The newly formed TD Canada Trust has an opportunity to raise the bar on customer service in the Canadian retail banking industry if it can live up to Canada Trust’s envied position as a first-class customer service provider, say financial industry analysts.
But if the organization formed in the wake of the merger of the TD Bank and Canada Trust fails to stick to its marketing promises, the floodgates could be opened to competitors looking to cash in on Canadians’ love-hate relationship with their banks.
Since the merger of the two financial institutions was approved by the federal government late last month, retail customers have been promised that the merged organization will maintain CT’s high service standards, with the entire branch network adopting extended opening hours.
To ensure its message is consistent, TD Canada Trust has named former Canada Trust executive vice-president of marketing, Chris Armstrong, to lead the marketing charge for the whole organization. The new bank’s retail operations will be headed by former CT CEO Ed Clark.
The appointments signal TD’s commitment to maintaining the customer service positioning that Canada Trust has developed, says Bill Currie, senior manager in Deloitte & Touche’s competitive strategy group.
‘It’s certainly been a formula that’s proven successful for Canada Trust in getting market share,’ Currie says. ‘TD’s been a very good retail bank, but in the last couple of years they’ve been very aggressive in taking costs out of their branch system.’
With the merger, however, parent company TD Financial Group is realigning into three functional ‘silos’, says Tom Hill, associate vice-president of national advertising for TD Canada Trust. Hill will not say what the silos are, but a TD spokesperson confirms the organization will break down into a retail banking group under TD Canada Trust, a commercial unit under TD Commercial Banking, and wealth management unit under the Corporate Investment Bank (which includes TD Securities) and TD Waterhouse.
Currie says banks typically divide their organizations along product lines, such as mortgages and insurance, but a structure based on customer segments should give TD Canada Trust an edge over its competitors. The new set-up will also allow the bank to carry forward Canada Trust’s legacy of high-touch customer service, while maintaining TD’s strengths on the investment side, he says.
‘The commercial guys have a different customer segment. They have a different focus. Their customers have a different set of requirements, and demand different stuff,’ says Currie. ‘There’s not a lot of value in integrating that with the retail customer base.’
Aside from service, which will be a big bonus to TD customers, Canada Trust’s customers can look forward to an improved product selection, says Charles Stuart, senior vice-president with Ernst & Young.
If TD Canada Trust is successful in building a service-based retail operation, both Stuart and Currie say other banks will move in the same direction, and an industry-wide service improvement could result.
If they fail, however, other players will be vying for Canada Trust’s position as an alternative to the big banks.
‘When you buy a trust company, you can’t assume you’ve bought the staff, you cannot assume you’ve bought the customers. You must continue to earn that,’ says Professor Allan Middleton of York University’s Schulich School of Business in Toronto. If the merged company doesn’t keep up the Canada Trust level of service, there are other competitors to which customers will migrate, he says.
‘In my mind, (TD Canada Trust) is extremely exposed and we’ll go after them aggressively because of our platform of being relationship-based and customer focused,’ says Brent Cuthbertson, vice-president of marketing at Richmond Savings, the B.C.-based credit union known throughout Canada for its award-winning ‘Humungous Bank’ ad campaign.
‘We’ll obviously be picking up on this as it relates to our future advertising and become a bit more aggressive in trying to coax a Canada Trust customer to give Richmond Savings a try,’ Cuthbertson says.
Professor Middleton, meanwhile, gives the new customer-service marketing focus a 50-50 chance of survival. ‘One of the realities of any kind of merger or acquisition,’ he points out, ‘is that what goes first is the culture of the acquired.’
