Who are we? The National Bank of Canada is an incorporated group that offers an inclusive financial service to clients. Its customers are small, medium-sized firms and big corporations that are in the major market of the bank while providing special services elsewhere around the globe. The NBC offers a full range of services such as corporate, and investment banking in this sector. Moreover, it is considered as an active player on the world markets. What do we do? The bank participates in the brokerage of securities, management of wealth, the mutual fund and the retirement plan arrangements as well as insurance through its subsidiaries. NBC is number six in Canada regarding size with over 2.3 million personal customers. On the other hand, it is the leading financial institution in Quebec where it is considered as the partner of choice among the Small Medium Enterprises (SMEs). Additionally, its branches are almost in each province of Canada with several representative offices, partnerships, and affiliates. Consequently, this bank is capable of serving clients in U.S, Europe, and other parts of the world.
The headquarters of the bank is in Montreal, Quebec. Furthermore, the bank has a network of over 450 branches with 930 banking machines in Canada (National Bank of Canada - Complete profile, 2016). The NBC has assisted several organizations across Canada in particular through its donations, sponsorship programs, as well as the initiatives of its workers. The bank focuses on the four key areas concerning its operations; health, culture, education, community outreach, and arts. The aim of the above emphasis is to create positive bonuses for the societies.
The vision for the National Bank of Canada (NBC) is to deliver an ultimate experience to the clients through simplicity and value delivery. In accomplishing this vision, the bank decided to replace the silos with a single, integrated, and powerful customer relation management solutions. Moreover, the bank is seeking to attain its vision through and enhanced and integrated process alongside technology that can break down the silos. Therefore, it wanted to fulfill the need, and expectation of its customers in a consistent manner irrespective of their entry point into the bank. Consequently, with almost 20,000 workers and about 450 outlets, the National Bank is providing a work environment that is open and transparent to encourage both personal and professional growth through the ongoing development programs and the wide range of employee benefits, and banking privileges.
The mission of the NBC is more about the detection of the opportunities while making it a priority. Therefore, through interaction with a business partner, the bank can enable its clients to grow their books of business in a holistic manner to solidify the relations between the bank and the customers. That is the National Bank is struggling to offer personalized expert advice to the clients in support of their businesses for them too to meet the needs and concerns of their clients.
The key financial aim of the NBC is to deliver the ultimate experience in the banking sector. Since it is the sixth largest financial institution in Canada and the leading bank in Quebec, it holds over 40% of the market share. Moreover, it has been part of the fabric of life for over 15 decades in business. According to the Bloomberg Magazine, it was named the strongest bank in North America and the third resilient bank around the globe. The NBC provides a complete range of banking services such as mortgages and other forms of loans to people and institutions.
The major strategic plan for the NBC is more about serving one client and one bank. With this strategy, the bank has resolved to deliver the decisive experience to its customers. However, the main idea was to redefine the value of clients and their propositions. Moreover, the provision of the best customer service is very vital for the National Bank of Canada. However, the legacy of the software in place to support the origination of the mortgage is the greatest challenge in the provision of quality services. That is the six channels of sales that are being offered by the bank gives six different loan officers. Moreover, the application of the silos and the manual processes led to delays and errors, and these were not welcomed by the clients particularly when they needed a smooth and straightforward experience when they were making the greatest investment of their lives.
Regarding the unified customer experience, the national bank began the execution of its strategy in 2008 to breakdown the silos. The aim was to ensure that the customers get level services that can fulfill their wants and expectation nevertheless their entry point into the bank. While resolving the issues of inadequate IT systems, the bank decided to put together a modernization project team. They began to define the requirements of the business to a detailed degree. For instance, they considered all different scenarios of the customers where they set a customer experience matrix.
The team imagined what the customer experience should be especially at the request of a mortgage, loan or account opening. Therefore, the team was able to start looking for new solutions that can meet the needs of every client. During the early stages of the project, the bank did not customize the SAP CRM to fit the existing process. But they restored the way they conducted the business to allow for the conformation of the best practices of the practices. According to the bank managers, their approach was to modify their thoughts and see if the solution is good and leverage it as much as possible (Internet Banking Solutions for Businesses Demo | National Bank of Canada, 2016). Therefore, the style made it simple to standardize and integrate the processes all over the bank branches. It was later simplified for the customers of the bank to speed and increase banking efficiency.
