Canadian

Imperial

Bank of
Group No 10
Commerce
Golap Banerjee (46)
Anshay Nagda (47)
Sheetal Munden (108)
Bindu Mishra (110)
Ankit lodha (176)
Shilpa Sharma (179)
the Industry
•Canada’s Banks had assets over $ 777 bn.
•9 domestic chartered bank
•51 foreign bank subsidiaries
•
Top 3 banks
•Royal Bank of Canada
•
•CIBC
•
•Bank of Montreal

Royal CIBC Bank Montreal

Assets Bank
173,079 151,033 138,175
Deposits 135,815 115,462 98,241
Loans 115,386 99,938 88,634
Net 1,169 890 825
Income
About CIBC (Canadian imperial bank of commerce )

•125 years old bank.

•North America’s 5th largest bank

•Provided financial services to 6 mn. Canadian customers.

•1428 branches, 2887 (ABMs) & 40800 full time personnel.

•2nd largest financial institution in Canada.

•CIBC LinkUp, CIBC Contact & Commcash like services

were launched.

•After the recession CIBC’s income grew by 2 2%

•
Banking during ’90

•Online banking system emerged

•Consumers wanted quick, cheap & accurate services.
(Unprofitable)
•Additional services required for customers associated with
complex banking needs, investment counseling & asset
management services. (Profitable)
•Average Canadians dealt with 2.2 banks. (study reveals)
•26% - 1 bank
•37% - 2 banks
•37% - 3 banks
•Different discounting schemes were launched.
How CIBC competed

•Change in Corporate Strategy

•Relationship Banking
•Customer Segmentation

Relationship banking

Providing integrated, tailored packages to clients and households rather

than encouraging product focused marketing

Customer Segmentation
•Customer who valued convenience
•Customers whose banking needs caused them to, value personal
services.
Consumer credit division

Location : Toronto

Total staff : 120 employees

Departments : 6 consumer loan deptt.

Vice President : Pat Skene

Product sold : 106 different products

3 most important : i) Personal Loans (22.5% of Canadian Mkt.)

ii) Personal Lines of Credit (17.0% of Canadian Mkt.)
iii) Overdraft protection
Problem faced during recession

•Focused strongly on marketing credit products

•Lack of sophisticated risk management tools
•Lack of assessment tools accessible to branch staff
•Arrear, Delinquent & loan write-offs were having significant impact

Probable Solution for the problem

•Credit policies need to be revised in a better way

•Better risk management tools need to be develop
•Short term credit guaranteeing should be tightened
•Reduce extending loans of marginal quality
The New Campaign

Previously the bank staff were ordered to follow stringent norms

while allowing credit. But post 1992 appropriate system, policies
and controls were in place to meet customer’s credit needs

3 things were needed to revive :

•To disseminate the new approach throughout the organization

•To explain the new software.

•To find ways to differentiate CIBC products from competitors

How did CIBC differentiated their products

1.Roadside Assistance
2.
3.Discount Coupon for Loans
4.
5.Bankware C.
6. I .B
.C
7.An Informational Booklet
8.
9.Free VISA Classic card for a year or Free CIBC LinkUp for a year
10.
11.The “valued customer” Portfolio
12.
13.The last payment (Up to $500)
 Bankware (I)

•Created by : Interactive Media

•
•Idea came : Wells Fargo
•
•Contents : CIBC loan, Mortgage & other Credit Products
•
•Financed by : Consumer Credit
•
•Total Cost : $250,000
•
•Introduced on : 1993
•
•Promotion : Globe & Mail (national newspaper of Canada)
•
•Produced & distributed : 144,000 copies

BAN
KWA
R E
I
Bankware (II)
•Total Cost : $ 250,000
•
•Contents : Deposit Accounts, Investment, VISA, Mortgages,
Mutual funds & Loans.
•
•Participants : VISA, CIBC Wood Gundy, etc.
•
•Launched in : September 1994
•
•Extra features : 1) Ability to print personalized mortgage
amortization tables and to compare cash back car
offers with discounted loan interest rate offers.

2)A section was developed where children could

explore the services offered by major banks.

