Fubon Financial Holdings gets results with SAS®
In one year, Fubon Financial Holdings saved US$2 million in its credit card division, reduced the customer service division's labor costs by 14 percent and reduced product costs by as much as 50 percent. At the same time, Fubon warded off a severe credit card debt crisis. All of this was accomplished with the help of a SAS performance management solution called SAS Activity-Based Management.
Taiwan's financial services industry has experienced a period of consolidation as it nears maturity. Cross-industry mergers and restructuring have led to growing complexity and competition, and the industry faces new challenges, such as finding and developing more profitable products in a crowded and mature market. To stay competitive, companies must differentiate their products and provide relevant services to a large volume of customers while reducing transaction costs and measuring each department's performance. Amidst this growing complexity, Fubon Financial was formed in 2001 through the merger of Fubon Insurance, Fubon Securities, Fubon Bank and Fubon Life and now provides the most comprehensive range of financial services in Taiwan.
Developing a Cost-Sharing Model with SAS®
Fubon Financial's credit card division, with about 3 million credit card customers, was the pilot for the SAS solution's implementation. As the division with the fastest growth and the highest operating cost, this division was the most logical for the trial. It would be followed by other branches and finance divisions. "SAS Activity-Based Management gave us the flexibility to initially work with a single department to produce independent ROI results," said Chung Ming-Ling, Fubon's Assistant Vice President of Planning. "We were pleased with its scalability. The credit card division pilot allowed us to understand what it would take to produce rapid results, thus providing a sound business case for further adoption by other departments for this enterprisewide solution."
Revealing the Cost Culprits
The bank also found that the mailing costs for the credit card division were very high. Using SAS Activity-Based Management, Fubon identified and analyzed these costs and chose to mail only those things necessary to maintain service levels. In addition, an analysis of service delivery showed that delivery processes could be cut by four or five steps in some cases. Fubon's service delivery became more fluid and efficient after a review of those costs and removal of repetition.
SAS Activity-Based Management models organizational processes and accurately determines the cost and profitability of products, customers and business segments. "The value of analyzing customer behavior to understand the real needs of customers is twofold: On the one hand it helps us meet our customers' needs," said Chung Ming-Ling. "On the other hand, it reduces costs by redesigning operating processes."
Card Debt Crisis Averted
"Banks, while managing risk, need to also consider a customer's lifetime value," Chung Ming-Ling said. "High-contribution customers who are also high risk should be excluded from the list of customers to be purged. Because both the customer return and risk have been taken into account, information becomes more valuable because it is no longer one-dimensional."
From Operations to Strategic Planning
Users of SAS Activity-Based Management do not need to know how to program or rely on IT departments because they can easily create their own data models. This flexibility and usability allowed Fubon to build a core analytics team to easily cope with increased workloads. It also meant that data models could be quickly and efficiently adjusted to changing business conditions.
Fubon's success with activity-based management lies in a synergy between SAS solutions and an organization willing to take the lead and embrace innovation and growth.
The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.
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Fubon Financial Holdings
In a maturing financial market, Fubon Financial Holdings needed to evaluate the true operating cost of each of its divisions because of a massive restructuring.
Fubon Financial used SAS Activity-Based Management models to gain cost, process and profitability insights.
Customer segmentation based upon risk and return profiles, accurate cost information and clear operational focus led to improved resource allocation across Fubon's 124 bank branches and a US$2 million savings in the credit card division in the first year.
“The value of analyzing customer behavior to understand the real needs of customers is twofold: On the one hand it helps us meet our customers' needs. On the other hand, it reduces costs by redesigning operating processes.”
Assistant Vice President of Planning