RBS Strategic Customer Engagement Report: Analysis & Strategies

This report provides an in-depth analysis of RBS's customer management practices between 2008 and 2016, focusing on the treatment of Small and Medium Enterprises (SMEs). It draws upon the Tomlison report, a review by Clifford Chance LLP, a Financial Conduct Authority (FCA) s166 report, and various articles from financial publications. The report highlights the mistreatment of SMEs through practices such as reassessing loan-to-value ratios, imposing technical covenant breaches, and altering banking facilities. Furthermore, it proposes a strategy for RBS to rebuild trust and engage effectively with its SME customers, utilizing the Schema Model to enhance customer engagement by focusing on direction and leadership, data and IT management, culture, and competencies. It also emphasizes the importance of developing a new value proposition that addresses the specific needs of SMEs, such as access to capital, financial advice, and decision-making guidance, ultimately aiming to foster brand loyalty and improve customer relationships. Desklib provides access to this and similar solved assignments.

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1. Introduction
The purpose of this report is to provide an analysis of how the UK
Government can turn RBS into a genuine customer-centric bank. In October
2008, the RBS was bailed out by the UK Government with nearly £50 billion. It
was as a result of the organisation’s disastrous lending and overpaying for the
acquisition of Dutch bank Amro. Since this, RBN has been publicly criticised
for the way it treated Small Medium Enterprises (SME) during ‘dash for cash’.
Therefore, this report will provide an analysis of how RBS has managed its
SME customers between 2008 and 2016. It will be based on the Tomlison
report, a review by the Clifford Chance LLP, s166 report commissioned by
Financial Conduct Authority (FCA), Articles published in the Financial Times,
Economist, Daily Telegraph and a talk given by Neil Mitchell, former CEO of
Torex Retail. Then, the report will provide a strategy to enable RBS engage
with and build trust of its SMEs customers.
2. How RBS has managed its customers between 2008 and 2016
After the discovery of how RBS mistreated SMEs customers, there was
tension in the banking industry. A bank should be a place of growth and
development for SMEs. Instead, RBS used it as a platform to practice
turnaround division thus trapping businesses.
While giving a talk in one of the local universities, Neil Mitchell, May 2018,
said that the RBS scandal had angered so many customers and it had ruined
its reputation. Similarly, Lawrence Tomlison compiled a report on the details
on bank lending practices. He collected evidence from business that had been
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mistreated by RBS. The report focussed on treatment of businesses in
distress. It provides that there were circumstances within the RBS that
unnecessarily drove businesses out of local management into the turnaround
divisions (Tomlison, 2013, p. 11). Consequently, the businesses experienced
devaluation of assets, generation of revenues through fees, and increased
margins.
According to the report by Clifford Chance LLP, RBS managed to drive
businesses into distress in three main ways. First, it reassessed loan to value
ratios. It was based on revaluation which depressed the assets of a business
(Clifford Chance LLP, 2014, P. 26). Secondly, it committed technical
covenant breaches. It involved things that had significant impacts on the
viability of a firm like late submission of information and temporary dips in
EBITDA. Thirdly, it changed banking facilities or implemented moves to
finances based on assets.
Similarly, the print media in the country provided an analysis of how RBS
managed SMEs customers. For example, an article written by Caroline
Binham and published on the Financial Times claimed that senior
management of the RBS knew that SMEs customers were deliberately being
mistreated. Further, it claimed that the Treasury should consider assigning
the role of supervising corporate lending to FCA. Additionally, an article
published on the Telegraph by Lucy Burton in 2018 confirmed that Britain’s
small businesses were being exploited hence the need to protect them from
bad banking to avoid scandals like those observed from the practices of RBS
and Lloyds Banking Group.
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3.0. Developing a Strategy to enable RBS to engage with and build the
trust of its SMEs business
3.1. Introduction
In an article published on the Harvard Business Review website, 2010, Rust,
Moorman, and Bhalla explained that the mistreatment of SMEs customers
created an environment of mistrust between RBS and SMEs customers thus
there was a need for banks to rethink the concept of marketing. Similarly,
According to Roger L. Martin, 2010, there is a need for the institution to create
and implement strategies that will persuade SMEs customers to seek its
banking services (Loucks, Martens and Cho, 2010, p.179). Therefore, this
chapter provides an analysis of models that can be used by RBS to engage
with and build the trust of its SMESs. First, the chapter provides an
examination of the Schema Model and the process of developing new value
propositions for RBS. Then, the chapter provides the process of developing
excellent customer experience using three models. Lastly, the chapter
discusses account management, leadership and employee engagement, and
rebuilding trust.
3.2. The Schema Model
Many organizations struggle with the capability to understand aspects of
businesses like people, Technology, Data, Processes, and Policies
(Woodcocks, April 2018, p. 2). The Schema Model is a competitive strategy
used to engage customers through providing relevant experiences and
meaningful information (SCHEMA, 2014, p. 1).
