created an incubation team, which conducts a lot of client research and solicits feedback before we kick off any new workstreams. This way we understand the client mindset and their pain points. As we get into the development cycle, the developers then listen to client interviews so they’re better equipped to make suggestions around how they can solve those problems from a technology perspective. To add to this, a data squad feeds back information on client adoption and utilization, which influences subsequent rollouts.
Thanks to this customer-centric focus, what we are building is landing really well with clients. For instance, we’ve transformed the account opening process. A year ago, a client had to sit with an advisor and click through about 45 screens, which took 45 minutes. It now takes on average 11 to 12 minutes. Client engagement is much higher, and advisors have time to discuss with clients their other needs and how they can take advantage of what we offer.
The second big benefit is speed to market. We’ve adopted a more agile methodology, with a shift towards persistent development teams, co-location of business and tech so they work side-by-side, and automated build and testing. Code can now go into production in hours or days, rather than weeks or months, making us far more flexible.
Why is it so important for retail banks to implement a digital transformation program?
C.H.: Customer preferences are changing rapidly. Clients no longer compare us to other banks. They compare us to the last great digital experience they had, whether it was with one of the technology platform companies or a fintech start-up. We need to meet that bar. And clearly the competition won’t wait.
In the next one to two years, the risk of losing market share is probably not that high. But banks that don’t take on this challenge now and adapt to consumers’ changing expectations face a very material threat they won’t exist in five to ten years, especially as barriers to switching banks continue to fall. So either we disrupt ourselves, or at some point we will be disrupted by somebody else.
Where are the biggest challenges for banks in digitalizing their offering? How did you overcome those?
C.H.: RBC is 150 years old. We’re a large bank, with 80,000 employees. While such scale and history provide many benefits, they bring a certain amount of organizational drag. But we’re not alone in this, other retail banks around the world face a similar challenge.
Through our program, we’re building the next generation of retail RBC bank from the inside out. To do that, we have to change our existing processes, technology and how we work. Inevitably that creates friction points but strong progress is being made.
Having a core team of 200 to 300 people focused day in and day out on our agile transformation program is making it easier to achieve escape velocity as we adopt new ways of working. For instance, some roles are focused on communicating with other areas of the organization to help them understand what we’re trying to do and how it is different. We work with those teams to create new processes that meet their desired outcomes in terms of safety, soundness and so on, but at a pace that supports our program.
Our go-to-market documentation is a case in point. Historically, we completed the documentation whenever we implemented something into production. That works with an online banking application that goes out to production eight times a year. But we went to production 17 times last week. Working together across the organization to streamline the approach allows us to move faster, while ensuring the bank’s safety and integrity is maintained.