Enabling a new banking experience with predictive analytics

1 © 2015 IBM Corporation

Transforming Customer Engagement with Analytics

Robert Palmer, Global Banking Industry Marketing Leader, IBM AnalyticsChris Yaldezian, Global Banking Industry Marketing Leader, IBM Commerce

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© 2015 IBM Corporation

• IBM’s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice at IBM’s sole discretion.

• Information regarding potential future products is intended to outline our general product direction and it should not be relied on in making a purchasing decision.

• The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code or functionality. Information about potential future products may not be incorporated into any contract.

• The development, release, and timing of any future features or functionality described for our products remains at our sole discretion.

Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user’s job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here.

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Please Note:


Consumer empowerment and digitization are rapidly changing how individuals and organizations interact

•Channels are governed by different silos and incentives

•Organizations drive consumer experience

•User experience is typically unintuitive

•Marketers group consumers into broad segments

•Focus groups and market research represent consumer input

Organization-centered economy

•There is a seamless experience no matter the channel

•Consumers expect experiences “my way”

•Marketers deliver a personalized experience to a “Segment of One”

•Data and analytics reveal insight from consumer behavior

•Focus is on ease of use and curation

Individual-centered economy


Engagement requires a systematic approach

Data is the new basisof competitive

advantage

Cloud is the path tonew business models

Data is becoming the world’s new natural

resource

The emergence of cloud is transforming

IT and business

Mobile and social are transforming individual

engagement

At the same time, technology innovation has spawned a new era defined by three shifts that address this consumer centric world


Change is required to meet customer expectations

Source: IBM Institute for Business Value CEO Study

CEO’s realize they must to improve their understanding of individual customers and respond faster to their needs

Improve understanding of individual customer needs

Improve response time to market needs

Harmonize customer experiences across channels

Include customers across product / service life cycle

Increase transparency and corporate accountability

Increase social and environmental responsibility

72%72%

68%68%

67%67%

44%44%

55%55%

38%38%


CMO’s feel most challenged with the very factors that, when successfully managed, can most impact their success

The most prominent challenges for Chief Marketing Officers

Data explosion1

Social media2

Growth of channels and devices3

Shifting consumer demographics4

71%

68%

65%

63%

Source: IBM Global CMO Study: “What areas do you feel most underprepared”. 2014


Drive improved business outcomesby applying more sophisticated analytics across more disparate data sources in more parts of their organization.

Capture the time value of databy developing “speed of insight” and “speed of action” as core differentiators.

Change the gamein industries and professions by infusing analytics into everything.

L E A D E R S W I L L:

Organizations that maximize the power of data and analytics can transform their industry


Leading marketers realize there is room to improve segmentation using analytics, but also to impact the activities that drive engagement

Use of Customer Data

Source: IBM Global CMO Study: 2014

61%

54%

46%

45%

41%

40%

Segmentation/Targeting

Action/Buy

Awareness/Education

Interest/Desire

Use/Enjoy

Bond/Advocate

Transaction Focused

Relationship Focused


Alert me- Real-time predictive analytics and personalized customer communication

Advise me- Bringing expertise to every client interaction

Educate me- Digital online education and tips “in the moment”

Let me choose- Options vs. prerequisites, roadmaps vs. checkboxes

Know me- Offer new products and services based on understanding my wants, needs

Trade with me- Sharing data, location, and new ideas in return for better products and value

Excite me- Unexpected services at unexpected moments

Find me- Using visualization and analytics to discover new customer segments

Compare me- Offer peer analytics in virtual channels

Protect me- Multifactor security that doesn’t punish the innocent

Ask me- Consulting customers on products, services, and social issues

Grow with me- Data and insight connecting the lives of customers, households

New data and analytics capabilities can enable improved customer engagement and deliver more value to the relationship…


…through improved insight of consumer needs, preferences and behavior that can help drive tangible business outcomes

Advanced analytics enables you to:

• Analyze, understand and anticipate customer behavior across all channels

• Deploy web and social network analytics as a source of valuable insight

• Offer personalized products and services tailored to the individual

• Manage the optimal balance between service and cost of delivery

• Predict life events, attrition risk, customer satisfaction and customer lifetime value

• Improve service levels and knowledge of front-line employees

•Improved customer lifetime value•10%–25% increase•Higher loyalty and affinity•15%–30% increase•Increased retention rates•10%–50% increase

•Improved conversion rates•20–40% increase•Reduced default rates•10%–30% reduction•Improved Products Per Customer•20%–40% increase

Potential Outcomes

Analytics


Exploiting all data and all perspectives delivers new insights to attract, grow and retain customers

360 DegreeCustomer View

Data and Analytics

All perspectives• Past (historical, aggregated)

• Present (real-time)• Future (predictive)