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The integrated modules provide alignment to a common definition and
implications of the customer engagement. The give benchmarked
assessment the status of an organization’s capabilities and what is needed to
experience the benefits of the integrated systems. Also, they give an
organization the potential financial value to achieve its goals and established
an engaged and mobilised team. Additionally, they provide gap analysis and
offer a prioritised roadmap plan that address long-term sustainability plan and
short-term wins.
3.2.1. Foundation factors that enable customer engagement
Sustained incremental profitability is at the heart of the model. It is achieved
by Direction and leadership, data and IT management capabilities, culture,
and competencies of the people. Additionally, the model provides factors that
enable good customer management like how an organization generates deep
customer insight and use it to target activities, the ability of the proposition to
reflect the positioning of the brand, and translation of brand positioning into
concrete customer experience. Additionally, the model provides the nature of
integration of media and channels, and how content is developed and utilised.
After this, the process proceeds to execution through assessing the
customer’s lifecycle of winning, developing and keeping the right customers,
and exploiting the cost of doing this to the optimum levels.
3.2.2. Schema Assessor Benchmarker
It is a tool used by organizations to understand and quantify its current
capabilities to engage customers (SCHEMA, 2014, p. 2). It uses an outcome
set to engage customers and selected through an analysis of specific need
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and sector of the client. All the dimensions of the schema model are covered
in the assessment and the current state of capabilities of the organization are
provided. The main advantage of this process is that it provides a benchmark
for an organization between different business units or against its peer
organization.
3.2.3. Schema Direction Shaper
It is often conducted within the same period with current state assessment. It
provides directions regarding an organization’s future through individually
engaging senior management and collectively engaging management in a
particular meeting setting like workshops. It enables the identification of the
change required through comparing the current state assessment and desired
state assessment (SCHEMA, 2014, p. 3). Also, it stimulates and enables the
alignment of senior stakeholders in a way that empowers them to define the
nature of customer engagement needed according to the requirement of an
organization.
3.2.4. Schema Value Evaluator
It is a methodology used to establish a segmented view of an organization’s
opportunity through behaviour metrics and customer-value sales. It is used to
assess the value of customers lost and those acquired. Also, it shows how
the value of customers grows, and how much an organization spends on
differing customer values. Further, the value evaluator is built on the
information provided by an organization from its shopper panels or
transactional systems. The main advantage of the system is that it enables an
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organization enquire more clarity on the scale of financial benefit and priorities
in different engagement strategies.
3.2.5. Schema Road Map
It delivers transparent and robust recommendations regarding important
capability areas that need to be addressed so that an organization can
achieve financial performance and customer engagement (SCHEMA, 2014, p.
4). Through inputs provided by other models, this tool can test the validity
and provide definition of the current transformation programme.
Shema proof of concept
It involves setting and executing pilots. It requires a careful planning and
considerations of factors like KPI setting, evaluation, agency briefing, and pilot
management. The main advantage of proof of concept is that it helps an
organization to prove the existence of a particular concept (SCHEMA, 2014,
p. 4). Consequently, an organization can redirect and deliver the benefits
seen in the pilot study free of control by the environment.
3.2.6. Assessing RBS Remotely
Research shows that, generally, banks are poor in proactively developing and
retaining customers. They only consider the customer experience as a
channel with specific functions instead of considering the end-to-end
experiences (Ries, Bersoff, Adkins, Armstrong and Bruening, 2018, p. 22).
Assessing RBS remotely involves analysing the organization based on
schema execution, enables and foundation factors.
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In 2016, The Times published an article written by Harry Wilson. It claimed
that RBS was the biggest failure in the banking tests. In 2016, it revised
capital plan because it failed to meet its core equity.
By the time the new chief executive, Ross McEwan was taking over; RBS’s
losses had reached £46 billion. Similarly, in 2016, the Bank of England’s
stress test was conducted. RBS was identified as the main victim (Wilson,
2016, p. 2). Thus, it became apparent that it would be difficult for it to turn
around its performance before the government gets to mark the 10th year
since it bailed out the institution.
From the claims of this article, it is clear that RBS needs to input a lot of work
to satisfy the needs of the customers, attain the goal of shareholders and
increase productivity among its people which can translate to growth.
3.3. Developing a new value proposition
In the 21st Century, the success of a business is based on an organization’s
ability to identify, express and communicate unique and new value proposition
to the target market. The term ‘value proposition’ was coined by Michael
Lanning, 1988, a member of McKinsey & Co consulting firm (DVP, 2015, p.
3). It is a statement explaining the value in a company’s goods and services.
Key elements of Value Proposition
The first element involves identifying the target market. It is the consumer
group that is likely to consume a large percentage of the business’ products
and services. It is important for a business to know its target market to enable
it understand what appeals to them. RBS should understand the strengths,
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weaknesses, and needs of SMEs and help them to achieve their business
goals.
