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Case Study: Supporting the branch network using predictive analytics: Predicting First Investment...
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Transcript of Case Study: Supporting the branch network using predictive analytics: Predicting First Investment...
Matthias MeulDeutsche Bank
Supporting the branch network using predictive analyticsPredicting first investment behaviour12Dec2013
Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
The next 40 minutes
04/08/2023 05:07:20 AM 2010 DB Blue template
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— Introduction to Deutsche Bank & casestudy
— The First Investment model
— Commercial implementation & results
— Lessons learned
— Q&A
Introduction Model Results Questions
Introduction
Model
Results
Questions
Deutsche Bank Matthias MeulFirst Investment model
Deutsche Bank in Belgium
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— > 315 000 clients
— +-715 employees (of which +-300 with client contact roles)
— 33 Financial Centers
— 3 Contact Centers
— Over 21 billion € AUM
— “Open architecture”, mandates as of 100€
— Retail – DbPersonal – Private
ClientsCapacity
DBP
Private
Retail
300 employees with client contact
33 FCs
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Casestudy overview
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— Clients with investments are treated very well (maturities, downgrades,…)
— The objective is to convert retail savers-only to investors
A significant number of clients doesn’t have and never had in-vestments!
INDICATION
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Dependent variable
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First InvestmentPredictive analytics in Investments
— Will the client make a first investment in a strategic product in the year to come? Yes/No
— Timeframe?
Introduction Model Results Questions
T2: The moment when we want to make the prediction
T3: Start of the period in which the behavior will take place
T4: End of the period in which the behavior will take place
Historical data taken into account to make the prediction
Period to execute commercial initiatives based on predictions
Deutsche Bank Matthias MeulFirst Investment model
Modeling technique
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— Linear regression
— Dependent variable between -∞ and +∞
— Easy to explain:
— However, the problem of identifying First Investors is binary
— Made a FI = 1
— Did not make a FI = 0
— The desired outcome of the model are probabilities (between 0% and 100%)
Þ We have to perform a transformation
— Logistic regression
— Model the log odds of the event (=dependent variable), which will be transformed into probabilities
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Variables retained (high level) using stepwise regression
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— Current AUM & variations
— AUM in the past
— Education level
— Current level of loyalty towards Deutsche Bank (~advanced algorithm)
— Length of relation
— …
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Evaluation
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First InvestmentPredictive analytics in Investments
— Check model performance… Wait until time goes by…?
T2: The moment when we want to make the prediction
T3: Start of the period in which the behavior will take placeHistorical data taken into account to make the prediction
Period to execute commercial initiatives based on predictions
T4: End of the period in which the behavior will take place30jun2012
31jul2012 31jan2013
Use the model to score, based on 28feb2013
31mar2013 30sep2013Monitor model performance
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Technical performance measures
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— Lift
— AUC
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Technical performance measures: Lift
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— Lift
Introduction Model Results Questions
OVERFITTING?
Deutsche Bank Matthias MeulFirst Investment model
Customers
— Area Under the receiver operating Curve
— The probability that a classifier will rank a randomly chosen positive instance higher than a randomly chosen negative one
Technical performance measures: AUC
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A random first investor(score = 10%)
A random “not” first investor (score = 0.005%)
When I compare the scores of the FI and the non-FI, the FI has 70% chance (AUC = 0.70) of having a higher predicted probabilityof churning than the non-FI
First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Operational implementation of the First Investment model
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First InvestmentPredictive analytics in Investments
— Recurrent Tasks, monthly refresh
— Event-driven (e.g. AUM evolution)No ice-cold calling— always at least 1 of 3 potential commercial triggers in Task comment
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
+-20% of treated tasks results in a meeting!
Deutsche Bank Matthias MeulFirst Investment model
“Educate” the branch network
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out (purchases until end of september)
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Introduction Model Results Questions
First InvestmentPredictive analytics in Investments
Deutsche Bank Matthias MeulFirst Investment model
Results of the first roll-out (purchases one month after task injection)
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Introduction Model Results Questions
Sales until October 19th taken into account because of
*tasks being treated as of September 19th
*time between ordering and booking an investment product
First InvestmentPredictive analytics in Investments
Deutsche Bank Matthias MeulFirst Investment model
Is it necessary to contact these clients?
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Introduction Model Results Questions
Won’t they invest “by themselves”?
Do they really need the extra trigger?...Þ Same characteristics as targeted clients & compare!
First InvestmentPredictive analytics in Investments
Deutsche Bank Matthias MeulFirst Investment model
Results of the First Investment model
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First InvestmentPredictive analytics in Investments
Introduction Model Results Questions
1 2 3 4 5 6 7 8 9 10 11 12
First Investors 2012 vs 2013 (31nov)
Investors_per_month_2012
Investors_per_month_2013
YTDInvestors_2012
Total2012
YTDInvestors_2013
Deutsche Bank Matthias MeulFirst Investment model
First InvestmentPredictive analytics in Investments
Lessons Learned
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— Do not limit yourself to the existing KPIs. Do they match the business problem you’re trying to solve?
— Assure the commercial implementation of the model, put the scores to use & add tangible customer leads.
— Assure the followup of the model & recurrently report results.
— Keep it simple & understandable!
Introduction Model Results Questions
Deutsche Bank Matthias MeulFirst Investment model
Thank you!
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First InvestmentPredictive analytics in Investments
Introduction Model Results Questions