http://web.services.leveragesoftware.com/rest/service.aspx?client=mycommunity&method=BlogPosts.GetAll&format=rss2&blogid=434a3aecaf1a496c98579450b1cdd89b&sort=creationdate Mon, 30 Jan 2012 17:11:37 GMT Insights about analytics, business intelligence and management from leading global practitioner David B. McNab. http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/in3mMwCpgzs/blog_post_view.aspx Mon, 30 Jan 2012 17:11:37 GMT Understanding the motives that drive customer behaviour is increasingly being recognized as essential to relevant customer interaction. Knowing that customers are likely to drop a product or add a new one, or detecting abnormal changes in account use provides only a small part of the information you...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=in3mMwCpgzs:0uPXz5s3y5s:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=in3mMwCpgzs:0uPXz5s3y5s:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=in3mMwCpgzs:0uPXz5s3y5s:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=in3mMwCpgzs:0uPXz5s3y5s:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/in3mMwCpgzs" height="1" width="1"/> Analytics | Business Intelligence | Management 84afd9a688a846079a1e723eace43eef 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 Understanding the motives that drive customer behaviour is increasingly being recognized as essential to relevant customer interaction. Knowing that customers are likely to drop a product or add a new one, or detecting abnormal changes in account use provides only a small part of the information you need to have a meaningful conversation with your customer. Historically our capabilities have addressed identifying what customers are likely to do (see article parts I and II ) with little regard to why. Leading banks are now exploring how to better understand motive by gathering information about what is going on in their customer’s lives, and developing offers and dialogues that are relevant to the individual in the context of their changing circumstances. Detecting “life events” such as birth of a child, cohabitation, going to college, buying a home, renovating, acquiring a vacation property and the like is not easy. Some of this information must necessarily be solicited directly from your customers, through interviews or online tools that provide the customer with more relevant advice when they share details of their circumstances with the bank. These capabilities have long been used in the investments domain to gather a fuller understanding of customer aspirations and needs, while satisfying “know your client” (KYC) regulatory requirements. There are now many financial planning and customer dialogue scripting tools available to engage your customer and extract vital insights into circumstances and aspirations that can be used to tailor offers and interactions to be more relevant to the individual person you are serving. Implementation of similar life event dialogue tools is now growing in popularity among leading retail banks. Asking your customers about their life events must involve a meaningful exchange of value to work. Customers must perceive a real benefit to providing information about their plans, aspirations and circumstances, and perhaps more importantly, if they proffer this information they need to see that your bank remembers it, protects it and utilizes it intelligently to improve the relevance of customer dialogue, offers and interventions. Failure to use information you ask for is worse than not asking in the first place. A coordinated customer dialogue requires integration across products, geographies and distribution channels with a consolidated understanding of your customer as the common base. In addition to revealed motives gleaned from customer dialogue, important insights about how customers use your products and services can be gleaned from traditional information sources. The big challenge is getting past account or transaction based analysis to understand holistically what your customer is doing. Traditional banking systems fragment customer behaviour into sets of transactions that obscure what is really going on. For example when a customer borrows against their home to invest in mutual funds, banks see the two sides of the transaction as unrelated (and even contradictory) events; borrowing and investing. It is only when both sides of the event are seen together that we understand the customer’s real behaviour. Taking a holistic view of customer use of products and services enables you to gain insight into customer intent. 30% of account level growth and diminishment occurs because your customer is switching money from one product or service to another. Transaction and account analyses fail to see these important flows of funds – everything is seen as a win or a loss of business. This distortion leads to false targeting, false triggers and irrelevant customer dialogue (see blog entires What is a cross-sale? and Event detection ). Let’s take a look at how customers move money around inside the bank: Customer moves money between Possible motive Accounts of the same product Features, location Deposit or lending products Rate, features, location Deposit and lending products Borrow to invest / pay down loans In addition to moving money between existing accounts, your customer may be moving into a new account or product at the same or a different branch. These changes, normally observed as sales and lost business, indicate clear product or location choices that are conscious choices your customer is making to