Extract greater value and growth insights from your ... · Business Analytics software The Key is...

© 2010 IBM Corporation

Business Analytics software

Extract greater value and growth insights from your customer intelligence and data

David Morton, Business Analytics ASEAN

4 December, 2010

© 2010 IBM Corporation2


“Insight and foresight are linked with leadership. It's insight that helps to capture opportunity.”

Zhou Ming, Executive Vice President and Secretary General, China Council for Int’l Investment Promotion (Source: IBM Global CEO Study, 2010)



Relevant Information

Actionable Insights

SmarterDecisions

BetterOutcomes



Analytics Critical for Driving Competitive Advantage

“At a time when companies in many industries offer similar products and use comparable technology, high-performance business processes are among the last remaining points of differentiation.” Tom Davenport, “Competing on Analytics”

57%

55%

61%

62%

63%

64%

66%

70%

76%

80%

63%

68%

70%

67%

71%

73%

71%

73%

77%

86%

Unif ied Communication

SOA/Web Services

Business Process Management

Application Harmonization

Self-Service Portals

Customer and Partner Collaboration

Mobility Solutions

Risk Management and Compliance

Virtualization

Business Intelligence and Analytics

Ten Most Important Visionary Plan ElementsInterviewed CIOs could select as many as they wanted

Source: IBM Global CIO Study 2009; n = 2345

Highgrowth

Low growth

BI/Analytics #1

investment to

improve

competitiveness

IBM Global CIO Study 2009



5

Banking CIO’s Top 3 external factors affecting industry

Source: IBM Global CIO Study 2009 – Special Banking/FM subset

Top 3 Reasons

Sample Size (Overall) = 2598, Valid Cases (Overall) = 2598, Sample Size (Banking/FM) = 403, Valid Cases (Banking/FM) = 403

Overall

Banking/FM

LONG TERM TRENDS % VALID CASES

Changes in Business Model

Budgets

Macroeconomic Factors

Globalization Factors

People Skills

Regulatory Concerns

Technological Factors

Security Factors

Internal Customers

Other

Environmental Issues

53%50%

45%

44%33%

36%

30%

21%

29%29%

28%49%

26%23%

24%

26%

19%13%

8%

8%

8%

4%



The Key is Leveraging Information and AnalyticsInformed, Real-time Decisions at the Point of Impact…

6

Sense and respond

Instinct and intuition

Automated

Skilled analytics experts

Back office

Predict and act

Real-time, fact-driven

Optimized

Everyone

Point of impact

Breakaway Approach

Lack of Insight

Inability to Predict

Inefficient

Access

Variety

Volume

Velocity

Traditional Approach New ApproachInformation Challenges



7

Broad, Large, Informed and Complex Analytic Insight Community

Real-time or historical;

operational or strategicGuided or self-service access and

exploration…

Foresight using

Statistical, Content, ‘What-if’ and Predictive

Analytics…

How are we doing?How are we doing? Why are we on/off track ?Why are we on/off track ? What should we do next ?What should we do next ?

Business Modelling &

Enterprise Planning

throughout the business



Example: Imagine If Your Bank Could …

Product ManagerBranch Manager

Loan OfficerOn-line Channels

Manager

…offer new customer,

menu-selected

products, price and

terms within Bank’s

optimal levels

…stop a large wire

transfer when

predictive analytics

shows likely fraud?

…use adaptive risk

control at the

customer and

transaction level?

…cross sell optimal

product, right

customer, right time?

