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How to Blow Away the Competition Through Leadership: Why TD Bank Kicks Butt

February 10, 2011

Updated June 25, 2011

During our June 2011 trip through New England we came across more TD retail banks, leading me to wonder if I should explore switching from my current bank. It’s certainly much more convenient when you’re a Canadian travelling in the U.S. to stick with your own brand.

Regardless, TD’s rapid growth in the huge U.S. market is not just a positive commentary on the success this firm is having south of the border, given the litter of past Canadian failures (eg, RBC’s recent exodus), it’s a fascinating study in visionary leadership, complemented by extraordinary execution.

In a June 22 interview with the New York Times, TD CEO Ed Clark discussed his journey in building TD’s brand in the United States. Here are a few quotations:

The biggest thing about crossing the border is that Americans get almost as much pleasure out of crushing an opponent as winning. If they ever get you where they think they’ve put you on the run, they put you out of the game.

(On buying Commerce Bancorp of New Jersey in 2008) People said that was bad timing. As it turned out, we had enough size to take advantage of the downturn, to have a huge growth spurt.

The great thing about the United States is that it’s so large. I don’t need 100% of Americans to say that friendly service and convenience are differentiators for me. If you have 10% of Americans saying that, that’s 100% of the Canadian Market.

First off, I’ll disclose that I don’t bank with TD (Toronto Dominion) Bank, one of Canada’s Big-Five banks (nor do I own any of its stock or bonds). I bank with Scotiabank, one of the Big-Five sisters, and which provides satisfactory service. As you’ll see in this post, TD Bank has proven itself to be the most innovative bank in Canada.

During our trip through New England last fall, Sue and I kept coming across TD signs. We found it odd since Canadian banks have a weak penetration record in the U.S., at least from a branding sense. But there were the green machine TD signs. I felt kind of pleased and proud that a Canadian bank was finally making its presence known in the huge and competitive American financial services industry.

So what has TD done that’s so darn special? Well, for one it has created what’s called TD University in Mount Laural, New Jersey, a suburb of Philadelphia, one of 48 campuses spread across the U.S. All 24,000 TD employees must attend a five-hour orientation training session at one of the bank’s 48 campuses.

The aim of the training is to get all TD employees on the same page when it comes to the company’s culture of service to customers. As Fred Graziano, president of U.S. consumer banking, expresses: “You have to buy 100% into our culture.”

For those of you who are skeptics and who might accuse TD of forcing employees to drink the corporate Kool-Aid, I disagree. When it comes to embedding a customer service culture in an organization, I believe you’re either on the bus or off it. There’s no middle ground.

Toronto-based CEO Ed Clark has worked tirelessly at positioning TD for entry and growth in the U.S. market, relying on the bank’s highly successful efforts in Canada. As he stated bluntly: “We made a decision to go big or go home.”

Clark was recently named Canada’s outstanding CEO of the year by the Financial Post Magazine, Caldwell Partners International and Business News Network. As the head of TD since 2002 (due to retire in 2013) Clark can claim credit for the tripling of the bank’s market cap, doubling of employees and (surprisingly) growth in the U.S. mortgage market.

I well recall the days of old when banks were open only Monday to Friday for a mere six hours a day. Gradually, technology was introduced and hours widened, including limited hours on Saturday. This is more or less the current state of Canada’s banking industry.

But TD has been blowing apart that business model. In addition to moving to now being open on Sunday and extending hours from 7:30 am to 8:00 pm during the weekdays, it has introduced such innovative services and features as the use of free coin-counting machines, piggy banks for children and water bowls for dogs. Check out this virtual illustration of the TD Bank format in the U.S.

Since 2004, TD has invested almost $20 billion in the Eastern U.S. market. It now has some 1,300 branches, spanning from Maine to Florida. That’s about 200 more branches than it has in all of Canada. The bank is introducing the idea of calling branches “stores” and to have TD Ameritrade advisors at each one.

As Clark expressed in an interview with the Financial Post Magazine (February 2011):

“…the great thing about our model is if I put a branch on a corner in New York City, I know five years later I will have more than 25% of the local business, because at some time in that five years someone will come by at 4:02 pm. Their branch will be closed, they’ll look across at our store, this beautiful store, there will be someone giving dog biscuits to somebody’s dog, they’ll walk in and there’s a greeter that’s unbelievably friendly, and they’ll say, ‘So why am I banking at the guy across the street?’

On Sundays we send our bankers out to all the small businesses and say, ‘You’re open, we’re open, and you bank with the bank that’s closed.’…It’s a very simple concept: Just be open longer and give better service.” Clark also noted, for example, that their branch at 2 Wall Street, which opened five years ago, now has US1 billion in deposits.”

To see the extent to which TD Bank is going to garner attention, take a look at this Regis Philbin clip:

My view is that TD bank gets it, that finally a Canadian bank understands what business it’s really in. It’s less about the actual financial transactions (as in the days of old) than the total customer experience: to be able to bank when you want, where you want, and to receive consistently superior UNIQUE service EACH time.

An analogy I’ll give is Starbucks. I like going to Starbucks on occasion, not as much for its mediocre coffee but rather for the experience. It’s kind of weird, but I keep going back, despite there being better coffee shops in my community. I know what to expect every time I enter one of Starbucks’ coffee shops, whether it’s in Halifax, Ottawa, Vancouver, Chicago or San Diego.

In Canada, banking is highly regulated and the Big Five operate as an oligopoly by controlling most of the market. However competition is steadily creeping in, and it’s only a matter of time until such massive banks such as ING, HSBC and Bank of America are allowed to be let loose in the Canadian market. TD Bank will be ready for them.

It’s all about visionary leadership, employee alignment and execution.


Although your customers won’t love you if you give bad service, your competitors will.
Kate Zabriskiev


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8 Comments leave one →
  1. February 10, 2011 10:38 pm

    Yes, the upselling can be exceedingly annoying. Competition drives customer service. The more the merrier! Thanks for sharing your experiences, Susan.

  2. February 10, 2011 9:47 pm

    I agree with your appraisal of most banks — their business model is all wrong. They treat the customer like an inconvenience. Their limited hours of operation are a perfect example of their lack of customer service. And who hasn’t walked into a bank, stood in a long line while 5 tellers stood at their windows but only 1 was servicing customers; the others presumably counting the bank’s money. How rude!

    The bank behavior that irks me the most is the teller who when he/she takes my deposit, peeks at my account balance and then tries to upsell me on some costly product or service. Sorry, but that just feels invasive and wrong.

    Good for Ed Clark and TD Bank for recognizing the void for a customer-centric bank in the marketplace. I hope it does well.

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