reallocate their money within your bank’s products and services, and you need to understand why. For example relocating accounts may be indicative of a change in job or residence – a major life event. Paying down loans suggests that your customer has recently acquired new wealth. Borrowing to invest may imply an impending major purchase. You can refine these insights by knowing which products are involved. For instance borrowing from a HELOC to invest in short term mutual funds may indicate an impending renovation, whereas borrowing from a HELOC to invest in equities or long term CDs likely indicates a change in investment strategy. Knowing what your customer is doing holistically reveals – at least partially – their intent, which should inform your customer dialogue. Switches between deposit and lending products are another interesting case. These substitutions – often called cannibalization – illuminate customer preferences. Within deposits, for example a customer can move money between products with different liquidity characteristics (short term, long term, demand) and with different rates of return and risk. Changes in preferences reflect changing customer needs which you should be aware of. Analysis of this type reveals a lot about customer behaviour. When you combine this data with other information acquired through tools designed to gather life event data you can sharpen the relevance of your dialogue significantly. Moving beyond the analysis of individuals, statistical techniques can be applied to your entire portfolio of customers to better understand, predict and optimize your customer interactions by first understanding why customers do what they do. - Dave McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=84afd9a688a846079a1e723eace43eefhttp://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/55edakAXVjA/blog_post_view.aspx Thu, 19 Jan 2012 15:43:20 GMT We started this retrospective by looking at how industry challenges and regulatory responses have been increasing analytics capabilities in Financial Institutions in Part I of this series. Let’s now layer on the introduction of analytics enabling capabilities with the growth of customer insight over...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=55edakAXVjA:64amvK_vRn4:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=55edakAXVjA:64amvK_vRn4:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=55edakAXVjA:64amvK_vRn4:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=55edakAXVjA:64amvK_vRn4:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/55edakAXVjA" height="1" width="1"/> Analytics | Business Intelligence | Management 4bc532e4f9f0430cb5e8318c9bcb25e5 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 We started this retrospective by looking at how industry challenges and regulatory responses have been increasing analytics capabilities in Financial Institutions in Part I of this series. Let’s now layer on the introduction of analytics enabling capabilities with the growth of customer insight over the same period. When we do distinct phases of advancement in business insight over these three decades emerge. Bef ore the 80s banks ran on volume metrics in branches, with practically no technology enabled insights into customer relationships. This was followed by a product-centric management trend (thanks partly to FTP, partly to the influx of consumer packaged goods marketers in the 80s) and the evolution of the geography-product management matrix that still prevails in most banks today. With Basel I we got better at assessing credit exposure and that information, coupled with FTP and ABC costing gave us the basic ingredients for understanding customer "profitability" (more properly Customer Value). There was a big push in the 90s to develop a 360 degree view of each customer relationship (the Customer Information File or CIF) and start leveraging FTP, credit loss exposure and ABC cost to measure customer value to the bank. The insights produced were profound, enabling us to understand the value dimension of the customer base for the first time, revealing huge disparities in contribution of different customer groups. These observations spurned development of target marketing and marketing strategies that are still dominant today. Leading firms started to look at transaction streams when AML requirements (and card fraud losses) forced investment in streaming data analysis. Banks started to apply business rules to identify anomalous transactions – statistically outside of a customer’s normal volume, frequency, location etc. – in an attempt to identify appropriate interventions in response. These efforts were fruitful, enabling retention and cross selling interventions to be identified in real time, dramatically increasing the relevance of the response to events detected by the monitoring tools. In parallel predictive analytics – forecasting future events based on history – has grown in importance. Originally used to predict loan defaults (credit scoring) the same statistical techniques have extended to identify next likely sale, probability of offer conversion, probability of account and customer defection and the like. More sophisticated methods of analysis such as price optimization based on price elasticity of demand at the micro-segment and individual customer level have been meeting with significant success in recent years. All of these techniques have led us to better understand our customers better. The new frontier in Financial Institution customer analytics is an extension of these insights