4
V
We should focus on quality
customers instead
rate-sensitive shoppers
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V I
The way forward
Edwin van Raalte, Global Head
of Product Development Branding for R&R:
Wake up your savit
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etst f
deposits cover only 5 percent of the required self-funding
ratio, so RaboDirect Australia embarked on a new 'Wake up
your lazy money' marketing campaign in late May. At the end of
last year, the contribution from both branch and online
deposit sources was around 24 percent; now self-funding has
reached 33 percent and it is still improving by the day."
Global Head of Product Development Branding for R&R
Edwin van Raalte compares the different funding sources
with the engines of a plane. "You need four. If one stops,
you have got three others still running." Until recently, Van
Raalte was responsible for the implementation of RaboDirect
in Australia and New Zealand, and involved in the ALM and
global strategy review for Rural Retail, but now he has been
shipped back to Utrecht to oversee product development
and branding at Rural Retail.
Van Raalte says that the 70 percent self-funding targets might
have caused a stir, especially in regions and business units
that rely mainly on central funds. He suggests that there are
strategie options available that might compensate for local
shortfalls. "We need to focus on strategie global portfolio
decisions," says van Raalte. "Why only look at short-term local
solutions and not aim for the longer term? If RaboDirect
would grow in key markets from AUD 3.8 billion to AUD 10
billion in fïve years time, that would not only provide us with
a lot of self-funding but also with plenty of possibilities for
cross-selling to a few hundred thousand new customers. We
should make this a much more strategie discussion. From a
RaboDirect perspective, that growth is possible, but we need
to keep investing in acquisition and retention, as well as in the
RaboDirect brand. And we should focus on quality customers
instead of rate-sensitive shoppers who walk in and out. If we
can offer them more products instead of the single product
we currently have on offer, RaboDirect deposits will become
more sticky. Investing in innovation should be an important
part of the RaboDirect development."
Berry Marttin has a similar line of thought. "We have to find
other ways of creating income. We have never focused
our organisation on flow products, on current accounts.
Suddenly, we find ourselves in the situation where it might
make sense to enable more transaction accounts. Ten percent
to 15 percent of all funding of the member banks in the
Netherlands is from current accounts. If you have 15,000
farmers on your books, those transaction accounts might add
10 percent to your funding." Farmers alone cannot supply
the level of funding that Rl expects for its R&R activities, so
additional efforts will have to be aimed at new target groups,
Marttin acknowledges. "We do struggle with the fact that
the rural areas are asset-rich but cash-poor, while the cities
are usually asset-poor and cash-rich. That is a very important
factor," says Marttin. "If you look at how we have dealt with
that in, for instance, New Zealand, you will see that we were
able to develop a dual strategy where the asset side is linked
to the rural communities and the liability side to the more
urban internet communities. That case taught us that we
can do this; a dual strategy works." So is the dual strategy
that is working in Australia the solution for other regions?
Van Raalte suggests a more collaborative development
process that leaves space for local differences. Not
establishing a centralised global approach but introducing
more initiatives to share, discuss, learn and test with focus
groups. The new focus will move R&R forward into new
target groups, predicts Berry Marttin. "Rabobank is not only
a farmer's bank," says Marttin. "We need to work on that
mind shift."»
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issue 25 o< RI WORLD