Next generation of efficiencies will come from applying analytics to optimize decisions at every contact point.…made possible by enabling pervasive,

predictive real-time decisions at the point of impact



Sales

Marketing

Finance

HR

Operations

Product Development

CustomerService



Sales

Marketing

Finance

IT

HR

Operations

Product Development

CustomerService

Increased productivity of by 80%, and

increased compliance reporting score to 97% (up from 57%)

-- Bancolumbia

Increased productivity of by 80%, and

increased compliance reporting score to 97% (up from 57%)

-- Bancolumbia

Large private bank 6m customers, 23k branches

Huge labor cost on analyzing and auditing 100k transactions a week – reduce to 5k

trxns.Significant fraud detection due to

identification of suspicious operations



Sales

Marketing

Finance

IT

HR

Operations

Product Development

CustomerService

600% increase in uptake of cross-sell campaign, increased response rates by

3%, reduced mailing costs by 20%

-- First Tennessee Bank

600% increase in uptake of cross-sell campaign, increased response rates by

3%, reduced mailing costs by 20%

-- First Tennessee Bank

High marketing expenses attracting new customers

Thru Predictive Analytics and BI, bank was able to analyze and distill customer behavioral

information.View of products and customers & relative

performanceReduction in mailing costs and increase in

update of campaign!



Value Integrators in Banking outperform, on average, other banks in Revenue Growth and EBITDA

Efficiency + Business Insight Contributes to Outperformance

Revenue Growth: N = 72; EBITDA: N = 58; ROIC: N = 73Source: IBM Institute for Business Value, The Global CFO Study 2010

Value Integrators also have a more than 5% better operating efficiency ratio than all other companies examined.

Return on Invested Capital5-year average, 2004-2008

Revenue Growth5-year CAGR, 2004-2008

EBITDA5-year CAGR, 2004-2008

Fin

an

ce

Eff

icie

nc

y

Business Insight

15.6%

18.2%

11.8% 18.0%

10.8%

14.7%

6.8% 4.5%

Business Insight

5.3%

9.8%

4.4%

8.4%



Business AnalyticsUnrivalled breadth and expanding analytics platform with industry accelerators

SPSS

Predictive & Advanced Analytics

Cognos 10

Scorecarding, Dashboarding, Reporting, Analysis, Alerts …

Cognos NOW!

Real-time operational BI

TM1

Scenario Modelling, What-if analysis

FPM

Business Modelling, Financial Planning, Forecasting

Open Pages NEWOp & IT Risk, Fin & Process Controls

Clarity NEWFast Close, Consolidate, XBRL

Analytic Applications

High business value application, out of the box

Financial Services Industry Accelerators

Integrated Customer Analytics Operational Efficiency

Risk Management



All Top 10All Top 5World’s largest

banks use IBM Business

Analytics1

4 of 5

1 – IBM Cognos customers on the Forbes Global 2000 list of largest banks

IBM Business Analytics experience in Financial Services

North American Banks companies use

IBM Business Analytics1

European banks use

IBM Business Analytics1

5 of Top 74 of Top 5global P&C

Insurers use IBM Business

Analytics1

4 of Top 5North American

insurance companies use IBM Business

Analytics2

Insurance companies useIBM Business

Analytics2

1– IBM Cognos customers on the Fortune 500 list of largest P&C insurers2 – IBM Cognos customers on the Forbes Global 2000 list of largest insurers



Branch Network Hierarchy

Head Branch Network

Regional Dir

Area Dir

City Dir

Branch Mgr

Example: Aligned Finance & Operational Planning The Branch Performance Business Model

Product Management

Marketing RiskFinance Capital IT

Plan Alignment

Pla

nnin

g H

iera

rchy

Retail Management Dashboard

Reporting Analysis ScorecardingEvent

Management Dashboards

Bra

nch

Perfo

rmance

BI



The Branch Performance Blueprint

� A Banking Blueprint that includes:– Branch planning at the branch, customer segment,

and product level– Reporting and analysis at the branch, customer

segment, household, product type, and product levels– Pre-integration with Acorn Profit Analyzer-CI activity-

based costing and management engine (although the product could work with other ABC engines or costing engines)

� The result: Off the shelf Blueprint incorporating best industry practices to drive plan, report and analyseBranch Performance



Driving Smarter Business OutcomesEnabling customers to predict future events & proactively act upon that insight to drive smarter business outcomes

Capture Predict Act

…

…

DataCollection

DeploymentTechnologiesPlatform

Pre-built Content

Statistics

Attract Up-sell Retain

Text

MiningData

Mining

Data Collection delivers an

accurate view of customer

attitudes and opinions

Predictive capabilities bring repeatability to

ongoing decision making, and drive confidence

in your results and decisions

Unique deployment technologies and methodologies maximize the impact of

analytics in your operation



� Enhance your existing customer relationships via cross selling and targeting the right customers and prospects with both the right products and services.

