FutureBanker: Royal Bank has more extensive offerings across the spectrum of financial services than American banks are currently permitted. How have you prepared to meet this challenge?
Lippert: Mellon, as far as most U.S. banks go, is probably as far forward on that as anyone, with the Dreyfus acquisition. It recently purchased an insurance company in Pennsylvania. We really looked at ourselves more as a financial services company than a bank.
This move provides some additional scope and scale that frankly I think can really represent some opportunity to make Royal not just one of the premier Canadian banks, but one of the premier North American banks, where we'll be well positioned to really compete with U.S. banks when some of the border issues start to fall and those markets start to open up more.
FB: What are the key hurdles in meeting this objective?
Lippert: When you talk to the business strategy surrounding where the group office at Royal is trying to move the organization, it's really to the concept of a "universal bank," where, from a consumer perspective, any consumer can come to the Royal and get services on any type of financial product or service they might require. And clearly to achieve that business strategy, there's a fair amount of technology that's required.
It starts from the ground up in terms of looking at the infrastructural processes currently in place and whether or not we're going to have to make some changes with respect to things like the underlying messaging systems. (We're) looking at customer databases and integrating those databases so that we have a clearer picture of the consumer and what services they're purchasing from us, what services they might have a need for. So our sales people are able to determine relatively fastowhether by phone or branch networkoexactly what might make sense for that consumer.
We'll probably look at telecommunications costs as they relate to that branch network. We have some relatively low-speed lines that go out to those branches. And as we start to extend some of these technologies further, there's probably going to be a need to upgrade.
Back office reengineering initiatives are going to be an early focus, looking at ways to improve service and drive out some costs.
And to the globalization issue: Two months ago, the Canadian government gave Wells Fargo the "OK" to begin offering some loan products to Canada via the Internet. As that starts to open up more and more, that whole area of competition and U.S. Banks coming north is going to become an increasing concern and opportunity. As they come north, we'll obviously look at some of the Canadian banks moving south. With new delivery channels, you have the opportunity to do that without necessarily having a brick and mortar branch system.
FB: How will your planned infrastructural upgrades improve bank service and responsiveness?
Lippert: When you look at things like bandwidth to the branches, there are a number of things that come into play, like video banking and centers of excellence, where you can drive more aggressively a central competency center where video links communicate with the consumer in the branch so that you don't have to have experts in every branch.
Another issue that comes into play (with regard to branch bandwidth) is check imaging, moving images of the checks back to the branches for customer inquiry, which provides a higher level of service to the consumer.
Speed is another issue. We're thinking about linking the branch sales platform into data warehouses to help facilitate sales efforts. To do that, you need a lot of (bandwidth) speed to get that information flow to the branch salesperson so that the consumer doesn't get impatient.
(In terms of back-office reengineering,) consolidating help desks into large centers always helps to drive costs out of the system and most of the time increases responsiveness to consumers. You can do some things with case-based reasoning tools and artificial intelligence to help speed problem resolution.
And as we talk about becoming an information company, the way we're able to move information around the organization is essential. So making the right choice on (the underlying messaging system) and making one choice is really critical to us.