Business Intelligence

Banks increasingly are turning to business intelligence (BI) tools to transform data into
actionable information. By helping banks better understand customers needs, BI initiatives can
create competitive advantage and lead to increased customer wallet share.
By Peggy Bresnick Kendler (mailto:)
January 03, 2006
URL: (http://banktech.com/core-systems/175800821)
Q: What does business intelligence mean for banks today?
Joe Dugan, Canandaigua National Bank and Trust: BI means increasing customer wallet share by
providing financial products based on a superior understanding of customers' characteristics, needs
and behaviors at any given point in the customer life span. Business intelligence helps us take what
we know about the customer base and offer customers education, advice and services that are most
relevant to them at their specific life stage or event.
Being able to forecast a customer's value over time leads to greater wallet share than only
concentrating on the already high-value customers. The cost of acquiring new customers is
significant, so today's BI systems must deliver actionable activities that can provide measurable
results for the financial institution and help to increase share of wallet for all customers.
Jill Barnes, IndyMac Bank: The customer wants to be known individually, and business intelligence
gives you the opportunity to do that. You can hang free checking banners, offer competitively priced
products to meet every conceivable need and proclaim your superior service, but your competitor
down the street is doing the same thing. It's only by taking advantage of business intelligence
technologies that you can differentiate your bank by sincerely knowing your customers and
appropriately responding to their needs. Business leaders can drive this by challenging their staffs to
push the limits of what our systems can tell us about our customers.
Howard Shao, EMC Corp.: For today's banking institutions, business intelligence software is a
means to respond to transactions and static data. As banks shift from sales to a customer-centric
business model, BI will adopt an information-aware infrastructure model that supports global,
distributed BI while protecting the security and privacy of this information.
Q: What are the capabilities of an "intelligent" bank? What are the keys to a successful BI
strategy?
Shao, EMC: The intelligent bank is one with greatly improved business intelligence within and
across the enterprise and value chain. It has greater visibility into -- and can adapt to -- changing
market conditions and customer demands. Greater visibility enables an intelligent bank to respond
effectively and make more-sophisticated predictions and decisions about its future profits, new
products and services to customers, in addition to the investment and allocation of assets. These
attributes (i.e., increased visibility, improved decision making and agility) are the metrics upon which
a bank with an effective BI strategy is judged.
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Susan Duchesneau, SAS: Two keys to success are executive sponsorship and a solid partnership
between business and IT. Intelligent banks achieve competitive advantage by knowing more than their
competitors. All banks know their current positions (e.g., financial, customer, employee, etc.) and
how they compare to past performance and current objectives; the intelligent bank knows more -- it
can accurately predict the future. It can predict the impacts of certain actions on future performance,
enabling it to make the most competitive tactical and strategic moves.
For competitive advantage, a BI solution must be smart, transparent and scalable. Smart: A BI
solution must go beyond reporting current and past performance; it should accurately predict future
performance and model the impact of change on future performance. Transparent: Everyone from
senior management to regulators wants to see how you arrived at your numbers; BI platforms must
offer transparency from source data to report. Scalable: You can achieve competitive advantage by
leveraging your BI investment longer than your competitors. BI platforms must scale as your business
grows, eliminating the productivity hit and expense of a system replacement.
Q: What technologies help banks achieve BI? What are the metrics of success for these tech
investments?
Barnes, IndyMac Bank: Among the technologies that contribute to BI are underwriting, risk-based
management, product analytics and customer profitability analytics systems. As for success metrics,
that's an age-old question. If we're more profitable after implementing a new system, was it the
system or other factors, such as added staff? It's tough to isolate all the variables to measure just the
initiative itself and determine the return.
Shao, EMC: To be more customer-centric, banks need a single, unified approach to classifying,
managing, accessing and retaining both structured and unstructured information. Structured
information in the form of statements, invoices and loan applications, and unstructured information
such as call center notes, e-mails and collector notes, contracts, pitch books, financial analyst reports,
etc., should be managed within a single, common information archiving framework. This framework
can eliminate the complexity of disconnected silos and provide banks with a more holistic, contextual
view of customer data in order to predict future customer behavior, purchasing patterns, etc. In
addition, it can help banks be better prepared to respond rapidly to legal inquiries. The success of this
archiving approach can be measured by looking at increasing shares of a customer's managed wealth,
acceleration of product creation, more-precise segment focus and customer acceptance.
Q: What is the future of BI?
Dugan, Canandaigua National Bank and Trust: Predictive modeling is the next wave, but I think
the real challenge will be to capture the next customer. Much of BI is focused on gaining greater
wallet share of existing customers, but the barriers to acquisition -- such as the National Do-Not Call
Registry and other information-privacy concerns -- are growing. We ultimately will need to figure out
how to use the information we have not only to predict what our customers need, but to identify and
predict the needs of our prospects.
Shao, EMC: BI is becoming more of an integral component within the enterprise, capable of
managing both structured and unstructured content. As companies begin to realize the potential of BI
technology, the next level of BI tools will have built-in metadata intelligence, essentially making
application data "storage aware." The data will be tagged automatically with a set of instructions that
determine exactly where it's stored, what protection and service levels it requires, who's allowed to
access or change it, when it should be archived, and when it is to be destroyed. As metadata becomes
richer, its contributions to the enterprise become richer as well. Business intelligence will move
beyond the boundaries of storage and IT to become vital parts of supply chain and CRM applications.
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Barnes, IndyMac Bank: Business intelligence is allowing us to place technology in the customers'
hands. They decide when they are ready to have their paychecks electronically deposited or to pay
their bills electronically. They determine when it makes sense to set up a high-balance money market
attached to a checking account where funds are swept as needed to cover bills. Bankers are moving
away from a role of merely executing keystrokes and into a true consultative role. This places a
greater burden on us, but opens up unlimited possibilities. Our offering is our intelligence -- our
ability to help customers make sound financial decisions.
Duchesneau, SAS: Banks are looking to expand BI throughout their organizations. They'll continue
the transformation of traditional reporting environments, where information is created and delivered
via complex spreadsheet reporting systems with limited accessibility, to a self-service BI environment
offering information not only about the past and present, but also about the future. In addition, they'll
continue to reduce the time to intelligence -- the time it takes to create and deliver information to the
appropriate people. **--Peggy Bresnick Kendler

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