Putting "You" back into Value
using analytics to shift antagonism to advocacy
Kevin Jury
IBM Global Business Services
Financial Services Sector Lead Partner
03 Nov 2011
© 2011 IBM Corporation
Most Banks are driving simplification and modernisation activities as
they progress their journey from multiple system environments
DISTRIBUTION
(Cust / Channel)
DISTRIBUTION
(Cust / Channel)
Simplification
MANUFACTURING
(Product)
MANUFACTURING
(Product)
OPERATIONS
(Process)
OPERATIONS
(Process)
People & Process
Information
Application
Modernisation
Application
Enablement
Infrastructure
2
© 2011 IBM Corporation
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
DISTRIBUTION
(Cust / Channel)
MANUFACTURING
(Product)
OPERATIONS
(Process)
3
3
© 2011 IBM Corporation
Why are the Banks only getting some of the potential benefits….
What is in
place
What isn’t in
place
What this means
Enhanced silos across
the product engines
Improvement on the
transaction based
relationship, but not true
relationship banking
Customer is a customer of a
product not a customer of the
Bank. Customers increasingly
have a portfolio of products
transcending bank silos
Improved Sales and
Service Desktop and
fulfilment engine
No real enhanced end-2-end
customer experience
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
Faster ability to offer
an off the shelf (mass)
product
Portfolio based offers and
product bundles still not
prevalent
Limited bundling of attributes and
very few unique customer
specific offers based on detailed
customer relationship and
understanding
Improved efficiencies
in operations
Process to variance is some
way off, ie, creating a
common generic process
with attributes
Straight through processing
mostly by product and re-use of
business process components
are still not implemented
4
© 2011 IBM Corporation
Why are the Banks only getting some of the potential benefits….
What is in
place
What isn’t in
place
What this means
Common user
interface driving
familiarity and a sense
of belonging for the
customer
Little consistency across the
channels beyond
transactions - not delivering
the right product to right
customer at right time
through the right channel
Lower than desired conversion /
take up rates, missed product
opportunities affecting
profitability, share of wallet and
customer satisfaction KPIs.
Self service is
delivering cost savings
Few common processing
platforms (eg, BPM/STP)
across the bank leveraging
reusable business
components for ultimate cost
reduction
The majority of efficiency gains
for banks are still to be realised
and there is volumes of
inconsistent messaging being
delivered to customers
Some re-use of data
to assist the
application process
But very little connection of
existing data elements (eg,
financial, customer and
process)
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
5
© 2011 IBM Corporation
Recent Studies show……
“clients do not trust banks to
offer products and services that
are in the clients’ best interests”
 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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6
© 2011 IBM Corporation
Banks are still focused on transactions and not relationships ...
 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
61%
Segmentation/targeting
46%
Awareness/education
45%
Interest/desire
54%
Action/buy
Use/enjoy
41%
Bond/advocate
40%
Transaction focused
Missed
opportunity
Relationship focused
Source: IBM Institute for Business Value, Global Chief Marketing Officer Study October 2011.
7
© 2011 IBM Corporation
CEOs and CIOs are both highly focused on insights, clients, process
and people …
Financial Services CEO focus over the next 5 years
Getting closer to
customer1
89%
Insight and intelligence
People skills
Client intimacy
83%
Insight and intelligence
78%
Customer
Experience
71%
Flexibility
Agility
Growth
New or different channels
Enterprise model changes
Secure
Confidence
People
Trust
67%
77%
Information
and insight
skills
72%
Risk management
72%
Internal Cost
collaboration
&
Containment
Communications
53%
62%
Revenue model changes
Revenue model changes
47%
Social Media
Industry model changes
Intelligent
Process
Management
Enterprise model changes
Sustainability
44%
43%
Industry model changes
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)
© 2011 IBM Corporation
48%
32%
8
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
9
© 2011 IBM Corporation
The quest for better client insight?..........and barriers to gaining this insight
70%
Mature Markets
60%
Emerging Markets
50%
%
40%
30%
60% 60%
59%
51%
41%
20%
47%
32% 35%
10%
27% 27%
22%
15%
13% 15%
0%
Time and
Constraints
willingness of
in our
systems and clients to
processes provide extra
information
Absence of
tools needed
to do follow
up analysis
Costs
outweigh
benefits
Acquisition of Information
Lack of
collected
additional
executive
today is
client
sponsorship
information is sufficient
not a priority
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
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© 2011 IBM Corporation
So what should we be solving for?
 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 proactively?
 Does the Bank know the best channel/mechanism to push calls-toaction to for each client?
11
© 2011 IBM Corporation
As a result, IBM’s point of view is that banking solutions need to become
instrumented, interconnected and intelligent…
Drive a simplified and
streamlined agile
enterprise that balances
growth, efficiency and
business resiliency
=
+
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
12 © 2011 IBM Corporation
An opportunity for
banks
to think and act in
new ways.
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
12
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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© 2011 IBM Corporation
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 platforms
Brand Affinity
Self Service
Branch
Contact Centre
Online
Mobile
Customer / Channel
Reduced
Cost
Increased
Efficiency
Quick Offer
to Market
Mortgage Loan
Personal Loan
ML Process
Overdraft Process
Cheque
Savings Process
Shares
Pers Loan Process
Product
OFFER
Process
VARIANCE
14
© 2011 IBM Corporation
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 platforms
Branch
Branch
 Put the customer at the heart of
everything the Bank does
Brand Affinity
Self Service
Contact
Centre
Contact
Centre
Online
Online
Mobile
– Treated like an individual / bespoke offerings
Mobile
– Portfolio based decisioning enables the Bank
to make better offers and the client feel valued
Customer / Channel
Needs
– Customer satisfaction / Emotional attachment
RELEVANCE Fulfilment
– Desire to do more with the Bank
– Why don’t you know that? -> how did
Treatments
Financials
you know that?
Quick Offer
to Market
Reduced
Cost
Increased
Efficiency
Mortgage Loan
ML Process
Process
ML
Personal Loan
Overdraft Process
Savings Process
Cheque
Shares
Rules
Instantiation
Personal Loan Process
Product
OFFER
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
© 2011 IBM Corporation
will only ever be a portion of what they could be
Process
VARIANCE
15
Lets close the trilogy and create the guided customer sales and
service experience” – lets create that part Digital and part Human
customer experience
Imagine a scenario where……
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 best way to get started is
to stop talking and begin doing”
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
Walt Disney
1616
© 2011 IBM Corporation