Stories from the battlefield: How A Leading Bank transformed itself through customer management analytics

Are we prepared for the challenges of customer era? Customer needs are ever evolving How well placed are we in predicting Customer needs and proactively managing customer value?
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The dawn of the Customer Era has thrown up a few challenges

Customers are Characterized by Customers have more information on their fingertips, Data on anything and everything is easily available Customers trust their social networks and not brands Challenges faced by firms How to provide information on everything & at the same time build any emotional quotient with customers? How to adopt this reality in day-to-day operations?

more informed
Dawn of the Customer Era

more Connected

Always ON

Customers are plugged-in everywhere and seek instant gratification

How to have more instant & relevant conversations with customers?

looking for Simplicity

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Customers face paradox of choice (more choice more confusion), hampering decision making

How to simplify products and services that aid in faster decision making?

Banking needs of customers

The Circle of Financial Needs

Transaction Needs

Credit Needs / Borrowing

Core Needs Savings & Investment Needs Security & Insurance Needs

Banking needs of customers are very diverse and keep evolving depending on their progress in lifestage, wealth, risk appetite, acceptance of technology
The Circle of Financial Needs
Cash transactions Overseas transactions Local & international Payments Govt. payments Online Transfers Transaction Needs Evolved Needs Personal need Auto, Home Marriage Education Travel / holiday Business Quick Cash Credit Needs / Borrowing Evolved Needs

Core Needs Savings & Investment Needs Security & Insurance Needs

For future For business For purchase For education For retirement For emergency Travel / Holidays

Securing life Securing health Securing property Securing travel Securing from theft and fire.

Banking needs of customers are very diverse and keep evolving depending on their progress in lifestage, wealth, risk appetite, acceptance of technology
Cash withdrawal Credit cards Cheque / drafts Remittance Internet banking Standing orders Phone banking Mobile banking

The Circle of Financial Needs

Cash transactions Overseas transactions Local & international Payments Govt. payments Online Transfers Transaction Needs Evolved Needs Personal need Auto, Home Marriage Education Travel / holiday Business Quick Cash Credit Needs / Borrowing Evolved Needs

Personal loan Home loan Auto loan Business loan Education loan Overdraft Cash advance

Product Manifestations

Core Needs Savings & Investment Needs Security & Insurance Needs

Product Manifestations

Bank account Time deposits Recurring deposits Mutual funds Stocks / shares Bonds Property investment

For future For business For purchase For education For retirement For emergency Travel / Holidays

Securing life Securing health Securing property Securing travel Securing from theft and fire.

Life insurance Medical insurance Property insurance Car insurance Travel insurance Theft & fire insurance

and if we dont give attention to little details, we have lost their attention.

A Leading Bank has done well in servicing walk-in customers capitalizing on its brand pull, process efficiencies & large network of branches. Beginning of 2009, with Global Financial Crisis setting in, the challenge was to get maximum out of a limited marketing budget Marketing team at A Leading Bank introduced Analytics based targeted cross-sell program, which after initial success, evolved into a full fledged Proactive Customer Lifecycle Management Program. Today we will take you through the key highlights and success factors in implementing this program.

We set out with a holistic customer centric vision

A Leading Banks vision is to be the market leader in customer lifecycle management in the region This involves ability to manage customer lifecycle using full suite of products and services across all banking channels embedded in automated technology and efficient processes
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The Vision was translated into specific initiatives for managing customer lifecycle under House of Analytics framework.
customer lifecycle 1 full suite of products and services
Assets

Customer Management - Customer Insights - Customer Segmentation Customer Lifecycle Management - Affluent
VALUE MANAGEMENT
- Sell loan for a second car - Sell a Watani top-up

- Mass
ACQUISITION
- Sell loans

- Private
REACTIVATION
-

ACTIVATION
-

RETENTION
- Prevent foreclosure

Liabilities

- Identify segments in the market with high opportunities

- On-board and activate customers

- Increase CA balances - Increase debit cards & POS usage - Increase salary transfer customers

- Prevent - silent attrition - balance erosion - salary transfer attrition

- Activate customers - Increase loyalty

Insurance

- Sell insurance

- Increase insurance holding

- Retain customers

Credit Cards

- Sell credit cards

- On-board and activate customers

- Increase spends and utilization - Increase credit lines

-Prevent attrition

- Activate customers - Increase loyalty

Campaign Management
- Develop - Execute - Track & Report

CRM Integration
- One view of customer - All push and pull channels
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- Automated and optimized

