Business Intelligence Tools
Analytics Help Leverage Your Massive Amounts
of Information
Big data is a hot topic in a variety of industries these days. Major retailers know how to use it, and larger financial institutions also are figuring out how to leverage mass quantities of data to increase their bottom line.
An organization’s data is a veritable goldmine, but you can’t really benefit from it without the power of analytics, increasingly known as business intelligence (BI) tools. This white paper examines the various ways in which financial institutions can use BI solutions to increase profitability, reduce costs and
Business Intelligence solutions give financial institutions the ability to translate their available data into actionable business decisions, and make it possible to use the information they already hold to better recognize customers at a personal level and bring them a targeted, individualized experience. BI tools can empower your strategies of engaging account holders and delivering their needs. Their data analytics functions allow financial institutions of any size to reach and obtain information from different channels and silos, as illustrated in these banking examples: One of Italy’s largest financial institutions, Banca Carige, utilizes analytics to support an improved understanding of customer-centricity and to launch new mobile services that engage and retain customers; and Bank of America uses transaction and propensity models to determine which customers have a credit card or
mortgage that could benefit from refinancing, then makes an offer when the customer contacts the bank through online, call center or branch channels.
“When I think of business intelligence for community banks, it’s taking the data that exists out of all your systems and using it to its fullest potential,” says Carl Snyder, director of Industry Value Engineering, US Banking for SAP, a business analytics market leader. “Ultimately, why that even matters is that it’s about providing a unique and differentiating experience to each of your customers by proactively delivering their expectations.”
Emerging Trends in Big Data
Investment in big data technologies continues to expand, according to Gartner’s most recent big data survey,1 in which 73 percent of respondents—comprising 300 members of the Gartner Research Circle’s core of IT and business leaders—have invested or plan to invest in business intelligence solutions in the next two years, up from 64 percent in 2013. The survey also indicates that organizations are coming off the fence about their big data options: the number of organizations stating they had no plans for big data investment fell from 31 percent in 2013 to 24 percent in 2014. Finally, the results show that the most dramatic changes stemming from BI tools, in various industries, have centered on enhancing the customer experience.
Gartner survey reveals
73% have or will
invest in BI solutions in
next two years. Up from
64% in 2013.
And that’s key, because service is an important differentiator in the financial industry, according to the J.D. Power 2014 U.S. Retail Banking Satisfaction Study,2 which reported that poor service drove many customers to change financial institutions, and that many banks are misfiring with selected segments of account holders, including Millennials, who desire immediate resolution as well as more personalized service and information.
BI tools can help in this area by generating new opportunities for banks to bolster marketing and service efforts. Frequently, consumers employ a blend of channels—including brick and mortar, smartphones, tablets, PCs and social media—to engage banks. But how many banks recognize a customer trail when the relationship crosses channels? Do banks know, for example, if customers start a HELOC search via mobile phone and then complete it on a different channel? This data plays a vital role in defining an integrated marketing and service strategy.
Turning Data into Business Practices
that Serve All Types of Customers
Today’s consumers, particularly Millennials, have a different view of banking. They don’t compare their encounters with Bank “A” against those with Bank “B,” but instead weigh their banking experiences against those they receive at, for example, Southwest Airlines or Amazon. Millennials still reach out to banks, but more so to gain financial advice, which is forcing branches to transform, to some extent, from transactional areas to consultative centers. And using
analytics, financial institutions can answer their complex questions by accessing a variety of data.
profitable customers are, as well as the types of products and services they most utilize. With BI tools, financial institutions needn’t become experts in creating data analytics models that draw out this information. The solutions can pull this data together and create detailed reports on such topics as spending patterns from debit cards, loan prepayment speeds and deposit decay rates. The reports also can provide cross-application research capabilities that track patterns across the board to compare DDA and loans data, for example, in robust detail. And advanced BI tools give banks the ability to unlock their dark data, which Gartner describes as “information assets that organizations collect, process and store in the course of their regular business activity, but generally fail to use for other purposes.”
