Royal Bank of Canada innovates from the inside out
Back in 2016, Royal Bank of Canada (RBC) launched its first native mobile app. Despite being the largest bank in Canada, its app ranked as the seventh most popular among the big five banks. To address this, not only did the bank have to innovate better, it had to fundamentally change the way it innovated.
I recently caught up with Peter Tilton, chief digital officer at RBC, to hear how things have evolved.
A new way of working would be needed to increase speed to market and stay ahead of competition. Client expectations are still rapidly changing at a time when banks are increasingly being compared to non-traditional competitors like big tech firms. As consumer interest in digital banking solutions grew, RBC’s confidence in using them grew, too. The bank’s technology infrastructure was inflexible and consisted of several different platforms across the business. This meant solutions delivered were creating inconsistent client and staff experiences and slowing solution releases and upgrades. RBC was spending too much time prioritising and funding hundreds of small projects for what felt like incremental gains.
Over the past five years, RBC has been transforming the bank’s five business lines to ensure digital relevance, while also focusing on building an agile culture to compete with more nimble emerging competitors like big tech and platform players. It has changed the way it works, moving from waterfall to agile. The bank has adopted design thinking and continuous client and adviser feedback by doubling down on the partnership between business and technology. It delivers value through frequent iterations, which increases speed to market and reduces risk: fail fast, fail small.
New single stack
Moving to a single stack infrastructure has also helped RBC structure its transformation around customer journeys and building reusable components for both advisers and clients that they can scale across all channels. This strategic approach, centred around customer journeys and the introduction of agile, has fundamentally shifted the cadence of the bank. It has moved from bi-monthly releases to 7–12 releases a day, underpinned by over 100 agile squads working on mid-tier services, browser and native client experiences.
“Before, we had to push and fight for more digital innovation, but now we have reached a point where innovation is self-perpetual, everyone sees the value it creates.”
Peter Tilton, chief digital officer, RBC
As you move along the spectrum from digitising transactions to digitising advice, the book value of digital solutions increases as clients complete more complex transactions, like corporate credit and home lending. There’s also opportunity to streamline complex operational processes with straight-through processing, helping drive down cost and time to serve. In addition to the direct business benefits, the complexity of the challenge may have also been what was so attractive for RBC. Given its scale and size, if it could get this right, the bank believed it could be a significant competitive advantage, one that would be very difficult for a fintech or smaller bank to replicate.
An example of digitally driven advice was the launch of NOMI. NOMI Insights helps clients manage their everyday finances by providing timely and personalised trends, alerts and overviews based on spending and saving habits. NOMI Budgets helps clients by taking the thinking, and the manual calculator work, out of setting up a budget. It takes a close look at a client’s spending and recommends a personalised monthly budget based on their habits. Since launch, more than 850,000 clients have set 1,500,000 budgets. NOMI Find & Save uses predictive technology to find money clients can spare and automatically sets it aside for them. Clients using this feature have saved on average about $308/month, adding up to about $3,700 per year.
Having changed the way it innovates and subsequently claimed the top spot as the nation’s favourite banking app, and in the process successfully digitised everyday banking and simple sales like payments, balances, insights, nudges and self-managed account opening, the bank is now focusing on further digitisation of relationship and advice, in both automated and adviser-led experiences. RBC believes it could reach 98% in digital self-serve transactions and a digital sales mix of about 50% in the next few years.
About the author
Christer Holloman is the author of How Banks Innovate (published by Wiley) and writes for FinTech Futures about innovation and diversity within financial services and fintech.