3 all banking channels

4 automated technology and efficient processes

To implement this vision, we had to work across all key components

Dedicated analytics marketing team (including consultants) + involved other teams within bank such as products & channels

Set-up a separate data-mart to enable analytics

Put in place rigorous data, campaign management and reporting process as they were done in silos earlier

Identified a series of low-hanging initiatives while setting up a framework & roadmap for long-term strategic initiatives

Achieved & beat target by over 80% in 2009 & 1st qtr 2010
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We will deep-dive into one initiative as an illustration of work done

Cross-Sell Program
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We have already achieved significant results across KPIs in the Cross-sell program
RESULTS
Incremental bookings from analytics base
Beat the 2009 targets by 80% 6 months from start of campaign Above the monthly targets

5 months from start of campaign

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We kick-started our analytics journey by launching multiple targeted campaigns for cross-sell of asset products to checking customers
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Data Setup

2
Model development Several analytical models developed
Jun-09: Demographic & product variables Jul-09: Added behavioral variables Jan 2010: Differentiated between salaried / non salaried customers Feb 2010: Customer life time value models

3
Campaign launch Test and control mechanism developed More than 25 campaigns launched Optimized on channels for campaigns

Campaign execution and tracking

Revenue realization Beat target by over 80% in 2009 & 1st qtr 2010

Data-Mart setup which is refreshed every month

Campaign scripts optimized

Lead management system developed

Out-bound callers trained

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We started with collating data from all sources, and created an analytical data-mart
Products
Deposits Watani Credit Cards

Customer Analytics

Mortgage

Auto Finance/ Leasing

Transactions
Deposits ATM Mubasher Credit Cards Branch

Comprehensive Data-mart

Contact information from different sources

Demographics Credit Filters

Campaign Management

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The Data-Mart is refreshed every month

We developed several analytics models and improvised on them over time

Look-alike models Decision tree models

Next-best Cross-sell model Segmentation models

Predictive models

Customer Lifetime Value model

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We developed several analytics models and improvised on them over time

Look-alike models Decision tree models

Next-best Cross-sell model Segmentation models

Predictive models

Customer Lifetime Value model

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Helped us in understanding customer needs and predicting behaviour

Suitable campaign execution channels were selected to optimize channel level RoI
Customers were rank ordered based on their propensity to respond to the X-sell Campaign
Most Expensive Channel

Set-up a structured process to implement the campaigns Before... After...

Tele Marketing
Customer Propensity

SMS & Email

Outbound Call Center

Random calling without any proper script Agents not trained to manage various situations

Professionally designed call script Trained agents to handle FAQs from customers

E-mail

Email & SMS Script

Scripts were designed in an ad-hoc way

Scripts designed in the systematic & structured way

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Least Expensive Channel

Control & Test groups were carefully designed to track campaign results
Low

Propensity of taking the product

High

Low Propensity Customers

High Propensity Customers

Benefits
We can test key hypothesis to learn what worked & what didnt:

CREDIT

F I L T E R*

H1: By comparing results

Low Propensity Customers
High Propensity Customers

from C1 & C2 we can estimate lift due to modeling

Random sample

H2: By comparing results

from T & C1 we can estimate lift due to campaign offer

BAU conversion

Control Group, C2

Control Group, C1

Test Group, T

Efficiency through modeling & analysis

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Incremental conversion due to campaign offer

* Except the SIMAH check

An E2E process for campaign tracking was developed and executed

Every campaign was tracked for 3 months post launch Campaign results were fed back into data for fine tuning analysis for subsequent campaigns Set-up a process for managing leads for the channels

All results were shared with entire bank in the form of news-letters

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Significant progress was made and communicated across all initiatives with good results against a pre-defined success matrix
Acquisition - Cross Selling
Sales: Incremental sales of SR2.3bn 30+ campaigns run Products: Credit cards added to consumer finance cross sell Execution: SMS and Outbound Calls

Activation - New Customer On boarding

Objective to accelerate customer profitability through managed engagement Performance metrics based on salary transfer, online usage, cross sell

BUSINESS RESULTS
3000
Hypothetical numbers for illustrative purpose

with well defined activities in the window of 180 days

Welcome Engage Activate

Above the monthly targets Beat the 2009 targets by 80% 2,176 2,301 1,922 1,500

2,500

2500 2000 1500 1000 500 0

Mar'10 Jun'10 Jul'10

6 months from start of campaign

691 212
Jun' 09 Jul' 09

832

935 500

321

498

5 months from start 1,302 1,400 of campaign 851 620 400 170
Jan' 10 Sep'10 Aug'10 May'10

