Analytics in Banking: Using Customer Profitability Analytics to Enhance Financial Performance.

1. Analytics in Banking:
Using Customer Profitability Analytics to
Enhance Financial Performance
© 2013 IBM Corporation

2. Q&A Resources Help
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3. Live Demonstration: IBM Customer
Profitability Analytics
Wednesday 10th April 2013 at 12:00 PM ET
Hosted by: Owen Kimber
Global Financial Services Solution Leader
IBM Business Analytics
Learn more and register
© 2013 IBM Corporation

4. Using Customer Profitability Analytics to
Enhance Financial Performance
 Frank McKeon, Banking and Financial Markets
Industry Executive, IBM Business Analytics
 David McNab, Senior Managing Consultant, IBM
Global Services
 Farhana Alarakhiya, Director, Industry Solutions,
IBM Business Analytics
© 2013 IBM Corporation

5. The new normal…
 Higher costs and complexity
 Regulation and governance
 Increased risk
 Scarce capital
 Demanding customers: more empowered and less
loyal
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6. According to a joint study by MIT Sloan and IBM…
Organizations that put analytics into action are more
likely to substantially outperform their competitors
Organizations that lead in analytics
3x outperform those that are just
beginning to adopt analytics
Top performers are more likely to
5.4x use an analytic approach over
intuition
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7. Mary
 Checking: $5,000
 Money Market: $30,000
 Retirement $250,000
 Average Credit Card
Balance: $5,000
 Mortgage: $250,000
© 2013 IBM Corporation

8. Jeremy
 Checking: $4,000
 Money Market: $28,000
 Retirement $175,000
 Average Credit Card
Balance: $10,000
 Mortgage: $245,000
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9. Are they really the same?
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10. Mary
 Age: 38
 Income: $80,000
 Lives in Chicago
 Married with one child
 Assistant Controller
 Channel preferences:
web & mobile
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11. Jeremy
 Age: 36
 Income: $80,000
 Lives in Boston
 Single
 Systems Analyst
 Channel preferences:
branch, phone
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12. 690 580
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13. How do we measure profitability?
Fund Transfer ABC Costing & Risk Based Economic
Expense Capital
Pricing
allocations Allocation value
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14. Customer Views Hierarchal Views
Business Unit Product Other
/ Geography
Household
Customer
Account
Non-Hierarchal Views
1/6/2009
Industry Currency Account Collateral Date Credit Status
Officer
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15. Implementing Customer Profitability
Analytics
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16. Implementing customer profitability
analytics
 With good foundation, implementation less than one
year
 Leading banks adopt a process of continuous
improvement
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17. Critical success factors
 Executive sponsorship
 Vision for using customer profitability information
 Quality infrastructure
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18. Remain current
 Most banks adopt a monthly cycle
 Customer profitability analytics must keep up with
constantly changing business
 Repeatable, efficient maintenance process is
mandatory
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19. Turning insight into action
 Produce and manage centrally
 Deliver to the point of impact
 Make sure the information can be trusted
 Package to meet differing needs across the
business
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20. #1 factor for building
the business case
Create value
for
business users
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21. Success at Banco Itaú Argentina
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22. Banco Itaú Argentina
 One of the world’s largest financial institutions
 45 million clients
 104,000 employees
 4900 branches
 30,000 ATMs
 $360 billion in assets
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23. Banco Itaú Argentina
 Increase customer satisfaction
 Maximize profitability
 Optimize cross-selling and acquisition strategies
The right offer…for the right client…
at the right time…through the right channel…
and at the correct price
© 2013 IBM Corporation

24. Four phase implementation approach
1. Predictive models to identify customers most
likely to respond
2. Automated cross-selling system to anticipate
next best offer
3. Sales optimization system that measures
expected revenues and cost of making the sale
4. Enterprise feedback management system with,
which allows customized dialog and
personalized product offers
© 2013 IBM Corporation

25. Banco Itaú Argentina: Results
40% 60%
revenue increase margin increase
from existing customers from retail customers
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26. Q&A
© 2013 IBM Corporation

27. Live Demonstration: IBM Customer
Profitability Analytics
Wednesday 10th April 2013 at 12:00 PM ET
Hosted by: Owen Kimber
Global Financial Services Solution Leader
IBM Business Analytics
Learn more and register
© 2013 IBM Corporation