Turning Data Into Value
The quality of the available information goes a long way toward determining the success of any BI initiative, and large data volumes -- often stored in silos -- present a major challenge for BI at banks. As a result, data management is a huge piece of the BI puzzle. According to Kopp, there are several stages needed in data management to achieve the ultimate goal of creating customer value: awareness, then governance and finally combination.
"We are challenged with the complexity of cultivating millions of individual customer relationships across multiple channels with increasing volumes of data," said Matt Harris, head of CRM for London-based Barclays Bank ($575 billion in assets), in a release. To better understand and leverage its customer data, Barclays recently implemented the Teradata CRM software application from Teradata, a division of NCR (Dayton, Ohio). Harris explained that the Teradata CRM solution enables event-triggered marketing at Barclays through the creation of business rules that are automatically deployed within the bank's data warehouse. The solution identifies significant changes in customer behavior that are indicative of new financial interests, allowing the bank to act upon the information with relevant and timely offerings that meet the customer's needs, according to Teradata.
Wachovia ($497 billion in assets) also turned to BI to better understand its customers. To measure customer loyalty and drive future business decisions, the Charlotte, N.C.-based bank recently chose SAS. Using survey results alongside historical customer data, the bank will attempt to understand what drivers affect customer loyalty, says Dan Thorpe, SVP and statistic and modeling director of Wachovia's customer analysis research and targeting group.
The next step in the equation, Thorpe notes, is evaluating customer equity. Customer equity, he explains, is a lifetime measurement of how much value each customer brings to the bank, and how Wachovia can improve on that value. "Customer equity is a way of looking at the customer beyond just the products," Thorpe says. "It's all the products the customer will have, how long they have those products and the value of those products over a customer's lifetime," he adds.
"Executives want to know, if we increase a customer's value, how much extra profit that means to the bank every year," Thorpe continues. "We are using SAS to really understand and model our customer's balance history, their revenues, their profits, the number of products and their tenure." As a result, Thorpe says, Wachovia is able to offer customers products and services that meet their needs as well as determine what strategy would be most profitable for the bank.
Thorpe stresses that the bank depends heavily on SAS for the analysis, which allows the bank to have a more holistic view of what each customer needs and target its marketing, adding that Wachovia chose SAS because of the comprehensive nature of the vendor's solution. "We nailed it faster than if we would have had to work with three or four different companies," Thorpe says.
"It's very important that a business intelligence solution handle everything that's needed, from pulling data, cleaning data, creating intelligence and delivering it to the right person" notes Susan Duchesneau, SAS global industry strategist for financial services. She recommends that banks target a robust BI solution that runs the gamut of capabilities.
But, "With sophistication comes complications," Wachovia's Thorpe concedes. The banks biggest challenges are with some of the solution's graphical displays -- or dashboards -- because of the huge amount of data with which the financial institution is dealing for its more than 13 million customers, he relates. Sometimes the sheer volume of data can create information overload, Thorpe says.