case study: supporting the branch network using predictive analytics: predicting first investment...
DESCRIPTION
by Matthias Meul, Customer Intelligence Analyst, Deutsche Bank AG, Brussels Branch, BelgiumTRANSCRIPT
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Matthias MeulDeutsche Bank
Supporting the branch network using predictive analyticsPredicting first investment behaviour12Dec2013
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Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
The next 40 minutes
04/08/2023 05:07:20 AM 2010 DB Blue template
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— Introduction to Deutsche Bank & casestudy
— The First Investment model
— Commercial implementation & results
— Lessons learned
— Q&A
Introduction Model Results Questions
Introduction
Model
Results
Questions
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Deutsche Bank Matthias MeulFirst Investment model
Deutsche Bank in Belgium
04/08/2023 05:07:20 AM 2010 DB Blue template
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— > 315 000 clients
— +-715 employees (of which +-300 with client contact roles)
— 33 Financial Centers
— 3 Contact Centers
— Over 21 billion € AUM
— “Open architecture”, mandates as of 100€
— Retail – DbPersonal – Private
ClientsCapacity
DBP
Private
Retail
300 employees with client contact
33 FCs
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Casestudy overview
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— Clients with investments are treated very well (maturities, downgrades,…)
— The objective is to convert retail savers-only to investors
A significant number of clients doesn’t have and never had in-vestments!
INDICATION
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Dependent variable
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First InvestmentPredictive analytics in Investments
— Will the client make a first investment in a strategic product in the year to come? Yes/No
— Timeframe?
Introduction Model Results Questions
T2: The moment when we want to make the prediction
T3: Start of the period in which the behavior will take place
T4: End of the period in which the behavior will take place
Historical data taken into account to make the prediction
Period to execute commercial initiatives based on predictions
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Deutsche Bank Matthias MeulFirst Investment model
Modeling technique
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— Linear regression
— Dependent variable between -∞ and +∞
— Easy to explain:
— However, the problem of identifying First Investors is binary
— Made a FI = 1
— Did not make a FI = 0
— The desired outcome of the model are probabilities (between 0% and 100%)
Þ We have to perform a transformation
— Logistic regression
— Model the log odds of the event (=dependent variable), which will be transformed into probabilities
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Variables retained (high level) using stepwise regression
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— Current AUM & variations
— AUM in the past
— Education level
— Current level of loyalty towards Deutsche Bank (~advanced algorithm)
— Length of relation
— …
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Evaluation
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First InvestmentPredictive analytics in Investments
— Check model performance… Wait until time goes by…?
T2: The moment when we want to make the prediction
T3: Start of the period in which the behavior will take placeHistorical data taken into account to make the prediction
Period to execute commercial initiatives based on predictions
T4: End of the period in which the behavior will take place30jun2012
31jul2012 31jan2013
Use the model to score, based on 28feb2013
31mar2013 30sep2013Monitor model performance
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Technical performance measures
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— Lift
— AUC
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Technical performance measures: Lift
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— Lift
Introduction Model Results Questions
OVERFITTING?
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Deutsche Bank Matthias MeulFirst Investment model
Customers
— Area Under the receiver operating Curve
— The probability that a classifier will rank a randomly chosen positive instance higher than a randomly chosen negative one
Technical performance measures: AUC
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A random first investor(score = 10%)
A random “not” first investor (score = 0.005%)
When I compare the scores of the FI and the non-FI, the FI has 70% chance (AUC = 0.70) of having a higher predicted probabilityof churning than the non-FI
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Operational implementation of the First Investment model
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First InvestmentPredictive analytics in Investments
— Recurrent Tasks, monthly refresh
— Event-driven (e.g. AUM evolution)No ice-cold calling— always at least 1 of 3 potential commercial triggers in Task comment
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
+-20% of treated tasks results in a meeting!
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Deutsche Bank Matthias MeulFirst Investment model
“Educate” the branch network
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
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Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out (purchases until end of september)
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
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Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out (purchases one month after task injection)
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Introduction Model Results Questions
Sales until October 19th taken into account because of
*tasks being treated as of September 19th
*time between ordering and booking an investment product
First InvestmentPredictive analytics in Investments
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Deutsche Bank Matthias MeulFirst Investment model
Is it necessary to contact these clients?
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Introduction Model Results Questions
Won’t they invest “by themselves”?
Do they really need the extra trigger?...Þ Same characteristics as targeted clients & compare!
First InvestmentPredictive analytics in Investments
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Deutsche Bank Matthias MeulFirst Investment model
Results of the First Investment model
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First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
1 2 3 4 5 6 7 8 9 10 11 12
First Investors 2012 vs 2013 (31nov)
Investors_per_month_2012
Investors_per_month_2013
YTDInvestors_2012
Total2012
YTDInvestors_2013
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Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Lessons Learned
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— Do not limit yourself to the existing KPIs. Do they match the business problem you’re trying to solve?
— Assure the commercial implementation of the model, put the scores to use & add tangible customer leads.
— Assure the followup of the model & recurrently report results.
— Keep it simple & understandable!
Introduction Model Results Questions
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Deutsche Bank Matthias MeulFirst Investment model
Thank you!
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First InvestmentPredictive analytics in Investments
Introduction Model Results Questions