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Using Customer Profitability Analytics to Enhance Financial Performance

Analytics in Banking:

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Q&A Resources Help

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Wednesday 10th April 2013 at 12:00 PM ET

Hosted by: Owen Kimber

Global Financial Services Solution Leader

IBM Business Analytics

Live Demonstration: IBM Customer Profitability Analytics

Learn more and register

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Frank McKeon, Banking and Financial Markets

Industry Executive, IBM Business Analytics

David McNab, Senior Managing Consultant, IBM

Global Services

Farhana Alarakhiya, Director, Industry Solutions,

IBM Business Analytics

Using Customer Profitability Analytics to Enhance Financial Performance

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Higher costs and complexity

Regulation and governance

Increased risk

Scarce capital

Demanding customers: more empowered and less

loyal

The new normal…

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Top performers are more likely to

use an analytic approach over

intuition

Organizations that lead in analytics

outperform those that are just

beginning to adopt analytics 3x3x

5.4x5.4x5.4x

According to a joint study by MIT Sloan and IBM…

Organizations that put analytics into action are more

likely to substantially outperform their competitors

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Checking: $5,000

Money Market: $30,000

Retirement $250,000

Average Credit Card

Balance: $5,000

Mortgage: $250,000

Mary

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Jeremy

Checking: $4,000

Money Market: $28,000

Retirement $175,000

Average Credit Card

Balance: $10,000

Mortgage: $245,000

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Are they really the same?

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Age: 38

Income: $80,000

Lives in Chicago

Married with one child

Assistant Controller

Channel preferences:

web & mobile

Mary

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Jeremy

Age: 36

Income: $80,000

Lives in Boston

Single

Systems Analyst

Channel preferences:

branch, phone

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580 690

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Economic

value Fund Transfer

Pricing

ABC Costing &

Expense

allocations

Risk Based

Capital

Allocation

How do we measure profitability?

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Customer Views

Household

Customer

Account

Hierarchal Views

Business Unit

/ Geography Product Other

1/6/2009

Non-Hierarchal Views

Industry Currency Account

Officer Collateral Date Credit Status

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Implementing Customer Profitability Analytics

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With good foundation, implementation less than one

year

Leading banks adopt a process of continuous

improvement

Implementing customer profitability

analytics

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Executive sponsorship

Vision for using customer profitability information

Quality infrastructure

Critical success factors

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Most banks adopt a monthly cycle

Customer profitability analytics must keep up with

constantly changing business

Repeatable, efficient maintenance process is

mandatory

Remain current

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Produce and manage centrally

Deliver to the point of impact

Make sure the information can be trusted

Package to meet differing needs across the

business

Turning insight into action

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Create value for

business users

#1 factor for building

the business case

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Success at Banco Itaú Argentina

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One of the world’s largest financial institutions

45 million clients

104,000 employees

4900 branches

30,000 ATMs

$360 billion in assets

Banco Itaú Argentina

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Increase customer satisfaction

Maximize profitability

Optimize cross-selling and acquisition strategies

Banco Itaú Argentina

The right offer…for the right client…

at the right time…through the right channel…

and at the correct price

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1. Predictive models to identify customers most

likely to respond

2. Automated cross-selling system to anticipate

next best offer

3. Sales optimization system that measures

expected revenues and cost of making the sale

4. Enterprise feedback management system with,

which allows customized dialog and

personalized product offers

Four phase implementation approach

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Banco Itaú Argentina: Results

40% revenue increase from existing customers

60% margin increase from retail customers

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Q & A

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Wednesday 10th April 2013 at 12:00 PM ET

Hosted by: Owen Kimber

Global Financial Services Solution Leader

IBM Business Analytics

Live Demonstration: IBM Customer Profitability Analytics

Learn more and register