A Holistic Approach to Complete Banking Intelligence

Banks seek innovative ways to grow business organically

In simpler days, it was easy for consumers to select a financial institution. They chose the local bank, the one where their family had conducted business for years, the teller was their neighbor's sister-in-law and the branch manager knew them by name. All else being equal, customers chose an institution because it was convenient and personal.

Today, the model of the personal neighborhood bank is a quaint memory replaced by national and multinational service providers, cross-industry joint ventures, ATMs, Internet banking, automated call systems and a proliferation of product choices – unfettered by traditional ties of geography and familiarity.

Consumers have traded loyalty and a personal relationship for the ability to pick and choose from the latest deals of the day that appear, pre-approved, in the mailbox.

As a result, banks now find it difficult to show competitive differentiation and find it harder than ever to show profit. A typical bank has thousands of local, regional, national and global competitors. As the industry continues to fragment, most players hold a relatively small and unreliable market share.

This new order calls for a new mindset. Banks have to rethink strategies and devise new business models to respond to increasing customer sophistication and the growing scrutiny of shareholders and regulators.

Top questions from today's banking executives
In this world of dwindling customer loyalty and spiraling external pressures, executives are asking pressing questions. In most cases, however, their current operations and reporting mechanisms don't provide gratifying answers.

CEOs and their boards of directors are asking hard questions about overall performance and accountability:

• Are we effectively identifying and capitalizing on opportunities for revenue growth?"
• "Are we sure of our compliance with regulatory requirements?"
• "What measures should we take to continually deserve the trust of investors and the public?"
• "How can we better align day-to-day operations with long-term strategic goals?"

CMOs and their teams have acknowledged that consumers have more power than ever, and are seeking new ways to court, cultivate and keep these relationships. They're asking:

• "How can we gain a unified view of the customer across the entire organization?"
• "How can we create an accurate understanding of customer behaviors and reach out to them at the most appropriate time with the most relevant offer?"
• "Who are our best customers, and how do we keep them?"
• "How can we maximize the profitability of each customer relationship?"

CROs and compliance managers are facing more regulatory control and investor scrutiny, even as the operations under their jurisdiction become more intangible and remote. They're asking:

• "How can I generate a comprehensive view of risk across the institution?"
• "How can we reduce the costs and burden of meeting regulatory requirements?"

CIOs and their IT teams are struggling to meet the technology requirements of the bank's ever-changing activities. They're asking:

• "How can we deliver unified applications on a patchwork infrastructure?"
• "How can my limited staff address the unique needs of so many business units?"
• "We were stretched thin before; how can we meet the new regulatory reporting deadlines?"
• "How do we prove our value and not just fight daily fires?"

The answers: A holistic approach
Answers to these questions aren't found in the megaspreadsheets that still proliferate in so many institutions. Spreadsheet programs simply cannot perform consolidations fast enough for larger organizations to meet the new, shorter reporting deadlines. They also do not provide the audit trail required for full transparency, or systematic ways to maintain version control and disseminate important information throughout the organization.

The right technology foundation integrates people, processes and information to arrive at a single, reliable view, based upon repeatable, searchable and auditable processes. As a result, many banks are now seeking one cohesive set of performance management applications from a single vendor. This unified approach provides the holistic view that is so desperately needed – while removing integration issues that hinder information sharing.

An effective framework from SAS can seamlessly integrate these fundamental components:

• A centralized data repository that synthesizes data from currently incompatible silos on any platform, in any format.
• Sophisticated data integration processes that maintain data quality, so you can have faith in the accuracy of plans, reports and analyses.
• Banking-specific business analytics that enable non-statisticians to uncover meaningful intelligence from vast amounts of information about customers, products and risks.
• Predictive analytics to deliver more accurate forecasts, optimization and resource allocation plans.
• Cohesive compliance management, including real-time consolidation/reporting, management of operational risk and compliance status, activity-based costing and an authenticated process-controls repository.
• Strategic performance management for institution-level guidance, accountability and integrity.
• Query and reporting tools that give users high-quality information, where and when needed, via multiple platforms and channels.

Delivering banking intelligence
The ideal solution provides all these essential ingredients – including banking-specific analytic and reporting models within a banking-specific data architecture – from a single vendor, along with enterprisewide balanced scorecarding with KPIs unique to the banking industry. SAS provides a comprehensive technology solution that includes industry-tailored components for any or all of the following areas:

Strategic performance management
A successful performance management solution provides industry-specific models and KPIs that let you effectively communicate your strategic plan throughout the organization, empowering employees to contribute to higher goals and anticipate events before they occur. The solution monitors which processes are successful and which ones need modification, so you can continuously improve efforts and boost profitability while managing risk.

Campaign management
A successful campaign management solution fully integrates customer analytics with campaign management technology to provide a better understanding of customer information, thereby increasing the efficiency and profitability of marketing campaigns. Such a solution seamlessly integrates modeling results from customer segmentation and profiling, cross-selling and up-selling, and customer retention models with campaign management activities.

Customer segmentation
The ideal customer segmentation solution identifies and categorizes the customer base into distinct groupings with similar characteristics. Demographic, geographic, attitudinal and behavioral data from across the enterprise, as well as from other analytic applications (such as cross-sell/up-sell and retention applications), can be incorporated into the analysis to develop highly accurate segments.

Cross-sell and up-sell
The best cross-sell and up-sell solutions show which products and services customers have bought and then use that knowledge to accurately predict which ones they are most likely to purchase in the future. Whether promoting installment loans, mortgages, credit cards, online banking services, retail investments or retirement plans, your chosen cross-sell and up-sell solution should help you quickly develop cross-sell or up-sell propensity models for specific products and lines of business.

Credit scoring
A successful credit scoring solution provides a better understanding of customers' creditworthiness by providing application and behavioral scoring to assess and control risk within existing consumer portfolios and to improve acquisition strategies. By applying predictive analysis to gathered data, you will better understand the specific risk characteristics and attributes that lead to delinquency, default and, ultimately, bad debt. And by accurately assessing risk within your existing customer base and providing a basis for scoring potential new customers, you can present appropriate product offerings while simultaneously managing business risk. 

Customer retention
Customer retention solutions should accurately identify customers who may cancel products or leave the bank altogether, while providing a better understanding of their needs. The solution delivers prebuilt models that provide retention analytics for specific lines of business. This analysis incorporates historical data on products held by clients as well as details of customer demographics, current and future life-stage data, customer satisfaction, channel usage, etc. This knowledge enables you to create more appropriate offerings and targeted messages.

Risk management
When every department or line of business measures and reports risks differently – and accounting systems and risk management systems run separately – it can be difficult, even impossible, to gauge overall risk exposure. The right risk management solution helps you manage risk across the organization, giving you an open, flexible and extensible means of measuring and managing market, credit and operational risk. It also adjusts to your bank's individual needs, while meeting regulatory requirements such as Basel II.

New insights, increased profits and decreased risk
As the banking industry grows more competitive and volatile markets erode consumer confidence and loyalty, banks must better manage their information and find new ways to turn that information into reliable business intelligence if they are to succeed.

A holistic banking intelligence solution can deliver software and services tailored to the unique needs of the banking industry, all integrated through an enterprise data architecture designed specifically for banks. These solutions draw on the vast amounts of data generated by existing systems and apply banking-specific analytic models to transform that data into meaningful intelligence about strategic performance, customer relationships, credit decisions, risk management and regulatory compliance. As a result, you gain new insights into customer and business information, infuse intelligence into strategic business decisions, and increase your success in generating profits, managing risk and delivering rapid ROI.