to get past understanding the probability of a customer doing something or reacting quickly to new or unusual transactions, to understanding why the customer is doing what they are doing. Understanding “why” is the key to being relevant . This is the domain of customer behaviour analysis, which requires a new way of thinking about our data, our tools and our objectives in using analytical tools.... and this time advances are being driven not by regulators, but by the need to create competitive advantage. NEXT: Beyond What: understanding customer behaviour - Dave McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=4bc532e4f9f0430cb5e8318c9bcb25e5http://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/jTVOeX3cZ2s/blog_post_view.aspx Wed, 18 Jan 2012 15:08:13 GMT Banking leads many industries in the application of analytical technologies to business problems. We can gain some interesting insights by reflecting on where we have come from over the past 30 years to gain perspective on where we are going. In this post (and the next few) I will provide a...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=jTVOeX3cZ2s:HhWk9jRUCLQ:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=jTVOeX3cZ2s:HhWk9jRUCLQ:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=jTVOeX3cZ2s:HhWk9jRUCLQ:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=jTVOeX3cZ2s:HhWk9jRUCLQ:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/jTVOeX3cZ2s" height="1" width="1"/> Analytics | Business Intelligence | Management 37c7dc77b8cc46eea7b402b587807842 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 Banking leads many industries in the application of analytical technologies to business problems. We can gain some interesting insights by reflecting on where we have come from over the past 30 years to gain perspective on where we are going. In this post (and the next few) I will provide a retrospective view of bank analytics evolution to highlight emergent patterns that may inform your thinking about where your strategy should be heading. I welcome fellow BAI Community members to dissent, agree or comment freely as my ambition is to provoke a thoughtful discussion that benefits the community. Let’s start by laying out two key timelines in parallel - major events affecting our industry and major regulatory changes - as a baseline. There is a distinct pattern of new regulatory regimes following closely after major industry events, which should come as no surprise to the members of this community. [click to enlarge thumbnail] The 80s were marked by interest rate peaks and a prolonged inverted yield curve which allowed interest rate risk to wipe out the profitability and capital of most of the Savings & Loan sector. This put Asset & Liability / Interest Rate Risk management in the regulatory limelight, driving adoption of matched maturity funds transfer pricing (FTP) as a core tool for monitoring A&L mismatch and enabling measurement of deposit and loan product margins. The 90s brought us a lending crisis starting in UK real estate and spreading to North America. This advanced the analysis and quantification of credit quality and credit related risk at both account and portfolio levels - in no small part driven by the first Basel Accord. Early in the new century 9/11 brought us the Patriot Act, which spawned the required Anti Money Laundering (AML) transaction analytics capabilities needed to comply with Homeland Security (and fraud detection) needs. At the same time the Basel Accords expanded to include understanding (and measuring) capital requirements associated with non-credit risks. Most recently liquidity has moved to the foreground as a consequence of the 2008 global financial liquidity crunch. Basil III and balance sheet “stress tests” are now in the spotlight. What can we learn from this? First and foremost it appears that both management and regulation of our industry have been largely reactive rather than proactive in the advancement of the analytics side of banking business intelligence. Core capabilities that enable modeling of customer value and other key insights have trickled in over the years driven not by our quest for insight, but by capabilities demanded by regulatory requirements. We have not been brilliant business leaders exploring new frontiers of insight for business advantage: we have actually been slow to exploit technology to uncover business fundamentals . NEXT: Out of distress.... insights - Dave McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=37c7dc77b8cc46eea7b402b587807842http://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/g2AVt0R1XmA/blog_post_view.aspx Fri, 21 Oct 2011 17:18:01 GMT Thanks for asking. Gatorade is one of today's global leaders in consumer engagement through technology. They monitor social media on the web - facebook, twitter etc. - in real time and use this monitoring to identify opportunities to engage consumers with their brand. It works like this.... "hear"...