– Increase lead generation– Enhance Banking revenue– Reduce campaign costs

� Capture and Integrate– Campaign Information– Customer demographics – Account history – Contextual understanding (structured and unstructured)– Customer behaviours– Business modelling, strategy selection, financial planning & sales forecasting

� Create predictive models– Predict customer behaviour & who is likely to

respond to the campaign

� Deliver: – Actionable insight and ranked offers to front office – Targeted offers to marketing officers– Real-time offer selection in the channel

An example: Banking Campaign Insight & Optimization



Solution components

� IBM SPSS Modeler

“By determining credit

risk in advance, we are

better positioned to make

intelligent credit-related

decisions, protecting our

bottom line.”

— Carlos Risetti

Risk Manager

Credilogros Cia Financeria S.A.

Business challenge

With assets valued at $95.7 million, Credilogros Cía Financiera S.A. is the fifth-largest credit company in Argentina. Based in Buenos Aires, it isowned by gST (Grupo de Servicios y Transacciones). After being acquired by gST, Credilogros wanted to find a system to improve how the company managed credit scoring and credit risk.

Solution

Credilogros selected IBM SPSS Modeler to develop scoring models and calculate credit-worthiness for new and potentialclients.

Benefits

� Analyze data from every channel – ATM transactions, web data, textual data such as notes from call centers and applications – in a closed loop that generates results to improve interactions, often in real time.

� Credilogros reduced the time it takes to process credit data and deliver a final credit score to less than eight seconds.

� Helped Credilogros reduce delinquency on loan payments by 20percent after only three months of implementation.

CredilogrosCredilogros quickly assesses credit-worthiness with IBM® SPSS ® Modeler

Deliver credit score in less than eight seconds

Reduce delinquency on loan payments

by 20%



Finance and Integrated Risk Management (FIRM)

� What is it?– Sample BI content and metadata leveraging multiple back end sources including banking data

warehouse models, best practice analytic reports and dashboards.

� What does it do? – Provide banks an enterprise view of risk across risk classes, geographies, lines of businesses,

etc including:• Credit Risk (Retail)• Credit Risk (Wholesale / Counterparty)• Operational Risk• Market Risk• Financial Reporting

� What does it include?• Sample dashboards and hundreds

of detailed Risk/Finance metrics • Supporting sample datamarts based

on numerous sources including the BDW• Multiple BI metadata models

� Why?– To provide a set of templates that can act as

accelerators for requirements and implementation



Risk-Adjusted Profitability for Commercial Banking

� Integrated risk-adjusted planning and forecasting within a commercial segment (ie, industry) at the product type and region level– For instance, RMs, LOB execs forecast sales & net income

for a specific industry segment, within a region, either across products or for a single product type

– Changes in risk factors e.g. PD & EL drive adjustments to loan loss provisions, and ultimately to net income

– Final result is profit and loss statement

� Multi-dimensional risk management and profitability reporting and analysis leveraging the FIRM

� Initiative planning allows comparison of multiple scenarios

� Incorporation of activity-based management / costing



Where Can You Start?

23

Take a graduated approach to determine your analytic inventory and assessing which strategic technology assets can be leveraged across processes and decision

areas.

Sustainedcompetitiveadvantage

Desired StateBusiness

Optimization

Current StateWhat are my

analytic & performance

gaps?

Where to begin …

Information Agenda

What Should I Include?

� Information Strategy

�Project Roadmaps

�Governance

�Technology Infrastructure



Relevant Information

Actionable Insights

SmarterDecisions

BetterOutcomes

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