WITH ADVANCED BI SOLUTIONS, FINANCIAL INSTITUTIONS CAN:
Produce advanced ad-hoc and
cross-application reports Utilize dynamic search tools, and save and share tailored reports
Obtain “deep dive” reports
Capture high-level summaries of data through visual representations that show at-a-glance views of daily and monthly activities and trends
Gain secure access to information anywhere, anytime via PC or tablet
Research shows the value of data analytics
solutions for financial institutions.
What BI
tools do you currently use?
And there are numerous practical applications for BI tools:
• Utilize Customer Analytics. It is progressively more challenging for financial institutions to turn all that data into genuine customer intelligence, and even more difficult for banks to determine how they should respond and do things differently. In years past, simply measuring activity on a financial institution’s website was enough, like page views, unique visitors, time on site, and exit pages. With BI solutions, there is enough accessible information to draw a holistic customer profile that includes acquisition, engagement and retention across all digital channels.
• Detect and Prevent Fraud. Through analytics, banks can better detect fraud and money-laundering patterns—in real time—by looking across customers’ transactional information to spot and flag unusual activity.
• Set Deposit Rates. You can improve your ability to make pricing decisions that will help your institution get and keep deposits by combining BI software with your own historical data and insight.
• Use “What If” Illustrations. You can create “what if” scenarios for a variety of data-driven decisions. For example, a bank could determine how its bottom line would be affected if 10 percent of its loans defaulted. It also could perform an analysis of its branches to determine when teller lines are busiest, and staff branches accordingly; or analyze whether a certain type of loan is likely to help—or hurt—cost-to-income ratios.
• Perform Continual Stress Testing.
Regulators want institutions to demonstrate an awareness of their portfolios to ensure that no single area takes up too high a concentration. Analytics enable stress testing to occur continuously across the organization, ensuring greater efficiency and reducing risks well beyond the intermittent stress test.
• Develop a Data-Driven Culture. A Celent
2013 report, How Big is Big Data?: Big Data Usage and Attitudes Among North American Financial Services Firms,3 found that establishing a data-driven culture means you can look at your acquired information objectively and make decisions based on the data—rather on history or intuition.
The Right Time for Business Intelligence
Making an investment to consistently strengthen customer engagement and information delivery is a key differentiator for financial institutions going forward. It is critical that financial
institutions anticipate their customers’ needs and expectations and rise above not only banking competitors, but also all other retail experiences. Consulting firm Capgemini has stated that, while about one-third of financial organizations have “hands-on experience” using big data, the majority—63 percent—are just flirting with experiments. Those that have made real investments, however, already have a 12-point lead over their competitors.
That’s why it is essential for banks to
understand their lines of business and revenues—and customers. Says SAP’s Snyder: “If I really understand the behavior of my customers, I then know what to sell them, when to sell them, and I know through which channel to do it. To me, it is all about offering the right product, to the right customer, at the right time. And if we understand our customers, then we can be much more intelligent about serving them.”
CSI IQ Can Help
Don’t expect these dashboards and analyses alone to increase profitability. Institutions must implement them to their fullest potential and act upon the vital information gained to efficiently derive answers and make decisions that not only drive profitability, but also reduce costs.
The good news is that you don’t need to be a database analyst to understand how BI tools work. CSI’s business intelligence solution, CSI IQ, helps you turn vast amounts of data into actionable information that keeps you competitive in the financial market and continuously meets your customers’ evolving needs. Contact CSI today to learn how CSI IQ can help your institution turn data into profit.
About CSI
Computer Services, Inc. (CSI) delivers core processing, managed services, mobile and Internet solutions, payments processing, electronic and print distribution, and regulatory compliance solutions to financial institutions and corporate customers across the nation. For more information, visit www.csiweb.com.