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=g2AVt0R1XmA:cZ6P1IJEDAU:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=g2AVt0R1XmA:cZ6P1IJEDAU:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=g2AVt0R1XmA:cZ6P1IJEDAU:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=g2AVt0R1XmA:cZ6P1IJEDAU:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/g2AVt0R1XmA" height="1" width="1"/> Analytics | Business Intelligence | Management dc49b404977042b8aaf54d936fe0c3b3 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 Thanks for asking. Gatorade is one of today's global leaders in consumer engagement through technology. They monitor social media on the web - facebook, twitter etc. - in real time and use this monitoring to identify opportunities to engage consumers with their brand. It works like this.... "hear" consumers getting together for sports events on the internet, identify the organizers and participants, contact them using social media, reward the organizer with special Gatorade offers, listen to the buzz ... While banking is not exactly the "sweat beverage" market, there is lots to learn from listening in on social media to hear what is being said about your brand, your products, your services, your people ... an awful lot of consumer intelligence is there just waiting for you to tap. Take a minute to check out this cool video on youtube... it was prepared by Gatorade's marketing folks to tell their social media story and was presented in New York last month at a global Consumer marketing show. Even if you don't "get" the connection the video is awfully cool........ - Dave McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=dc49b404977042b8aaf54d936fe0c3b3http://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/XEiTVR_vOJ8/blog_post_view.aspx Fri, 16 Sep 2011 21:33:28 GMT Sometimes it pays to keep things simple. Over 30 years in the industry I have had the opportunity to be involved in many think tanks working on KPIs, reporting, scorecards and dashboards. Throughout it all, some fundamental metrics consistently emerge as essential, since they describe manageable...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=XEiTVR_vOJ8:sn_JvIIMFrY:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=XEiTVR_vOJ8:sn_JvIIMFrY:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=XEiTVR_vOJ8:sn_JvIIMFrY:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=XEiTVR_vOJ8:sn_JvIIMFrY:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/XEiTVR_vOJ8" height="1" width="1"/> Analytics | Business Intelligence | Management d61a6d8b08854e4f9eaa7063472b160e 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 3 Sometimes it pays to keep things simple. Over 30 years in the industry I have had the opportunity to be involved in many think tanks working on KPIs, reporting, scorecards and dashboards. Throughout it all, some fundamental metrics consistently emerge as essential, since they describe manageable dimensions of the business in simple yet effective terms. They may sound too simple (and they certainly are not new), but simple works ... and if these metrics aren't working in your shop, your bank isn't operating optimally. Of course there are lots of other metrics that add value to management - I do not suggest abandoning these insights - but if I could only look at one page of one dashboard every day this is what I'd want to see. I'd also like to hear what your favorites are... this could get interesting if you participate in the conversation. Without further ado, here they are, my top 5 KPIs for a Retail Banking Sales & Service organization: 1. Average balance per product . Market positioning. All other things being equal, if you have higher balances per account than your competitor you will have a lower efficiency ratio since 2/3 of costs in the business are fixed. 2. Average total margin% per product . Price positioning. The margin / volume tradeoff is captured by monitoring this in conjunction with average balances. Successful positioning optimizes price / volume tradeoff which can be achieved with price optimization analytics. 3. Number of (active) products per customer . Sales effectiveness. Penetrating the existing customer base is imperative. This is a barometer of relationship depth and is highly correlated to share of wallet and retention. All other things being equal more products per customer will drive higher lifetime value per customer. 4. Number of customers per front line FTE . Case load. It is often revealing to see how many hours per customer staff have... an RM with 2000 customers is going to spend less than 10 minutes a quarter with each of them. Depending on your positioning in hte classic 2x2 strategy matrix (high v olume , low margin v. low volume, high margin etc.) maybe that is okay ... or not. 5. Cost per front line FTE . Staff mix. How you align staff to customers is crucial to profitability and customer experience. High touch, high dollars here must be justified by high balances, prices and penetration. Now the fun begins... these five simple metrics combine into the single most important ratio in the Financial Services sales and service business - revenue per staff dollar . The proof is simple: Balances per product X Margin per product = Product Net I nterest Margin (add fees if relevant) X Products per customer = Revenue per customer X Customers per FTE X 1/(cost per FTE) = Revenue per staff dollar If you are maximizing revenue per staff dollar on the front line you are running a good sales & service organization, in my view. The beauty of these five little KPIs lies in their ability to reveal the levers you can pull to make a difference. It's nice some things in life really are simple. Agree ? - Dave McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=d61a6d8b08854e4f9eaa7063472b160ehttp://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/YxdB-CuEYcM/blog_post_view.aspx Sat, 13 Aug 2011 19:15:44 GMT Of course the right answer is both, but it is important that the vaue of client information is protected by managing the risks of improper information management. Over the course of the past few months there has been increasing attention gathering around the subject of information governance,...