putting "you" back into value using analytics to shift antagonism to advocacy

© 2011 IBM Corporation

Putting "You" back into Valueusing analytics to shift antagonism to advocacy

Kevin JuryIBM Global Business ServicesFinancial Services Sector Lead Partner03 Nov 2011

© 2011 IBM Corporation2

Most Banks are driving simplification and modernisation activities as they progress their journey from multiple system environments

Simplification

Modernisation

DISTRIBUTION(Cust / Channel)

Application

Application Enablement

Infrastructure

People & Process

Information

OPERATIONS(Process)

MANUFACTURING(Product)

Bank Bank


MANUFACTURING(Product) OPERATIONS

(Process)


Which is inching the Banks closer to the customer but is not maximising the value and speed of ROI

Good individual decisions made at the time Solid delivery being achieved with costs

being reduced Most of these ‘new’ offerings still have the

bank at the centre … not the customer Disparate products, processes and channel

interactions mean that customers are not reaping the rewards from the value exchange

The premier customer experience is still not being delivered nor seems achievable

The intelligence to run a business on data driven decisions has still not materialised

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OPERATIONS(Process)MANUFACTURING

(Product)

Bank



Why are the Banks only getting some of the potential benefits….

What is in placeEnhanced silos across the product engines

Improved Sales and Service Desktop and fulfilment engine

Faster ability to offer an off the shelf (mass) product

Improved efficiencies in operations

What isn’t in placeImprovement on the transaction based relationship, but not true relationship banking

No real enhanced end-2-end customer experience

Portfolio based offers and product bundles still not prevalent

Process to variance is some way off, ie, creating a common generic process with attributes

What this means

Customer is a customer of a product not a customer of the Bank. Customers increasingly have a portfolio of products transcending bank silos

The Bank is more efficient, but the focus is on a product being activated/delivered rather than treating “me” as a customer of the bank

Limited bundling of attributes and very few unique customer specific offers based on detailed customer relationship and understanding

Straight through processing mostly by product and re-use of business process components are still not implemented


Why are the Banks only getting some of the potential benefits….

What is in placeCommon user interface driving familiarity and a sense of belonging for the customer

Self service is delivering cost savings

Some re-use of data to assist the application process

What isn’t in placeLittle consistency across the channels beyond transactions - not delivering the right product to right customer at right time through the right channel

Few common processing platforms (eg, BPM/STP) across the bank leveraging reusable business components for ultimate cost reduction

But very little connection of existing data elements (eg, financial, customer and process)

What this means

Lower than desired conversion / take up rates, missed product opportunities affecting profitability, share of wallet and customer satisfaction KPIs.

The majority of efficiency gains for banks are still to be realised and there is volumes of inconsistent messaging being delivered to customers

Banks not demonstrating an understanding of customers and their needs at the right time, eg applications processing is complicated with significant requests for the same data


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Recent Studies show……

The customer experience is better but not as good as it can/should be but remains bank/product centric

Banks need to gain a deeper understanding of their clients – what they value, what they need and what they expect

As such, banks must find a way to reconnect with their ever-evolving clients

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“clients do not trust banks to offer products and services that are in the clients’ best interests”

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Banks are still focused on transactions and not relationships ...

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Looking at the customer lifecycle we see banks using data primarily to segment and sell, not to generate awareness, stimulate interest and create customer “tribes”

It has been easy to get sales and segmentation data

Source: IBM Institute for Business Value, Global Chief Marketing Officer Study October 2011.

61%Segmentation/targeting

54%Action/buy

46%Awareness/education

45%Interest/desire

41%Use/enjoy

40%Bond/advocate

Missedopportunity

Transaction focused Relationship focused


CEOs and CIOs are both highly focused on insights, clients, process and people …

Insight and intelligence

Client intimacy

People skills

Internal collaboration & Communications

Risk management

Enterprise model changes

Revenue model changes

78%

77%

72%

62%

72%

44%

48%

Financial Services CEO focus over the next 5 yearsGetting closer to customer1

People skills

Insight and intelligence

New or different channels

Enterprise model changes

Revenue model changes

Industry model changes

89%

71%

83%

53%

67%

47%

43%

Intelligent Process

Management

Information and insight

Customer Experience

FlexibilityAgilityGrowth

Cost Containment

Social Media

SecureConfidence

Trust

Sustainability

Source: 2010 CEO Study Q13: “Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years?” (n=1,523); 2011 CIO Study, Q13: “Where will you focus IT to help your organization’s strategy over the next 3 to 5 years?”; Global sample (n=3,018); Banking (n=311)

Industry model changes 32%


Bank executives want to run their business on data-driven decisions Until recently most

companies focused their analytics capabilities on reducing redundant reporting, data simplification, database consolidation and other efforts to create leaner information platforms

Business executives want scenarios and simulations to provide guidance on best actions to take

Business executives want better ways to understand, apply and communicate insights


The quest for better client insight?..........and barriers to gaining this insight%

Note: Question asked:. What are the biggest barriers to collecting additional client information to achieve the level of insight needed by the bank? Select up to 3

Source: IBV EIU Business Analytics in Banking Survey 2010; n = 235

Mature Markets

Emerging Markets


So what should we be solving for?

