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© 2008 IBM Corporation

The Customer Centricity Imperative:Optimizing Customer Care and Insight in Financial Services for Growth and Efficiency

Bob Palmer

Global Financial Services Executive

Information Management and Information On Demand

IBM Software Group

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Agenda

Financial Services Trends and Challenges Demand a Customer Centric Approach

What Analysts and Companies Are Saying

The Customer Centricity Business Problem

Why Many Customer Initiatives Fail to Deliver the Value Expected

The Four Building Blocks of Customer Care and Insight

Innovate with Information to Optimize CC&I

Customer Care and Insight Critical Success Factors

Case Example - A World Leading Bank

IBM Banking Customer Care and Insight Framework

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Industry Trends and Challenges

Trend Challenge

Market Disruptions

Manage cost without losing

competitiveness

Differentiate Product Commoditization

Risk and Compliance

Optimize risk and compliance processes

Empowered Customer

Offer right mix of products and

services

Consolidation & Globalization

Achieve value and synergies from

mergers

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CRM Imperatives: The Game is Changing

Business Imperatives*Business Imperatives*Streamline application infrastructure for efficiency and reusability

Integrate enterprise information for ready access to lines of business

Simplify network infrastructure and administration

Achieve differentiation and profitability through improved customer experience and innovative offerings

Gain competitiveness through improved efficiency and optimized processes

Balance risk, security and compliance

Technology Imperatives*Technology Imperatives*

*Sources: Analyst reports and IBM Institute for Business Value

“Having long rested on a foundation of trust, traditional products, and resilience, financial services institutions are being awakened by tectonic forces altering the industry landscape.”

Source: Guillermo Kopp, TowerGroup 2007

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The Empowered Customer

“During the past decade, consumer needs have changed significantly, but the financial services industry has not evolved to meet these needs. This is why most financial services firms do so poorly in our customer advocacy rankings.”

Bruce Temkin, Forrester Research

There is a industry transformation around today’s empowered customer that represents a significant challenge, yet a growing opportunity for organizations that succeed in delivering the value and choice that financial consumers demand.

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Customer Centricity Imperatives Demand an Enterprise Approach

ObjectiveImperativesBusiness Area

Be customer centered to grow profitable

revenue

Enable a valued customer experience in order to create customer advocates

Develop a single view of the customer relationship and deliver targeted relevant offerings

Turn service issues into sales opportunities to maximize cross-sell opportunities

Deliver consistent service across all channels to capture sales opportunities and reduce customer attrition

Marketing, Sales, Customer Service & Compliance

Gain competitiveness via continuously

improved efficiency

Respond to new business models and opportunity

Differentiate offerings in the marketplace

Achieve optimal cost/income ratios

Simplify operational environment

Product and Operations

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What Analysts are Saying

“FSI’s that wish to grow and prosper are rebalancing their strategic objectives and bringing customers back into a position of primacy. Satisfying customers is as important as driving operational efficiency and minimizing risk.”

Guillermo Kopp, TowerGroup

“During the past decade, consumer needs have changed significantly, but the financial services industry has not evolved to meet these needs. This is why most financial services firms do so poorly in our customer advocacy rankings.”

Bruce Temkin, Forrester

“Institutions around the world are trying to improve their abilities to manage their businesses and their customers with one hand tied behind their back. In many cases, both the business information that is the cornerstone of effective management and the customer data that is the cornerstone of any relationship-building approach are still locked inside multiple back-end systems and datamarts.” Jim Eckenrode, TowerGroup

“Move away from balkanized data that is unavailable to users in other functions or business units. A single piece of data can provide value to many users. (Organizations)…need a single version of the truth, and an integrated customer profile can help provide it.” Kathleen Kirallah, TowerGroup

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What The Industry Is Saying

“We are challenged with the complexity of cultivating millions of individual customer relationships across multiple channels with increasing volumes of data.” Matt Harris, Head of CRM, Barclays Bank

“Our goal was to gain a ‘360-degree’ view of the customer, which we saw as the foundation for a better customer experience and a way for us to be more proactive in meeting their needs.”