The National Bank of Canada did not wait for a long time before it started to see the benefits SAP would bring during the implementation. The bank realized that the cost of administration, processing, rate of error would reduce, and the influence of customer satisfaction would be necessary. Consequently, the bank looked forward to sales increment since SAP CRM will provide the sales team with a quick and simple access to each asset in the portfolio of the bank. This will make it easy for the NBC to practice cross- sales as they up-sell the surplus products and services to clients as they work with them on their mortgages.
The consequences of technological change made the bank be in its full deployment mode and about 335 of its branches are currently running on SAP CRM. Similarly, over 1500 employees have processed at least 4,000 mortgage files as per the new solution. This was the b biggest change for the workers in the sense that they felt the benefits of time savings. Additionally, they are capable of assisting clients in different ways as they spend more time to understand their needs while making additional sales. For example, there was almost an improvement of 173% in cross-selling rates for credits and 65% on cross-selling rates for credit cards. The mobile sales force of the bank were the next people to apply the use of SAP CRM. This took the advantage of the mobility of the firm and remote connectivity technology from SAP. After this, the private banking channel of the NBC that is serving the richest customer will begin to apply the solution. Therefore, the NBC has several opportunities for expansion to value their new solution into additional forms of personal lending even after covering all forms of mortgages.
The PESTEL analysis is the framework that is applied by the marketers during the analysis of the external environment that may have an influence on the company (Berry, 2015). The results are used to ascertain threats and weaknesses during SWOT analysis.
Political
The National Bank that is based in Montreal made a disclosure in May 2016 concerning the write-off of its equity interest in Maple Financial Group Inc., the Canadian parent bank in Germany. The event occurred after the financial watchdog in Germany closed the units effectively for the allegation of tax irregularities. In exclusion in this write-off plus other extraordinary items, the proceeds from the first quarter of the bank were above the expectation of the analysts. Consequently, it became the second largest bank in Canada to make better reports more than the expected results in the earning seasons within the headwinds impersonated by low prices. The Maple Bank was closed by the German watchdog, BaFin and this was followed by taking hold of control of the NBC branch in Germany, and the court in Ontario granted an order of winding up such operations. The National Bank has been the lender to the energy segment that has faced a hard hit by the collapse of the prices of oil. Consequently, the provisions of the bank regarding the credit losses was set aside to cover bad loans of about C$63 million during the first quarter of 2016. However, this was slightly above that of the fourth quarter in 2015.
Economic
The acquisition of the TD Waterhouse in 2013 made the National Bank to sign one of the greatest conversion of asset particularly to the Canadian financial history within a period of seven months. This approach made the bank and its corresponding network be the leading provider of brokerage, trading, settlement, and record keeping services for the recognized and independent portfolio managers, custody, and clearing; thus, introduction of brokers
The NBC made an additional investment of over US $100 million to acquire the controlling interest in ABA Bank. Initially, the National Bank had purchased a 10% interest in Advance Bank of Asia (ABA) two years ago. Therefore, it made subsequent investments that brought its stakes in interest to above 40% in 2015. Currently, the NBC holds 90% interests in ABA Bank, and it has made investments of US $ 140 in ABA Bank as a measure of its global growth strategy in building a high growth in the emerging markets.
In the fiscal year 2016, the national bank believes that the ABA Bank will add $0.17 to its diluted earnings per share. This will represent a gain in the revaluation of its previous investments. Therefore, the transactions will make the common equity ratio of the bank reduce by 18 basis points in the third quarter during the fiscal year 2016. Moreover, the NBC is targeting a common equity ratio of 9.7% in approximation towards the end of the third quarter. On the other hand, the bank does not expect any significant investments in international levels within the next one year to enable it to focus on the consolidation of the existing operations.
Social
The NBC is acting continuously in driving the social developments. For instance, it is firmly committed to the promotion of entrepreneurship. Additionally, it supports several organizations and different initiatives, and this helps it to forge ties especially between education and the private sector. Besides being strong advocates for the progress of women, the NBC is committed to the diversity of cultures. The National Bank is taking action because the integration of strangers in Canada is obtained not only through education and family but hard work. Therefore, about 40% of the bank employees originate from different cultural communities. According to the policy of the bank, it will continue to champion for diversity over the next years. Moreover, the dimension of human beings will remain the major differentiating factor in the banking sector particularly in the context of technological change.