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=YxdB-CuEYcM:g__pR-TB0aM:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=YxdB-CuEYcM:g__pR-TB0aM:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=YxdB-CuEYcM:g__pR-TB0aM:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=YxdB-CuEYcM:g__pR-TB0aM:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/YxdB-CuEYcM" height="1" width="1"/> Analytics | Business Intelligence | Management 480448ca8bad4de3a1da3fdd5cb97feb 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 Of course the right answer is both, but it is important that the vaue of client information is protected by managing the risks of improper information management. Over the course of the past few months there has been increasing attention gathering around the subject of information governance, particularly since people have see the disastrous effects on share prices at compaines like Sony when a catastropnic security breach occurs. Traditionally the business case for investing in enterprise information management stewardship functions has been a tough sell to anyone outside IT departments; the risks seemed remote and the process of controlling information seemed arcane. With increased attention comes better literacy and awareness about this important aspect of possessing data. Recent events have demonstrated just how important managing information properly is ... what should be one of your strategic assets can quickly and unforgivingly inflict catastrophic damage to your brand, share price and your business franchise in total. One of the key things to realize is that we are not just talking about information you might have in a data mart or data warehouse containing client data. It extends much further than that ... documents, emails, paper records, telephne recordings, website history - all of these forms of unstructured data exist in your bank and they may contain 80% or more of the specific client information that needs to be protected from hackers, competitors and even espionage efforts. The scope is vast and growing exponentially , yet few are yet aware of the extent of the business and operational risk exposure maintaining client information entails. There is an upside to this story, and it is well worth considering before labelling information management as a risk containment exercise. One part of the upside lies in the value of information as an asset to be mined - well understood by marketing departments - to increase revenue through more relevant, timely and selective communications which reduce attrition and increase acquisition per dollar of spend. Similarly high quality, trusted and controlled information is critical to support operational decision making and deploymnet of the increasingly practical analytical optimization of business processes via statistical process control and measurement - what we called Operations Research back when I was at University. The other lesser known opportunity lies in the hard dollar savings that can be realized from getting rid of information that should not be retained. Eliminating redundancy and complying with disposition regulations can be a big money saver, as it reduces not only hardware and processing costs but reduces all of the other data management functions such as backup and retention processes as well. This aspect alone can make Governance a self-funding investment for your bank. Information about your clients can be an asset or a liability. Good management practices can reduce cost and increase effectiveness of management decision making. Poor management leaves you exposed to catastrophic risks that could empty some C-level offices. The time to acti is now, the choice is yours. If you would like to do a self-assessment of the state of information governance in your organization I recommend you join the global Information Governance Community which is available at no cost (IBM sponsors it). - Dave http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=480448ca8bad4de3a1da3fdd5cb97febhttp://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/51UME1BfQLw/blog_post_view.aspx Sun, 25 Apr 2010 20:47:42 GMT It is no secret that new money deposits and loans and retention of blaances are the keys to portfolio growth. Yet many banks don’t actually measure or manage to these simplest of performance objectives. Are they chasing the wrong goals? It is actually true…most banks don’t have clear dashboard...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=51UME1BfQLw:vQcwMWSNNYc:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=51UME1BfQLw:vQcwMWSNNYc:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=51UME1BfQLw:vQcwMWSNNYc:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=51UME1BfQLw:vQcwMWSNNYc:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/51UME1BfQLw" height="1" width="1"/> Analytics | Business Intelligence | Management f89a60cb96174cd1acf970fef3b22e11 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 It is no secret that new money deposits and loans and retention of blaances are the keys to portfolio growth. Yet many banks don’t actually measure or manage to these simplest of performance objectives. Are they chasing the wrong goals? It is actually true…most banks don’t have clear dashboard metrics for the basic drivers of portfolio growth and diminishment. Instead an array of proxies are more common, things like gains and losses in the number of customers, accounts and products and perhaps the