Todd Okuley, Director, Nationwide Insurance

“We want to deepen existing and future customer relationships with differentiated capabilities to exceed customer expectations and grow market share.” CEO, WW Top 10 FSI

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Balancing Efficiency and Growth is Critical

Too much focus on cost

reduction /containment…

Can lead to poor customer

experience and limited revenue

While too much focus

on revenue…

Can ruin the customer experience

and hinder cost reduction

opportunities

Too much focus on customer

experience…

Can hinder cost reduction and revenue

growth

We must find the right balance…

or optimally, maximize all three?

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Common Landscape in Financial Services Hinders Optimized CustomerCentricity

Inconsistent View of CustomerSilos of Information

Information Locked in RepositoriesInconsistent Data

No Single Version of the TruthPoor Channel Communication

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Why Many Customer Initiatives Fail to Deliver Expected Value

CRM Application Software as Panacea

No True Enterprise View of the Customer

Poor Data Quality Processes

Poor Channel Integration

Poor Business Process Optimization

Lack of Proper Information Infrastructure

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CC&I is focusing on front office, customer oriented business problems across marketing, sales, service and compliance.

Customer Centricity Requires Effective Customer Care and Insight

Customer oriented, information driven processes related to marketing, selling or servicing customers in financial services.

Examples include:LOB and enterprise marketing processes Sales processes at all touch points including

branch, agent, ATM, kiosk, web, and call center. Customer Service processes through all

channels including branch, agent, claims, call center, web chat, and web self service.Compliance processes such as Know Your

Customer and AML.Process truncation and optimization

Customer oriented business intelligence and analytics that provide fact based input to drive intelligent business decisions

Examples include:

Market analysis

Customer segmentation

Customer profitability

Channel usage, preference and profitability

Product profitability and design

Business Performance Management

What is Insight?What is Customer Care?

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Four Building Blocks of Customer Care and InsightCase

Management

Event Based Decisioning

Disputes

Contact Center OptimizationMarketing

CommunicationCampaign

Management

Customer Segmentation and

Profitability

Cross-sell Up-sell Customer Onboarding

Dynamic Product BundlingLending

Optimization

Know Your Customer

Customer Preferences

Supports Key Initiatives

Information Foundation Master Data ManagementCustomer Data IntegrationService Oriented Architecture

Data and Process ModelsData WarehousingInformation Integration

Data QualityHouseholding3rd Party Data

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Customer Analytics Search and Discovery Analytics Threat and Fraud IntelligenceBusiness Insight•Segmentation•Customer Profitability•Predictive Analytics•Channel Preference

•Branch Performance•Financials•Product Profitability•Planning

•Entity Analytics•Name Recognition

•Analyze Free Form Notes•Monitor Service Levels•Churn Detection•Legal Discovery

Insight

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Sales Processes

Marketing Processes Service Processes

Compliance Processes

Enterprise BPMContent ManagementBusiness Applications




Business Processes

3

Channel Integration4

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Organizations Must Create an Information AgendaAn approach for unlocking the business value of information

Creating a vision to guide decisions & help the

organization determine how to best support business goals

StrategyIdentifying the technology

components & capabilities to establish a common

information framework

Information Infrastructure

Establishing a plan for executing discrete projects

to realize short and long-term returns on investment

Roadmap

Implementing policies & practices for managing,

using, improving & protecting organizational information

Information Governance

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Innovate with Information to Optimize Customer Care and Insight

CustomerSecurity

Storage

AnalysisData

Quality

Access

GovernanceMaster Data Management

Integration

InformationCapabilities

CapabilitiesBPM

CustomerAnalytics

Sales & ChannelManagement

Service

ProductManagement

CampaignManagement

MarketingAnalytics

SelfService

Core

Analyze Demographics, Channel Usage, Profitability, and Buying Patterns

Perform risk analysis and business performance reporting with accurate trustworthy information

