First National Bank Builds 360 Degrees of Customer Vision

In 1998, as a consequence of the merger of Rand Merchant Bank Holdings and Anglo American, First National Bank (FNB) became the retail banking division of the newly formed FirstRand Limited, which trades on the Johannesburg and Namibian Stock Exchanges. FNB has a wide range of products and services for personal, business and rural customers, and owns some of the strongest brands in African banking.

FNB's 3.2 million customers – three million individual consumers and 200,000 SMEs (small to medium enterprises) – hold nearly 5 million accounts, but the bank competes in a tough environment. Many products are being commoditized, and in this climate, service differentiation is the key to profitability. Additionally, a lot of nontraditional entrants to the market are squeezing the business of South Africa's four major retail banking groups. All this has increased the pressure on FNB to become more customer-centric and to improve its marketing. "When we looked at our situation postmerger, we recognized the need to coordinate our direct marketing activity more effectively," says Jithendra Daya, Chief Knowledge Officer within FNB's Marketing Strategy Group. "We lacked a formalized communications platform and were not fully exploiting our customer data." Lack of coordination meant, for example, that many customers were being under- or over-solicited and some were receiving similar offers for the same product through different channels. Without any coordinated attempts to measure and compare the effectiveness of these channels, FNB's limited resources were not being used to optimal effect.

"We were at an important crossroads in the bank's history," says Daya. "There is an enormous untapped market in South Africa, but with growing competition from traditional and nontraditional sources, we had to capitalize on the opportunity quickly." FNB therefore decided it was time to take a more integrated campaign management approach. The aim was twofold: first, to increase existing revenue streams by cross-selling and up-selling, and second, to create new revenue streams through the introduction of new products tailored more specifically to customer needs. "Our complex strategy includes penetrating deeper into the unbanked market in South Africa as well as making sure that our customers stay with us for longer and use more products with us," says Michael Jordan, CEO of Customer Solutions.

SAS — a proven track record
To achieve these objectives, FNB knew it would have to introduce a campaign management solution to use its existing customer knowledge base more efficiently and to improve that knowledge through a continuous process of refinement. At the heart of the solution was the consolidation of direct communication channels through marketing automation. FNB put together a business case and sent out a request for information to various solution vendors, from which they drew up a shortlist. Daya explains why FNB ultimately selected SAS Marketing Automation, "SAS combines data warehousing, advanced analytics and campaign management in a single product suite, which is a clear differentiator. SAS was also a good architectural fit, and the company offered excellent local support, a proven track record in this field and a huge knowledge base. SAS also looked good on total cost of ownership."

The solution gathers and cleanses data from product and customer silos and then places it in a campaign management data mart. The data is then exploited for analytical cross-selling and to support automation of various communication channels, including telemarketing, direct mail and e-marketing. "It's very important to start with quality customer information in a single customer database. That's the most important challenge," explains Jordan. "The second bit is then to develop strategies around that customer database to make sure that we launch any of those strategies which are appropriate for customers."

At the top of the conceptual pyramid, the marketing automation solution delivers packages customized to meet the needs of individual customers, chosen on the basis of potential lifetime value. These include product bundles based around an analysis of the customer's experiences.

Double-digit response rates
Initial goals included easy integration of different campaign components, automation of current and planned campaigns, reduction of campaign implementation time, and an increase of campaign response rates. Less than four months into the implementation, FNB was already seeing substantial, measurable results on these metrics and implementing solid business processes for campaign test and roll out. According to Daya, "We're getting more reliable output within the appropriate timeframes on all the necessary components of the campaign. We're also better positioned to fragment campaigns into smaller components without making any extra demands on our analytical resources. For example, we're bundling packaged offers to subsegments within the overall campaign selections. And we've seen aggregate response rates of nine percent, with more than 16 percent response on the bundled offers, which is fantastic."

Marketing automation is also starting to help FNB to identify new revenue streams. "We have a number of core products, and our delivery mechanism to the customers has traditionally been the owners of the relationships based on those core products," says Daya. "In the process of putting together a campaign aimed at high-net-worth customers – the most profitable five percent – we discovered that a significant proportion had no relationship owner. So we broadened the campaign to reach other customers we had been neglecting. This is where we really see the power of the SAS solution beginning to exert itself."

Campaigns at a glance
Visibility over marketing activities is another important benefit. "You can see at a glance what campaigns you have going on. In the past, you had to wade through different Excel sheets. Now we can see how we're doing by day, by week, by month, so we can measure our progress over time and adjust our strategies," says Stuart Maciver, Head of Knowledge-based Marketing and the Manager of the Marketing Automation Project. "Based on the information and analysis we're getting, we're starting to have effective discussions about selection criteria for future campaign activity, which we've never been able to do in the past."

FNB set itself the target of achieving a return on investment within 10 months, with only a marginal increase in direct marketing activity. Technical challenges made this an ambitious objective, but SAS met the challenge. In fact, Maciver says the first campaigns completed with SAS Marketing Automation have each yielded a phenomenal ROI of more than 3,000 percent.

Daya attributes much of this early success to SAS. "Support from SAS was key to moving the implementation process forward. The level and speed of support, both locally and internationally, was just phenomenal," says Daya. "And that makes it a real pleasure to work on these big projects," he adds. "Obviously, all of our competitors are trying to become more customer-centric, but the technology and support we get from SAS is definitely helping us to stay a jump or two ahead. I think SAS understands that these solutions have to be implemented incrementally; there's no way you can solve every aspect of marketing automation or CRM with one big hit. But what you do, you should do well. And then build out. For example, data quality and data integrity are critical to marketing automation, and these are clear SAS strengths."

Know your customer better than anyone
While many financial service companies are using customer databases and CRM software to identify market opportunities, Daya says SAS offers additional benefits. "I think our advantage is that we can now do this at the customer level and act quickly on the knowledge, whereas our competitors are still looking at the customers through the prism of product portfolios. That's limiting and it's distorting. You need direct, 360-degree line-of-sight on your customers. The name of the game today is to know your customers better than anyone and to communicate with them better than anyone," he concludes.

Today, First National Bank knows it can effectively market its services to both new and existing customers, because SAS technology helps the bank develop marketing campaigns based on a deep understanding of customer needs. "We believe technology is an enabler to business," says Jordan. "What that means is we don't have a technology strategy per se but we do regard technology as something very important for you to succeed in your business strategy."

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