Environmental
The sustainability of the environment is the key part of the NBC towards the effort of corporate social responsibility. It has established policies, goals, and practices concerning the environment to help in guiding the inside and out activities of the bank. Therefore, the environmental thinking has been incorporated into a range of the operations of the bank, product and service lending, and community undertakings. The activities of the NBC ranges from the participation in the conservation advantages in the society across the country, Canada to commitments to organized domestic and international standards and agreements of reporting (About Us - Social Responsibility of National Bank, 2016). In conjunction with other five biggest banks in Canada, the NBC have committed to the Principles of the Equator, the global benchmark for social and issues of the environment in project financing. Consequently, most banks in Canada have received recognitions for their achievements in the field of environment.
Legal
The German Federal Supervisory Authority, BaFin suspended the business activities of the Maple Bank in the sense that it will no longer undertake its business operations in Montreal as at February 2015. These events led to investigations by the German authorities in September 2015 focusing on the selected trading activities by the Maple Bank including its present and previous employees during the taxation period of 2006-2010 (Trichur, 2016). According to the allegations of the authorities from German, these actions violated the tax laws. However, both National Bank of Canada and its employees did not take part in these trading activities. Therefore, no employee was the subject of such allegations. Similarly, the NBC advised the German authorities that in case the received dividends from the Maple Bank reasonably led to tax fraud, then the amounts should be repaid to the relevant authority. Moreover, if the repayments are needed, they should not be material to the National Bank.
Five Forces Analysis
Threat of new entry
The new entrance to any industry leads to a new capacity and the desire of gaining the market share (Porter, 2008). For the NBC to remain relevant, it is investigating the big currencies especially in products that are rivals to those that are being dreamed by the stars of Silicon Valley. Moreover, the bank is also working on an overtime basis to look for the cutting edge. It also develops the characteristics of biometric identification since the perception of the market is crucial.
The power of suppliers
The Bank is proud to provide the accounts receivable financing initiatives to the SMEs that is personalized to their needs. Since the NBC is the leader in receivables in Canada, it has offered financial support to comprehensive businesses that are growing rapidly into domestic and international sales for a decade. The bank’s specialists have customizable solutions aimed at improving the receivable management, and liquidity of the customers to assist in the growth of the business.
Rivalry
In Quebec, the main business of National Bank has been more about customer lending. However, Quebec is a province with lagging economic growth than that of Western Canada. Out of 451 branches, 339 are based in Quebec while the rest are in Ontario and New Brunswick. The NBC is the sixth largest asset lender in Canada. However, its retail banking reached through the agreement of 2000 with the Power of Financial Corporation Investors Group, and the London Life units. This deal permitted the bank to provide loans, credit lines, credit cards, and deposit accounts through the network of the above companies.
The presence of the National Bank in both personal and commercial banking keeps it strong in Quebec, but this province has never experienced the highest growth in Canada. Therefore, the efforts for diversification that ranges from wealth management and wholesale banking outside Quebec is clear. The national bank has been aggressive in lending especially in the oil patch, one of the strong areas in the capital markets in Canada. Energy sector plays a great role regarding the growth of the bank in the corporate and commercial lending. Additionally, the NBC has been the top coordinator of debts for the provinces, municipalities, and even the agencies of the government in Canada. This made it win more decrees outside Quebec. It also arranged for the debt deals for the British Columbia, Ontario, and Alberta in 2015.
References
About Us - Social Responsibility | National Bank. (2016). Nbc.ca. Retrieved 20 May 2016, from https://www.nbc.ca/en/about-us/social-responsibility/our-social-commitment.html
Berry, E. (2015). Pestle Analysis Essentials. Create Space Independent Publishing Platform.
Internet Banking Solutions for Businesses Demo | National Bank of Canada. (2016). Nbcmore.ca. Retrieved 20 May 2016, from http://www.nbcmore.ca/ibs-businesses/
National Bank of Canada - Complete profile - Canadian Company Capabilities - Industries and Business - Industry Canada. (2016). Ic.gc.ca. Retrieved 19 May 2016, from http://www.ic.gc.ca/app/ccc/srch/nvgt.do?prtl=1&estblmntNo=123456006487&profile=cmpltPrfl&profileId=501&app=sold&lang=eng
Porter, M. (2008). The five Competitive Forces that Shape Strategy. Harvard Business Review.
Trichur, R. (2016). National Bank of Canada’s Profit Falls on Maple Bank-Related Hit. WSJ. Retrieved 19 May 2016, from http://www.wsj.com/articles/national-bank-of-canadas-profit-falls-on-maple-bank-related-hit-1456236512