balance changes associated with them. Many banks also have good predictive models for these behaviours and use them to guide marketing, sales and retention programs, but there remains one simple problem: more customers, more accounts and more products are not the key metrics for portfolio growth ! What most managers are looking at are changes in things that are correlated to growth, but are once-removed from measuring actual portfolio growth and diminishment activity and results. To get to the core, you need to be measuring flows of dollars . There is a good reason that we use proxies, and that is the reality that the real numbers we need – how much new money flowed in, how much old money flowed out at the account level – are not recorded in legacy information systems . The silo systems architecture has prevented banks from being able to relate flows that occur in one system to those in another, fragmenting understanding of customer relationships, product performance and even basic things like sales management because flow of funds is obfuscated. To right this deficiency in legacy systems is a mammoth task , since the information would need to be captured on virtually every transaction at the time it was created. That kind of infrastructure change, while a meaningful architectural goal, is not going to get funded in any bank we know. This leads us to the next option: analysis. And the good news is you certainly can derive flows of funds at the account level if you have a data warehouse or data mart with a good Customer Information File (CIF). You don’t have to spend tens of millions of dollars to see your key portfolio growth drivers. You don’t have to use statistical proxies or models to approximate what is happening. You can actually derive flows at the account level that are meaningful customer behaviours : Adding new money Moving money from one account to another (incl. across products) Taking money out of the bank Each of these metrics can be predicted and measured , agreed to portfolio change and analyzed in multiple dimensions: location, product, staff member, etc. Doing so can increase marketing, sales and retention lift by 30% , just by targeting new and lost money instead of product and account substitution (cannibalization). Bankers we talk to understand the power of flow of funds analysis as a concept, but very few have actually done anything about it. Perhaps marketing departments are reluctant to see the real cash on the barrel-head results of campaigns. Perhaps sales forces don’t want to give up getting paid to churn deposits and loans. Perhaps product managers don’t want to know how much of their performance has come from shifting flows of customer money inside the bank. Whatever the objections may be, we believe that if your bank wants to outperform the market, you really ought to be driving resources towards the right objectives….and that means getting a handle on flows of funds. http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=f89a60cb96174cd1acf970fef3b22e11http://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/l_8RCYRkZW4/blog_post_view.aspx Sun, 14 Feb 2010 19:13:11 GMT The outstanding value delivered every day to consumers by core demand deposit account (DDA) services through retail banking operations of consumer banks is getting lost in the currently fashionable cacophony of media bank bashing. As an industry we have been remiss in communicating just how good we...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=l_8RCYRkZW4:MNzSsNwgIuA:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=l_8RCYRkZW4:MNzSsNwgIuA:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=l_8RCYRkZW4:MNzSsNwgIuA:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=l_8RCYRkZW4:MNzSsNwgIuA:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/l_8RCYRkZW4" height="1" width="1"/> Analytics | Business Intelligence | Management 438fd89f9fc94e719396ee253b27a32e 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 3 The outstanding value delivered every day to consumers by core demand deposit account (DDA) services through retail banking operations of consumer banks is getting lost in the currently fashionable cacophony of media bank bashing. As an industry we have been remiss in communicating just how good we are at serving the interest of individuals, businesses and even the government through provision of deposit services. Let's revisit what we should be talking about in addition to fee levels... First and most visible is the service of efficient, convenient clearing of billions of day-to-day transactions, through conveniently located branches, ATMs, telephone call centers, debit card terminals, cheques, money orders, wire transfers, the internet - just about any way people communicate we facilitate the exchange of value. This service is what freed us from the medieval chains of the barter system, enabling efficient local, regional and international exchange of goods and services. Without retail clearing operations our economy would collapse completely and utterly. Yet when you ask the proverbial "(wo)man on the street" how the cheque they used to buy jewelry in Tokyo got back to the envelope their bank statement (or e-statement) arrived in at the end of the month do you think they know ? The answer is no: people generally have no clue how complex and fantastically efficient clearing operations are. We give this service at nominal cost to millions, and they don't even know what we are doing for them ! The time has come to get this message out there... the value proposition