What obstacles does CIBC need to overcome to fully develop “relationship banking?”

Question

What will be an ideal response?

Answer 1

As noted above, CIBC’s management has charted a new course but the “ship,” composed of a number of separate divisions, an extensive banking network and over 40,000 employees, is difficult to move. This is not surprising, considering the size, complexity, and previous strategy of the CIBC (and probably the other Canadian banks). The steps the CIBC needs to take to overcome the obstacles include development of an information system that allows any division that may have customer contact to see a customer’s financial profile, better communications across divisions regarding their initiatives, improved structure of divisions, improved coordination of division initiatives through the branches (internal marketing), and, in general, a better understanding of “relationship banking” by all bank personnel.
Considering the Consumer Credit Division (CCD), it needs to consider more carefully what initiatives add value for the customer (note that the campaign initiatives for “We’re Changing the Loan Experience” were not pretested, nor was their effectiveness measured), work more closely with branch personnel (internal marketing) in the design of initiatives, and consult with other divisions concerning CCD’s plans and their plans. As well, CCD should probably establish criteria to evaluate any initiatives they are considering.
To elaborate, CCD did no market research in designing the promotional initiatives for the past campaign. The “brainstorming” session led in initiatives that may or may not have worked but CCD doesn’t know because customer response information was not collected. While Bankware was judged a success based on the number of disks handed out and copied, no information was collected on how customers used Bankware, or whether it led to more business for CIBC and a “stronger” relationship with the customers. While two focus groups were used to evaluate Bankware II, CCD has virtually no market information to evaluate the effectiveness of the past promotions. The consequence is that any future promotions will be based on internal “guesses” until market research is conducted.
The lack of internal marketing was evident in the mixed reaction to Bankware II at the branch level. Apparently, CCD assumed that the branches would be eager to “market” Bankware II to their customers. As well, the change in the operating system at the branch level (which illustrates a major communication problem within CIBC’s divisions and functional areas) precluded the opportunity for customer demonstrations of Bankware II at the branch level. This undoubtedly had a negative impact at the branch level.
The lack of criteria to evaluate promotions is apparent at the meeting. The participants are not clear about the target, the purpose, or the direction that Bankware III should take. In particular, the simplistic segmentation and the unresolved issue of what segment to target create problems in deciding on any future course of action. CCD needs to adopt a more market-oriented approach for their programs (e.g., customer analysis, segmentation, identification of attractive targets, etc.). A first step could be to establish criteria to evaluate promotions.