Create Personalized Products and Services with Dynamic Pricing

Perform Segmentation, Personalization, Channel Effectiveness and Propensity to Buy Analysis

Manage multistage, multi-channel campaigns with accurate and timely customer information

Use BPM and ECV to optimize sales and distribution

Leverage real time view of customer relationship and channel integration to provide exceptional service

CustomerLifecycle

Deliver multi-channel, real time client information to self service channels

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© 2008 IBM CorporationIBM Internal Only

Effective Customer Care and Insight Delivers Clear Business Value

Increase revenue and customer retentionIdentify the most valuable customers to provide differentiated

serviceLeverage cross-sell and up-sell opportunities

Cost reduction and operational efficiencyIntroduce new products and reduce time to marketStreamline and automate business processes for greater

efficiency

Increase flexibility to support existing and new business strategy

Meet the dynamic requirements of the business with customer care and insight solutions rooted in SOA

Support new strategic initiatives with an integrated information framework

Meet compliance requirements and reduce risk exposureA complete understanding of customers and prospects

increases compliance visibilityProactively uncover and action fraud risk

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Critical Success Factors for Customer Care and Insight

Successful organizations break down silos of information and use an enterprise wide approach to customer information and insight.

There must be a commitment from senior executives that information is an enterprise asset and that insight has a central role in decision making processes.

A single, accurate, accessible enterprise customer view is essential to the success of any organization that wants to differentiate on customer centricity .

An enterprise commitment to data governance and data stewardship must be made early for success of any major CRM initiative, with particular attention paid to data quality.

Management of content centric processes - their truncation, automation and optimization will be a key success factor in improving operational efficiency and customer satisfaction.

Business intelligence and customer insight must be more than a look back-it must also be applied in real time, in-process and at the point of customer interaction for maximum effectiveness.

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Top 10 WW Bank Achieves Efficiency AND Enterprise Customer View

Create enterprise customer view

Increase cross sell and up sell

Consolidate redundant customer systems and improve data access

Bank Strategy

Current customer information infrastructure was duplicative and costlyData synchronization between systems and customer data stores complexHigh CPU and maintenance costs of multiple systemsInitial initiative to replace CIF’s with CRM application MDM not viable solution

Business Problem

Implemented IBM customer data hub with services orientationEstablished SOA/ Component Model Architecture Integrated CIF information to hub in phasesWill replace additional CIF’s from acquisitions in phases

Solution

Bank Objectives

Become a more customer focused bank

Assimilate acquisitions and drive organic growth

Rationalize infrastructure and reduce costs

Business Outcomes

Effective enterprise view$50+ million in annual cost of ownership savings - infrastructure and FTE60% improvement in efficiency and 40% infrastructure workload improvementImprovement in customer centricity greatly improved but not yet measured

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IBM Banking Customer Care and Insight Framework

What is an IBM Framework?

It is a recommended set of prescriptive industry

solutions, services and roadmaps that address

specific business problems. They are composed

of: IBM software, industry data and process

models, pre-integrated accelerators, partner

applications, reference SOA architecture, and IBM

services.

The IBM Banking CC&I Framework helps organizations apply products and services from IBM

and its partners together as a synergistic whole to address customer oriented business

problems.

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IBM Banking Customer Care and Insight Framework Key Components

Information Foundation Info Sphere MDM ServerWebSphere Business FabricWebSphere Process Server

InfoSphere Warehouse Rational Data ModelerTivoli Access Manager

Customer Analytics Search and Discovery Analytics Threat and Fraud IntelligenceBusiness Insight

IBM CognosPartner Apps

IBM Entity Analytic SolutionsIBM Global Name Recognition

Insight

Sales Processes

Marketing Processes Service Processes

Compliance Processes

IBM ECM with FileNetBPM Lotus FormsPartner Applications

Component Business Services

Business ProcessesChannel Integration

IBM Industry ModelsIBM Information ServerIBM ECM with FileNet

IBM Cognos IBM OmniFind AnalyticsIBM OmniFind Discovery

IBM Global Business Services

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