Another element is the specific value being offered by a company’s
products/services. It provides justification of the customer choosing the
services of a particular company against businesses offering similar products.
Value can be offered through providing services at a relatively low price,
saving transaction time, relatively high prices, proprietary technology, and
ensuring that customers cannot access the product/service form any other
source. Therefore, RBS can offer low-interest rates on loans or extend the
payment period based on SMEs revenue generation.
Similarly, value proposition is based on how a company meets the needs of
customers regarding access to finance. It appeals to the emotions of target
market. Consequently, it enables the development of a relationship between
the customers and business thus instilling brand loyalty. SMEs need banks
that can give them access to capital, offer financial advice and consultation,
and guide in decision making. Therefore, RBS can ensure that it has easily
accessible funds for SMEs.
It is important for an organization to communicate the problems solved by its
product and services. A customer only purchases services or products that
will solve a particular problem. For example, it is important that a bank
explains how it will help customers solve their financial planning and
problems.
Also, value proposition involve the uniqueness of a product/service. There
are many banks that can offer similar services to RBS’s. Therefore, it is
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important that the customer is informed on what he/she stands to lose by not
seeking the services of RBS.
3.4. Developing an Excellent Customer Experience
3.4.1. Kano Model
It was created by Noriaki Kano, 1984. He was a professor at Tokyo Rika
University. During that time, many businesses believed that giving customers
more made them happy. However, he did not subscribe to this thought.
Instead, he provided that performance on particular categories result to higher
levels of satisfaction than others. Also, he believed that performance related
to the attributes of services or products vary depending on a customer.
The Kano model is based on identity of the voice of customers (VoC),
translation of the customer voice into critical quality characteristics (QTC), and
ranks of CTQ into satisfier, dissatisfier, and delighted. To get the voice of
customers, businesses conduct Focus Group Discussions, Surveys,
Interviews, customer complaints, and observation.
3.4.2. Net Promoter Score
It measures the level of willingness of a customer to recommend the services
to others. The scale ranges from -100 to 100. It is used to measure the
overall satisfaction of customers and loyalty to the brand (Reicheld, 2011, p.
2). The survey is based on a single-question survey (Altiney, 2016, p. 27).
The customer is asked to use an 11-point scale to rate their likelihood to
recommend the organization to others. Then the results are used to group
the customers into Detractors, passives, and promoters.
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3.4.3. Customer Effort Score
It focuses on customer attention. Currently, it is considered to be the most
predictive and effective measure for assessment of future customer
behaviours. It enables an organization to establish the root causes of
customer detraction (Goodman, 2009, p.22) .The main advantage of this
model is that it provides an insight on the customer’s journey and experience.
Customer Effort Score, Net Promoter Score, and Kano model can all be used
in the banking industry. The sector provides services that heavily depend on
the individual and general satisfaction of the target market. RBS failed to
positively engage SMEs. This hugely cost the institution its reputation and
customer satisfaction. Therefore, by apply any or all of the strategies, it will
improve on how it interacts with customers and assure them of an excellent
experience.
3.5. Account Management
Key Account Management involves all strategies applied to ensure that a
business is customer-centric and enable successful customer outcomes. The
most important element in KAM is relationship. It enables a business to build
an accurate picture to its customers. One of the models used in this process
is the cust review process.
Cust Review process enables a business to gain insight of customers in four
phases: planning, gathering, reporting acting. In the planning phase, the
business sets out the objectives and establishes information needed
regarding the target market. This can help RBS to understand the
characteristics of SMEs and needs.
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In the gathering phase, an organization sets teams to conduct face-to-face
interviews with the customer contacts selected. Thus, RBS should create
teams that will meet SMEs and hold one-on-one interviews with its
shareholders. This will make SMEs feel appreciated and encourage them to
continue doing business with RBS. In the reporting phase, the teams sent out
to interview customers analyse and present their findings to the top
management. RBS could use this strategy to understand the concerns of
SMEs regarding being their customers again even after hearing how other
SMEs were mistreated. Consequently, it will know where to adjust to serve
the customers better. Lastly, the acting phase involves internally and
externally communicating the results. This enables a business to plan and
execute actions at account, individual, and enterprise level.
3.6. Leadership and Engagement
RBS misconduct was a reflection of irresponsibility and conflict of interest in
the top leadership. A business leadership and engagement is based on its
ability to serve customers well, build sustainable value to all shareholders,
and build standalone strength. Through mistreating SMEs, RBS lost the
power to do all these. However, after the 2007-2008 financial crisis, the
organization now considers its employees to be imperative to the success of
the business.
3.7. Rebuilding Trust
After realizing that it had damaged its reputation among SMEs making it hard
for the latter to trust them, RBS hired advisors to look at the treatment of small
business (Tonias et al, 2018, p. 23). This ensured that its response to the
Mark 5053 Strategic Customer Engagement Report 2018