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IS-535 Managerial Applications of Information Technology Professor Muhammad Khan December 4, 2010
ABC Bank
Contents
ABSTRACT ....................................................................................................... 3 BUSINESS BACKGROUND .................................................................................. 4 DISCUSSION ..................................................................................................... 5 CURRENT BUSINESS ISSUES...................................................................................... 5 PROPOSED SOLUTION DEFINITION ........................................................................... 7 PROPOSED SOLUTION BENEFITS ............................................................................... 9 RECOMMENDATIONS FOR EXECUTIVES .................................................................. 11 CITED REFERENCES ............................................................................................... 12
ABC Bank
Abstract
This paper will review about Business Intelligence solution to be implemented in ABC Bank for effectively integrating and cross selling financial products in the organization. The paper will discuss the existing business issues like low customer cross sell, ineffective direct marketing, fraud prevention, branch ATM locations and further discuss on how these issues would be resolved by proposed integrated business intelligence implementation. Business intelligence solution is implemented by broader deployment of data warehouse environment and reporting infrastructure that will provide the business users to easily access, analyze and apply business information to day to day and forecasting activities. Business intelligence applications facilitate many activities, including those listed below: Multidimensional analysis of data Cross-functional activities Data mining Forecasting Business analysis Visualization Geospatial analysis Digital dashboard access
The expected benefit of the business intelligence is a 30% increase in each customers lifetime value by the end of the third year following the implementation of business intelligence solution.
ABC Bank
Business Background
ABC Bank is a regional back providing multiple financial products from Retail Checking and Saving accounts, Credit Cards, Mortgages and Investment products. The Bank is divided into different business units depending on the above business products. Over the period of time Bank has made multiple acquisitions and integrated them into respective existing business units. As competition intensifies in the retail financial services marketplace, accurate measures of customer value down to the account level are becoming increasingly pivotal to success at the retail end of the market. This applies both to established players and new entrants. [SIMON, NCR 2000] The amount of data collected in the banks from daily transactions to customer interactions presents a tremendous opportunity for banks to analyze the data and predict how to better offer the bank products and how much customers are satisfied by these products. According to financial consultants, in a typical retail bank portfolio, 20% of the accounts contribute profits equaling 200% of the overall return, whereas more than half of the accounts generate losses. Business Intelligence can help business clients to evaluate customer lifetime value and short term profitability expectations and to use this knowledge to distinguish between profitable and non profitable customers.
ABC Bank
Discussion
Current Business issues
ABC bank is not able to consolidate its customer base across business units. ABC bank is lacking product penetration across its customers. There is no system to know if mortgage customer has a credit card or investment account with the bank. ABC bank has increased incidents of fraudulent activity. Bank needs to better predict and avert fraudulent activities. ABC bank needs to understand fraudulent patterns before hand and set up alerts if fraudulent patterns are seen on the accounts. ABC bank is not able to easily cross sell or up-sell their products at the branch customer interactions as branch reps cant see the 360 view of the customers. Currently ABC bank just markets products to their customer without any business intelligence involved decreasing the response rate for the in person marketing campaigns. ABC banks direct marketing mail campaigns and operations have very low response rate compared to the industry standards. Banks direct marketing send offers to major part of its customer base but receive low response rates. ABC Bank needs to analyze the responses received by each channel of marketing. Bank needs to analyze which marketing channels are cost effective when compared to other channels. Bank needs to reduce cost by decommissioning ineffective marketing channels. ABC bank has issue with customer loyalty and attrition as it not able to understand what drivers affect the customer loyalty. ABC bank need to understand which offers will keep the
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ABC Bank
customers with the bank and also encourage increasing number of financial products with the bank. ABC bank is incurring credit losses due to its internal credit risk management is not taking an intelligent decision based on the data available. ABC bank needs to find best location to setup new branches and ATMs for better customer reach. Currently the branches and ATMs are either over utilized or underutilized. ABC bank needs to identify top profitable customers and products by analyzing per customer and product profits over period of time like monthly, yearly and lifetime profits.
ABC Bank
Figure 1 : Explaining the flow of Overall Business Intelligence Implementation Source : http://www.emeraldinsight.com/content_images/fig/2870380408001.png
ABC Bank
All the operational data and each Banks business units data need to be loaded into single enterprise data warehouse. This will be data repository where all the data will be standardized across the Bank. The customer data is integrated providing 360 view of customer like how many accounts and what kind of products does he have. Data will be extracted and merged from operational systems and external data sources and gets stored in dimensional modeled data warehouse .In the dimensional data model the measures like balances, accounts etc will be stored in fact tables and the account attribute hierarchies like addresses ,branches ,scores, time etc will be stored as dimensions. This dimensional data model data infrastructure will provide foundation for business intelligence applications to slice and dice data. Business intelligence applications implemented on top of this enterprise data warehouse will be able report data across business units. This business intelligence solution will help crossorganizational decision-support strategy rather than departmental decision-support silos. Business intelligence applications will be able slice and dice data, segment data , aggregate data based on different dimensions. Business intelligence applications can forecast and predict future trends by analyzing historical data available in enterprise data warehouse. As historical data keeps getting collected, the BI systems will get better in forecasting and predicting future trends.
ABC Bank
ABC Bank
it ratio historically . A credit card cancellation can be provided with a best balance transfer rate or double the points on the customer favorite or largest spending category .Business Intelligence can find customer top 10 spends or at what was last lowest balance transfer rate the customer positively responded. As of cost a acquiring a new customer is a lot compared to keeping an existing customer there will direct saving to reduce the churn factor. Business Intelligence applications can store the behavior of historical fraudulent accounts and find patterns. Business intelligence application can then find these fraud patterns in the whole set of customer s and raise red flags to the business users. For example accounts with foreign big tickets purchases have increased chances of fraud than accounts that have consistently used in one state. Business Intelligence can be used to seek out patterns of suspicious behavior by geographical region, branch etc. Business Intelligence applications will be able to slice and dice customer and transactional data geographically by state, city, zip code. The business intelligence will be able find which customers visit which branches frequently and use which banks ATM more frequently. This information can be used to add new branches and ATMs to better serve the existing customer base and increase the branch footprint. Business Intelligence applications will be able rank customers, marketing channels, financial products by their profitability and cross examined through time dimension. Business intelligence systems will not only give information top profitable channels or products but will tell in which time period these products will be most profitable based on this marketing team can concentrate on those channels and products in that time period.
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Cited References
1. Business Intelligence Roadmap : The Complete Project Lifecycle by Larissa T.Moss and Shaku Atre ( 2003 Ch 1,4 ) 2. Jayanthi Ranjan, (2008) "Business justification with business intelligence", VINE, Vol. 38 Iss: 4, pp.461 - 475 3. Business Intelligence The Savvy Managers Guide by David Loshin ( 2003) 4. Data Warehousing Advice for Managers by Patricia L.Ferdinandi ( 1999 ) 5. Simon Doherty, 2000, CUSTOMER VALUE: GAINING THE COMPETITIVE EDGE, NCR. 6. http://www.techwr-l.com/techwhirl/magazine/writing/softwarerequirementspecs.html 7. http://www.prnewswire.com/news-releases/beiruts-first-national-bank-chooses-misysbusiness-intelligence-solution-as-its-mis-platform-106872013.html 8. http://www.diverseit.co.za/article.asp?articleID=60 9. http://www.qwikbank.com/ 10. http://www.forrester.com/rb/Research/topic_overview_business_intelligence/q/id/392 18/t/2
11. http://www.tdwi.org
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