Case Study 1- CIBC By: Silvia Ghonata (15114679)

1. What are the major challenges facing the Canadian banking industry in general and CIBC in particular? In general, changing preferences of customers is the major challenge faced by Canadian Banking Industry. In the 90's customers preferred the convenience of banking activities. These types of costumers are most likely transaction oriented. They demand banks to provide basic transaction quickly, cheaply, and accurately. Service is not something they expect from bankers. However, now there is a change in customers trends. Nowadays, customers are more demanding towards additional levels of personalized service rather than just convenience. They asking for consultancy service and expect to build "relationships" with their bankers. However, for CIBC itself, changing costumers trend is also a trait that should be noticed. Realizing that the "transaction-oriented" customers are no longer their potential target market, CIBC has to change its strategies to attract "personalizedservice costumers in buying its product. Nevertheless, competition is also one of the challenges faced by CIBC. "Personalized service" customers are the typical of costumer who are very profitable for the company. Therefore, lots of other banks are also targeting their products to this type of customers. Therefore, CIBC must truly be able to distinguish themselves from other competitors so that they will reach a larger market share. 2. What obstacles does CIBC need to overcome to fully develop relationship banking? Relationship banking is a strategy used by banks to offer some additional level of personalized service instead of just selling their product. They encourage bankers to move away from a product-focused marketing strategy and to concentrate instead on providing an integrated, tailored package of banking services designed to meet the needs of individual clients and households. To become a relationship bank, CIBC must change its position strategy. Previously, CIBC had been very focus on products which were sold based on price and product attributes. All the promotions done by CIBC was trying to emphasis on the features of their products. But now, CIBC needs to change its position from product-based to customer-based. CIBC must make sure that its potential customers who valued personalized service are aware that now CIBC offers relationship banking. Changing

the perception of customer is not an easy thing but also it is not an impossible thing. One of the ways is by using advertising that reflect more on personal relationship. The second obstacle that must be considered is the bankers ability. Previously, bankers is trained to have a deep knowledge of their products but they are not trained how to build relationships with customers. When CIBC want to develop relationship banking, it needs to train the bankers to have not only good product knowledge but also to have strong people-oriented focus. The third obstacle is the CIBC banking system. CIBC requires access to a completely integrated, comprehensive customer database that consolidates all of customers interactions with the bank into a single client portfolio. With the new system added, it will ease CIBC personal banking.

3. What would you recommend that CIBC do with Bankware II? Why? Bankware II is one of Bankware software system extension which was developed by CIBC in facilitating personal service to its customers. Bankware II is not only concentrated on service and products offered primarily by the Consumer Credit group but also show much wider range products and services available from CIBC. Moreover, it allows customers to print personalized mortgage amortization tables and to compare cash back offers with discounted loan interest rate offers. Having such good features do not make Bankware II highly demanded by costumers. This is because these several factors: Many of banks customers were unaware that the product existed. The branch managers often kept copies of Bankware II and only distribute the diskette to customer upon request. To solve this problem, CIBC needs to encourage the branch manager to distribute the diskettes to customers. CIBCs branch manager must also help the costumers understand how this Bankware II will help them in making investment. By doing so, customers are aware and this will also profit CIBC. Although Bankware II actually helps CIBC address customers need and allowing customer to make well informed decisions about their finance, (kalo udah ada although di depan, ga prlu pake but lagi...) there is a hesitance whether Bankware II fits with banks current strategy. It seems like the diskette is completely product focused and completely different with the mission of CIBC which is relationship-focused. It is probably because the convenience offered by Bankware II made contact between banker and customer thus reduced. Customers only rely on Bankware system to get all the information. Consequently there is no

relationship that is built up between banker and customer. One solution that can be done is CIBC train its bankers to establish contact with the customer. Bankers still can do further consultation and provide information that may not be available in Bankware to customers Thus although Bankware emphasise on convenience but good relations with customers is also maintained. The third issue was the discrepancy between the systems with Bankware II program. DOS system is not able to support this program that requires OS/2 system. CIBC will have to upgrade its systems from DOS to OS/2. Technology is one thing that is very crucial in running a business. To be able to compete efficiently, CIBC must always be aware of technology development and adapting it. But this is also after taking into consideration the cost to pay and the benefits to be received by the adaptation.

4. What steps would you recommend that CIBCs Consumer Credit Division take in preparing its promotional plan for the next year? To determine next year promotional plan, CIBC should consider whether it wants to use Bankware III or it can use other promotional tools. In my opinion, it is better for CIBC to use Bankware III As its promotional tool in the coming year. One of reasons is Consistency of the marketing promotion. By maintaining the same promotional tools, it's easier for CIBC to approach to the customer because they are already familiar with Bankware. Moreover, to create a new promotional tool that will be very costly (eg. R&D cost). However, there are some things that need to be done by CIBC to develop Bankware III. CIBC must do research to understand what are the needs of potential target market. They have to really understand who its target markets are and what their needs are, in order to develop promotional tools attributes which are really beneficial for customers and themselves. CIBC shall provide a relationship banker to maintain their relationship with the customer. CIBC should not let the target market feel that Bankware III contradicts CIBC's mission which is relationship-focused. CIBC must make sure that the delivery of these promotional tools are evenly distributed and can reach all potential target markets.