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How do we leverage the valuable data we have? Are we creating a bespoke product variant or bundle for the client? Do the branch/contact centres have any more insight about the

client they’re dealing with than before? Is the client being treated as individual / a segment of one? Are we making better use of data to understand credit risk? Is data streamed real-time to support data driven decisions and

modelling? Are productivity improvements being identified and being applied

across all relevant processes / operations? Are clients that are affected by incidents being informed pro-

actively? Does the Bank know the best channel/mechanism to push calls-to-

action to for each client?


An opportunity for banks

to think and act in new ways. +

+

=Develop enterprise-wide capabilities to enable informed judgment, client-centricity and profitable growth

Achieve compliance objectives while mitigating operational risk, fighting crime and optimizing financial returns

Drive a simplified and streamlined agile enterprise that balancesgrowth, efficiency and business resiliency

As a result, IBM’s point of view is that banking solutions need to become instrumented, interconnected and intelligent…

In other words : To ultimately use information for innovation! To establish organisational DNA that strives

to supplement current data with future data and create “relevant content” for customers

To shift from a culture of decision-making by intuition to decision-making with science

To innovate and adapt, to develop products that don’t just meet, but anticipate your customers’ needs

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What do we need to do? Gather less data, get better alignment to needs, be “right here right now at the right time”


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What do we need to do? Gather less data, get better alignment to needs, be “right here right now at the right time” Digitise the Distribution, Manufacturing and Operations platforms in a way that significantly

drives simplification across the platformsBranch

Contact Centre

Online

Mobile

Distribution

Mortgage Loan

Cheque

Shares

Personal Loan

Manufacturing

ML Process

Overdraft Process

Pers Loan Process

Savings Process

Operations

Customer / Channel

ProcessProduct

Brand AffinitySelf Service

Quick Offer to Market

Reduced CostIncreased Efficiency

VARIANCEOFFER


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What do we need to do?

Branch

Contact Centre

Online

Mobile

Distributin

ML Process

Fulfilment

Rules Instantiation

Brand AffinitySelf Service

Quick Offer to Market

Reduced CostIncreased Efficiency

Gather less data, get better alignment to needs, be “right here right now at the right time” Digitise the Distribution, Manufacturing and Operations platforms in a way that significantly

drives simplification across the platforms

Put the customer at the heart of everything the Bank does– Treated like an individual / bespoke offerings– Portfolio based decisioning enables the Bank

to make better offers and the client feel valued– Customer satisfaction / Emotional attachment– Desire to do more with the Bank– Why don’t you know that? -> how did

you know that?

Analytics

Needs

Financials Treatments

Analytics is the missing link that will enable the maximum benefits to be realised from all of the work that has been undertaken – without it, the results will only ever be a portion of what they could be

Branch

Contact Centre

Online

Mobile

Distribution

ML Process

Overdraft Process

Personal Loan Process

Savings Process

Operations

VARIANCE

Mortgage Loan

Cheque

Shares

Personal Loan

Manufacturing

OFFER

RELEVANCECustomer / Channel

ProcessProduct


Lets close the trilogy and create the guided customer sales and service experience” – lets create that part Digital and part Human customer experience

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A customer logs on to online banking

The website recognises from browsing info that the customer is looking for a new Credit card

The product engine analyses the total value of the client to the Bank and assesses the suitability of the standard credit card products

The decision engine determines that a credit card with a lower annual fee and an interest rate 50bps lower than standard is appropriate and will be of interest

The customer confirms acceptance of the offer and provides a small amount of data (that the Bank doesn’t already have) to complete the application

Fulfilment is executed automatically via STP and the client is provided with a printable set of credit card details they can use immediately whilst the card is dispatched in the post

One well serviced and delighted customer

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7“The best way to get started is to stop talking and begin doing” Walt Disney

Imagine a scenario where……

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putting "you" back into value using analytics to shift antagonism to advocacy

Documents

right customer

right product

detailed customer relationship

customer self service

product bundles

product opportunities

bank silosthe bank

ibm corporation2