3)It allowed customers to learn, explore, compute

E
WAR make decisions and print any information related to
A NK CIBC.
B
II
•Production : 150,000 English & 25,000 French copies
BANKWARE (II) continues……

•A focused group discussion took place. The banks were informed that they
should charge a fee of $15 for Bankware II, in order to increase the
perceived value to the customers. But it was disagreed by Bank Officials
•100 free copies were given to the branches and for any extra copy $0.50 were
charged.
•The bank staff was recommended to install Bankware I so that they may help
the customer to show how it works.
•No free copies of Bankware II were given.
•85,000 copies of Bankware II were ordered by the bank staff. But it was clear
after 1995 that they are not ordering due to the nominal fees that were
charged for each copy. They removed the $.50 charge and overnight 41,650
were ordered.
•80% of the Bankware diskettes were distributed among the customers
•Bank Managers kept those diskettes in their drawer and distributed upon
request
•At one Toronto branch they were not given as free samples because the
manager thought that they were taken in bulk .

•
Strengths

ØCustomer oriented services –

•
• Personalized service for customers having more complex banking
needs
• Convenience for transaction oriented customers

ØQuality, service and personal relationships with its customers

•
ØExcellent Corporate strategy based on concept of relationship banking and
customer segmentation
•
ØPersonal bank representatives were available in every branch
•
ØAdvertising and promotions supporting their corporate strategy
•
•
•
•
Strengths continued …

•
ØUse of software which could determine the profitability of each client
and even identify clients who were good candidates to approach about
investment or lending opportunities

ØBranches had total price discretion on loans

ØNew campaign to change the loan experience had differentiating

elements.

ØBankware showcased wider range of product and services available

from CIBC and allowed customers to learn explore ,compute ,make
descions and printout informations on any products and services of
CIBC.
Weaknesses

ØOut of 106 products offered , average customer was aware of only 3

products.
•
ØThe whole responsibility of Bankware II was levied on consumer credit
division.

ØBank was not able to formulate proper distribution system.

•
ØStatic nature of Bankware did not allow it to reflect the new innovations
and campaigns developed in consumer credit department and elsewhere in
the bank.
•
ØBankware II could not be loaded at the branch level and customers could
not be shown how to use it because only softwares developed or supported
by theinformationsystem division was loaded on the network servers.
•
ØThey did not know from where they were getting the best bang for the
buck.
•
Opportunities

Ø 37 percent Canadians who were multiple bank users could be

targetted through personalised services.
•
Ø Keeping in mind the leading edge of technology they have the
opportunity to bring revolution in banking industry of Canada.
•
•
Threats

ØBank of Montreal was close third thus it may pose a threat to its
position.
•
ØBecause of similar type of products offered in the banking industry
there was always a threat of losing customers to competitors .
•
•
•
•
•
•
•
WHAT TO DO
NEXT
Whether to develop Bankware III or devote resources elsewhere

•Additional special features

•RSP (new) to target old age segment
•Comparative interest rate structure
•CD-ROM – Perceived Value
•GUI Supported
•Can be loaded in server
•Other departments of CIBC actively involved
•Reasonable price for complex customer
•Multi billion dollar banks ,No problem with cost
•
•
Is it worthwhile developing Bankware III? Should it aim at plannin
the financials for customers who heavily depend on CIBC?

Reasons :

•We are in favour of developing Bankware III and providing it at

a price of $ 15 (say) that itself means our target customers will
tend to become customer having complex needs.

•The fact that convenience customer are transaction oriented

because they look for quick, cheap and accurate transactions
If resources are developed elsewhere, what are the value added
initiatives that can be taken care of instead of Bankware III.

Resources can be devoted to develop a system which could have

allowed customer to have direct access to the network.
•Updation of Bankware II with new innovation & campaigns
•Processing becomes faster
•Less burden on relationship banker which leads to greater
efficiency

development of a relationship focused approach to banking :

•Incentives for Relationship Bankers in order to increase

level of dedication
•
Financials

Roadside Assistance Cost - $ 25

½ off coupons+ thank you brochure - $ 0.35
Credit wise booklet - $ 0.95
VISA Classic Card - $ 12
Free LinkUp - $ 2.25
The Valued Customer Portfolio - $ 5.50
Total - $ 46
Say , average no. of people - 150,000
Total Cost - $ 6,900,000
Bankware - $ 250,000
$ 7,150,000