Descriptive data• Attributes

• Characteristics• Company info• Demographics

• Weather Patterns• Location Data• Social Media

Behavioral data• Orders• Transactions and Spending

Data• Payment History• Usage Patterns and Service

Records

Attitudinal data• Opinions• Product Reviews• Needs and Desires• Market Research• Social Media

Interaction data• E-Mail / chat transcripts

• Call center / CRM notes • Click-streams

• Lead Generation• Mobile Marketing

• Tradeshows and Events


Advanced customer insight can transform the customer experience

Customers get mass offers Customers get timely personalized recommendations

…analyzing customer interactions, spending patterns, social media and more

Customer treatment based on broad segments with little differentiation in experience

Personalized customer treatment …using advance analytics to create behavior-based micro-segmentation and “segments of one”

Customers frequently check balances Customers receive regular analysis of spend and cash flow

…analyzing spending patterns and applying predictive analytics

Employees act on dated information Employees access real-time customer status and suggested actions

…performing real time profile updates and adjust recommendations as interactions and events occur

Customers are surprised by overdraft fees

Customers get event predictions and ways to plan for their future

…analyzing behavior to predict future events

Customers ignore notices Customers seek advice, based on life events

…using predictive analysis to uncover life events and proactively provide options

Banking Today With Advanced Analytics By…


Large Chinese bank improved marketing offer response 300%

Need

• The bank wanted to improve marketing efficiency

• They wanted to uncover new insights about customers that took into account their entire relationship with the bank to improve cross sell

Solution

• Analyzed credit card transactions for new customer insight

Benefits

• Increased credit card marketing response rate from 3 percent to more than 10 percent

• Improved the bank’s ability to identify customer attrition risk and take preventive measures to improve customer retention



European bank rapidly analyzes client behavior for improved marketing results

Need

• To speed analysis of client behaviors to offer personalized marketing offers across all channels

Solution

• Predictive analytics on customer behavior

Benefits

• 3X improvement in customer response to next best action propositions

• A 98 percent increase in key client interaction performance metrics such as click stream data, analytical reporting and queries


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Driving Change in Banking - Engagement in the world of empowered individualsMarch 2015

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© 2015 IBM Corporation 16© 2015 IBM

72% of CEOs are making major changes to understand their customers’ individual needs

35% of the general population is influenced by social media, vs. 52% of Gen Y (Millennials)

The Smartphone is the omni-present channel for sharing and 91% keep the phone close and access it up to 150 X a day

Source: IBV Studies

What’s changing in the world of Banking client engagement

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Bank Marketing’s universe is changing too… Marketing must re-imagine its role…

Know your customer as an individual

Create value at every touch

Be an authentic brand and culture

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It’s awfully hard to re-imagine marketing when the technology infrastructure looks like this…

SMSMarketing

FilesFiles

FilesFiles

Files Customer Database

Files

Email Service Provider Web Analytics

Provider

Website Behavioral Targeting

Search Marketing Dashboard

Customer Insight ToolPredictive Analytics

Marketing Finance Mgmt

Digital Asset Mgmt

Call Center/Inbound Decisioning

Marketing Operations Mgmt

Lead Management

Local Marketing

Predictive Analytics

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IBM Commerce strategic vision for Bank CMO’s: Provide the best customer experience through an integrated set of capabilities

Analyzeto identify opportunities and

predict outcomes

Collectdata that augments

each customer profile

Managemarketing processes and

measure results

Decideon the best action, offer, content and/or channel

Deliverrelevant pricing, engaging messages, and capture reactions

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A IBM Commerce approach helps CMOs improve the customer experience at the bank

Grow your knowledge of customers as individuals so you can better target offers

and information.

Deliver an omni-channel marketing experience to

give the customer one consistent brand experience

Better anticipate customer needs to deliver more

relevant and timely offers that are more likely to

be accepted.CMO Agenda

GAIN CUSTOMER INSIGHT TO ACT

PERSONALIZE INTERACTIONS AND

ENGAGE CUSTOMERS WITH

RELEVANT OFFERS

DELIVER AN OMNI-CHANNEL

MARKETING EXPERIENCE

DELIVER A BETTER MOBILE BANKING

EXPERIENCE

Deliver an improved mobile banking customer experience. And ensure that mobile is not a stand-alone silo, with Omni-

Channel marketing.

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#ibmamplify


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First, you need to GAIN CUSTOMER INSIGHTwith Customer Analytics & Digital Marketing

FROM TOUnderstand Customer

Demographics Understand Individuals &

Ecosystems

CMO

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First Tennessee Bank uses web analytics to optimize mobile banking interactions by driving targeted content

Business challenge: First Tennessee Bank wanted to make the most of the time customers spent on its web and mobile sites by delivering personalized content and targeted marketing messages. The bank also wanted to tap in to the data captured during virtual interactions to help tellers and call center employees improve customer service and identify more up-selling opportunities.