Day 1
Account opening
Account opening Welcome kit delivery Issue ATM Card Spend quality time with the customer to understand the need and explain the relevant products and features Outline the benefit of Salary transfer Guide customer on Mubasher usage

Week 1
Welcome SMS
Thank you letter/email/SMS

Week 2
Welcome Email
Welcome Email

1 to 3 months
Engagement
Bill payment offer Offers on debit card usage at POS Follow up calls if customer still inactive on Mubasher Check on Salary transfer

3 to 6 months
Cross-Sell
Customized Cross Sell offer through direct mail/email/ SMS Offer Prepaid card Address needs of customers who decrease their balance by more than [70]%

Nov' 09

Sep' 09

Aug' 09

Oct' 09

Dec' 09

Feb' 10

2009 Target

Apr'10

2010 Target

2010 revised target

EXECUTION

TRACKING
Natural Conversions Lift due to Campaign C1 % Lift due to Modeling Natural + Execution led Conversions T1 % This represents the converted customers due to the project => Booked amount due to the project

REPORTING
Dashboards for regular reporting

X%

C2 % Low Propensity Control High Propensity Control High Propensity Target

Conversion here is BAU conversion

Conversion here is due to efficiency through modeling

Incremental conversion over & above C1 will be due to campaign offer

Earn the right to X-sell

2010 IBM Corporation
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X-sell/Up sell programs

2010 IBM Corporation

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Value Management - Credit Card Segmentation

CUSTOMER BASE
ANNUAL POS SPENDS
0 < 9,187 SR
D1

Attrition - Account Depletion

We analyzed our customer base to understand if balance depletion was due to account closures or silent balance reduction
Attrition Rate (Account Closure)
15% 12.0% 10%

9,187 18,247 SR 18,247 38,401 SR

C1 B1

>38,401 SR
A1

ANNUAL POS TRANSACTIONS

>78

0.1%
D2

0.7%
C2

1.0%
B2

0.6%
A2

42 - 77

1.2%
D3

2.1%
C3

1.4%
B3

0.4%
A3

20 - 41

5.2%
D4

3.0%
C4

1.2%
B4

0.3%
A4

1 - 19

40.0%
A

3.0%

0.9%

0.2%

ATM only

Total base = 315 K customers

A1 A2 and B1 B2 customers should be maintained well
C1 D1 and D1 D2 customers should be moved towards higher spends D4 and I need to be activated

7.6%
I

Inactive

Understanding of customer segments in terms of usage and revenue Foundation laid for 2011 credit card portfolio management strategy

Silent balance reduction forms a major reason for overall balance depletion

5%

1.0% 0%
Average US Banks Al-Rajhi Bank

Silent attrition identified as significant point of investigation Internal analysis combined with customer research to identify root causes

31.1%
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Al Rajhis account closure rate is much lower than that of the average bank in a developed country, and hence not a concern area

We undertook surveys to understand the reasons why customers reduced their account balance
2010 IBM Corporation

2010 IBM Corporation

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While implementing analytics within the bank, we are in the process of establishing a fact based culture
Structured Model to change organizational mindset
Supported by 'soft approach' to make the team understand and implement the change

Dedicated analytics marketing team (including consultants) + involved other teams within bank such as products & channels Rigorous data, campaign management and reporting process put in place

The initiative is driving excellent results across the organization and defining how we should align our business for the future. - DCEO A Leading Bank

Clear goals and plans incorporated by all teams

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Analytics team has provided us with a great framework to effectively manage our cards portfolio. - Credit Cards Team

and we are currently transforming our organization for facing the customer era by making every customer interaction count
From To We have established an end-to-end onboarding experience, walking the customer through his first 6 months This has earned us the right to cross-sell to the customer Reactive Engagement Proactive Engagement

Providing relevant services to customers through targeted cross sell up sell campaigns Exceeded customers cross sell sales target by 80% Generic Interactions Personalized Interactions

Emphasis on a culture that is inclusive of customers One way Customer Interaction

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Customer Dialog

Learnings
Have a vision and sell the vision to get all stakeholders onboard The vision should be broken down to clear manageable initiatives
Devil is in the detailed planning and focus on execution Identify success matrix with some linkages to profitability Tracking & reporting results regularly against the success matrix

Its about winning people not burning bridges

Thank You

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