is absolutely fabulous : as an industry we desperately need to improve awareness of it. The second service we deliver through DDA is a secure haven for safekeeping of the earnings and savings of millions of individuals, with complete recordkeeping services and guaranteed fidelity of custody. In no other situation can you warehouse your assets at such nominal cost. Yet this service is not valued highly by most consumers (or businesses or governments). Without secure repositories for cash every individual in our society would be at far more at risk day and night of being robbed or even killed for the money they are now able to safely store in banks. This service is essential to maintaining law, order and property rights of individuals that are fundamental to society…yet no-one even seems to notice we do it. The third service embedded in the DDA business is, of course, intermediation between depositors and creditors. Demand deposits are the backbone of the funding base for credit cards, lines of credit and similar loans that are essential to modern living for the vast majority of consumers. Without consumer credit the availability of goods and services to most consumers would be severely reduced. The consumer-driven economy we live in simply could not function . Despite the extraordinary – in fact unique - value that the retail banking industry delivers every day to every participant in the economy bankers are under siege for the pricing of DDA services today. Consumer resentment over fees for processing NSF cheques and the potential elimination of free checking in the US has become the stuff of politics. In reality the retail banking industry has been undervaluing these essential services for decades , and any of the three value propositions outlined above should easily justify charges sufficient to make these services profitable to banks. The time has come to embrace public enquiry, present the real business case for DDA services to consumers and charge what they are worth . -DBM . http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=438fd89f9fc94e719396ee253b27a32ehttp://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/_Zl034pqZOI/blog_post_view.aspx Mon, 11 Jan 2010 17:08:35 GMT Information management strategy lags the development of technology in most industries, and banking is no exception. We have seen the march of progress towards customer intelligence from initial customer identity management in the late 1980s through consolidated customer position snapshots (Customer...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=_Zl034pqZOI:y_ygG27b9pQ:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=_Zl034pqZOI:y_ygG27b9pQ:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=_Zl034pqZOI:y_ygG27b9pQ:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=_Zl034pqZOI:y_ygG27b9pQ:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/_Zl034pqZOI" height="1" width="1"/> Analytics | Business Intelligence | Management ee0507552e204fe7ac9adbcac26dd9d4 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 2 Information management strategy lags the development of technology in most industries, and banking is no exception. We have seen the march of progress towards customer intelligence from initial customer identity management in the late 1980s through consolidated customer position snapshots (Customer Information Files or CIFs), retail velocity metrics (recency, frequency monetary or RFM), customer value | profitability metrics , to monitoring customer behaviour . Many of these techniques were adapted from consumer retail product marketing, particularly packaged goods and telecommunications, rather than retail banking. The result has been success mixed with unfruitful investment because the technology was pushing ahead of industry management thinking. Examples of technology-push in banking are not hard to find: investments in ERP, SCM, and the CRM boom stand out in recent history. One of the later entrants on the scene has been Transaction Trigger Analytics. First championed by banks in Australia (notably NAB,) it was discovered that parsing through transaction files overnight could result in identification of significant changes in customer accounts which, when acted on within 24 hours, could change customer behaviour. By detecting a significant deposit, for example, the bank could contact the customer to ensure all is well and offer any new services that the customer might require, such as investment advice. This technique is used primarily to keep new money in the bank or to keep old money from leaving. Their experience proved the business case for transaction trigger detection convincingly - ROI was very high. At the same time regulatory pressure to sift through transactions looking for money laundering events made daily transaction analysis a necessity. The only problem is that transaction files do not represent customer behaviour very well. They reflect accounts changes, but from a company perspective (or more accurately an account management system perspective) which we believe is quite different than the customer perspective . Customer behaviour can be far more complex than what shows in a transaction file. For example, a significant deposit transaction could arise from a tax refund; sale of a property or business; transfer of an investment account; liquidation of investments; relocation of an account between locations and so on. Research has discovered that over 1/4 of banking balance changes result from internal flows of money within a customer's existing relationship (see article in Banking Strategies) . This means that the transaction triggers will be false positives nearly half the time. Why ? because for every significant internal "plus" there is a corresponding "minus" so each side of an internal transaction appears to be a signirficant transaction event trigger. Transaction triggers can generate false leads about half of the time, draining staff time, program credibility and, worst of all, annoying customers with pointless dialogue. Bankers need to define customer behaviours in the context of their business relationships. Know what customers really do and model these customer behavioural events , then apply detection mechanisms to find and route real customer behaviour changes to your customer service staff. Better quality leads to improvements in efficiency, effectiveness and satisfaction for customers, employees and shareholders simultaneously. - David B. McNab PS Best of the new year to all. http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=ee0507552e204fe7ac9adbcac26dd9d4http://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100 http://feeds.objectivebusiness.com/~r/AnalyticsBusinessIntelligenceManagement/~3/eISSHtRzoE8/blog_post_view.aspx Mon, 14 Dec 2009 21:57:33 GMT Customer value helps identify the top tier customers we need to focus retention activity on, but what of the other 80% of customers who generate nominal or even negative contribution? Are they naughty or are they nice to have in your portfolio? This question has been troubling strategists and...<div class="feedflare"> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=eISSHtRzoE8:NWHJLy4vUew:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:7Q72WNTAKBA"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=7Q72WNTAKBA" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=eISSHtRzoE8:NWHJLy4vUew:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=qj6IDK7rITs" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:l6gmwiTKsz0"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=l6gmwiTKsz0" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:gIN9vFwOqvQ"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?i=eISSHtRzoE8:NWHJLy4vUew:gIN9vFwOqvQ" border="0"></img></a> <a href="http://feeds.objectivebusiness.com/~ff/AnalyticsBusinessIntelligenceManagement?a=eISSHtRzoE8:NWHJLy4vUew:TzevzKxY174"><img src="http://feeds.feedburner.com/~ff/AnalyticsBusinessIntelligenceManagement?d=TzevzKxY174" border="0"></img></a> </div><img src="http://feeds.feedburner.com/~r/AnalyticsBusinessIntelligenceManagement/~4/eISSHtRzoE8" height="1" width="1"/> Analytics | Business Intelligence | Management 597cbfc033c44aa399be15b2c817fefd 434a3aecaf1a496c98579450b1cdd89b dmcnab dmcnab BlogPost 1 Customer value helps identify the top tier customers we need to focus retention activity on, but what of the other 80% of customers who generate nominal or even negative contribution? Are they naughty or are they nice to have in your portfolio? This question has been troubling strategists and marketers since customer profitability measurement first became viable in the early 1990s. And with good reason: depending on what you are measuring and what your goals are customer value can suggest very different actions. It is imperative to measure customer values using a model appropriate to the decisions you want to make. More often than not you will discover that a variety of measurement models are needed to support different kinds of decisions. (See CMA article How should we measure customer profitability ). Even if you’ve got the models you need, however, it is inevitable that 60% of your clients are going to be somewhere in the middle and 20% at each of the top and tail of your list. Let’s consider the bottom 20%. Are they “bad” customers that we should de-market? Are they “abusers” of our services? Customers in the bottom quintile of value rarely have an “average” customer profile. In this tier you will find customers with a wide variety of business relationships with your bank, most of them fairly substantial in terms of balances and activity. If you dig deep enough into the numbers, you are likely to find pricing at the root of their negative value. Some will have their value depressed by shrewd negotiation of rates and fees, others by strategic discounting and others still by irrational market pricing conditions. Negotiated discounts in fees and rates certainly need to be taken into account when assessing customer value. But pricing anomalies driven by market conditions or strategic discounting have little to do with the customer, and should not be included in customer value. The extreme case of this is when the market prices entire business lines at negative spreads, which happens from time to time in periods of crisis. Whole segments of customer values can turn from gold to brass in a matter of months when this happens. Obviously one cannot switch customer relationship strategies with these shifting winds of chance . You need to look past the numbers to manage customer strategy effectively. Clearly we need to reprice relationships where excessive discounting is negotiated. It is equally clear we should not penalize customers for aberrations in market or strategic conditions. There is no substitute for wisdom and understanding when working with customer value ! Best holiday wishes to all. David McNab http://mycommunity.leveragesoftware.com/blog_post_view.aspx?blogpostid=597cbfc033c44aa399be15b2c817fefdhttp://mycommunity.leveragesoftware.com/thumbnail.aspx?dt=photo&fid=dmcnab&w=100&h=100