The smarter solution: The bank implemented a web analytics solution that draws insight from customers’ online behaviors. It uses the data to create targeted content, email messages and product suggestions. The solution also provides bank employees with insightful information about the customers they serve.

“Our goal is to make it easier for customers to do business with us on every channel. Today, we have all the tools we need to deliver outstanding service across every device.”—Nicole West, web analytics manager

3% lowerhome page bounce rate as a result of better insight into the page’s design

Increased frequencyof detailed web traffic reports from monthly to weekly

13% faster logins due to a better understanding of what customers experience on the bank's home page

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Customer engagement framework

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Customer engagement framework

Manage budgets,processes & measure results

Analyze data to find actionable insights

Decide on the best offer, action or communication

for each customer

Collect data that augments each customer profile

Learn, Optimize and tune iteratively

Build and integrate assets, offers, promotions for customer

engagement

Deliver engaging messages and capture reactions

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The Value of the Customer Engagement Framework

Precise Efficient Proactive

Individually identify clients, actions, and outcomes for targeted and unique offers

Predict likelihood of success, and focus on the most impactful

actions

Base your market strategy and actions on future outcomes, not

just past events

sophisticated analytics provide actionable insight to ExperienceOne

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PERSONALIZE INTERACTIONS with Real-Time Personalization

CMO

FROM TOStatic Offers Tailored Moments

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improvement in response outreach

Decrease in direct marketing costs

And a very Large European Bank grows revenue and loyalty with personalization across branch, call center, and web experiences.

3X

PERSONALIZE INTERACTIONSCMO

35%

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#ibmamplify


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ENGAGE CUSTOMERS with Omni-Channel Marketing

CMO

FROM TOTraditional Seasonal

CampaignsRelevant Lifecycle

Customer Marketing

#ibmamplify


targeted offers per week; more offers than previously sent in an entire year

growth in sales volume for a particular savings product

IBM helps SNS Bank create an Inbound Marketing Machine to Spur Growth

4.5 M

ENGAGE CONTINUOUSLY WITH CUSTOMERSCMO

5%

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#ibmamplify


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CREATE A SUPERIOR mobile banking experience

CMO

FROM TOFirst generation mobile

banking

Seamless brand experience extended to

mobile

#ibmamplify


Coordinated inbound, outbound marketing, Real-time offers across web and call-center, & integrated marketing operations

Sophisticated event detect that outperforms all other methods of lead identification

Comprehensive cross-channel lead management

End-to-end customer lifecycle optimization - attract, on-board, monitor and act on behavioral profiles

Cross-channel, multi-wave, lights out outbound marketing

#ibmamplify

© 2015 IBM Corporation 33

350,000+ Global trading entities connected

5.5 millionTransactions exchanged through B2B cloud daily

Nearly

15X ROIFor every dollar spent on IBM Commerce

#1 Banking tech vendor as ranked by the FinTech 100

$100 billion Commerce transactions analyzed in Holiday Benchmark Reports

5 years in a row the Gartner Magic Quadrant leader for Multi-Channel Campaign Management

IBM Commerce for banking delivers value at speed

Sources: Internet Retailer Top 500, IBM and Nucleus Research Provided for illustrative purposes and is not intended to be a guarantee of future growth rates or market opportunity. © 2015 IBM

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Copyright © 2015 by International Business Machines Corporation (IBM). No part of this document may be reproduced or transmitted in any form without written permission from IBM.

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Information in these presentations (including information relating to products that have not yet been announced by IBM) has been reviewed for accuracy as of the date of initial publication and could include unintentional technical or typographical errors. IBM shall have no responsibility to update this information. THIS DOCUMENT IS DISTRIBUTED "AS IS" WITHOUT ANY WARRANTY, EITHER EXPRESS OR IMPLIED. IN NO EVENT SHALL IBM BE LIABLE FOR ANY DAMAGE ARISING FROM THE USE OF THIS INFORMATION, INCLUDING BUT NOT LIMITED TO, LOSS OF DATA, BUSINESS INTERRUPTION, LOSS OF PROFIT OR LOSS OF OPPORTUNITY. IBM products and services are warranted according to the terms and conditions of the agreements under which they are provided.

Any statements regarding IBM's future direction, intent or product plans are subject to change or withdrawal without notice.

Performance data contained herein was generally obtained in a controlled, isolated environments. Customer examples are presented as illustrations of how those customers have used IBM products and the results they may have achieved. Actual performance, cost, savings or other results in other operating environments may vary.

References in this document to IBM products, programs, or services does not imply that IBM intends to make such products, programs or services available in all countries in which IBM operates or does business.

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Enabling a new banking experience with predictive analytics

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