Maximizing Profitability through Increased Customer Intelligence in Retail Banking (Strategic Focus)

Introduction

There is a growing need for maximizing profitability through improved customer understanding that drives the adoption of customer intelligence strategies and technologies. This is a large and expanding area that is increasingly reliant on technology, but also people and processes.

Scope

*This report examines the future prospects of customer management, and is written predominately for audiences from the retail banking sector.

*The report is specifically concerned with the business intelligence and data management aspect of customer relationship management.

Highlights

The growth of multichannel propositions presents banks with the opportunity to gain a more complete understanding of core customers. The challenge is to integrate all transaction information, web analytics and marketing data, so that data from various channels can be correctly analyzed and interpreted.

Customer-focused banking institutions now see Customer Intelligence analytic tools and applications as key to improving both their internally and externally facing customer management process. Business Intelligence and Analytics is an ideal technology for this since most data held in banking data sources are geared around customers.

Reasons to Purchase

*Gain insight into the challenges faced by retail banks seeking to improve their customer understanding practice.

*Gauge how market conditions are shaping the development trajectory of the customer intelligence discipline.


Report Highlights

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SUMMARY 1
Catalyst 1
Ovum View 1
Key Messages 2
Customer intelligence is key to maximizing the value of Customer Relationship Management (CRM) strategies 2
Retention of profitable customers is a major focus area 2
The multichannel environment is both a challenge and an opportunity for banks to improve the management of customer relationships 2
Access to solid data is the fundamental requirement - and is elusive in retail banking organizations 2
CI initiatives are stimulating retail banking demand for customer analytics 3
TABLE OF CONTENTS 4
TABLE OF FIGURES 5
MARKET CONTEXT 5
Increased customer satisfaction requires greater customer understanding 5
Customer intelligence is key to gaining the required level of customer understanding 6
Banks should focus on high retention levels to improve sales and profitability 7
Effective profitability analyses require a solid data foundation 7
Retention of profitable customers is a major focus area 7
Banks must focus on maximizing existing relationships 8
Trust is the key element in client retention and acquisition 8
Customers are now more likely to change their primary banking services providers 9
BUSINESS FOCUS 10
Multichannel integration is required to achieve consistency 10
Legacy infrastructure is the biggest challenge to channel integration 10
Effective marketing will drive channel utlization 11
Banks need technology 11
Corporate cultural shift needs to support technological enhancements 12
Customer intelligence guides go-to-market strategy 12
Access to solid data is the fundamental requirement to understand customer bahavior 14
TECHNOLOGY FOCUS 15
The goal: Getting a single view of the customer 15
Key Hurdle: Customer data contained in multiple, conflicting silos 15
The costs of bad data quality are high 16
Managing customer data involves people, process and technology 17
People: line organizations must overcome cultural inertia and turf issues 17
Process: essential for setting the ground rules for managing customer data 18
Technology: Get the core data integration building blocks in place 18
CI is the heart of a sophisticated CRM system 20
CI is a form of Business Intelligence 21
Demand for CI solutions is expected to increase 22
Banks are increasing interest in customer analytics (analytical CRM) 23
Predictive bank to customer relationship entails coherent data for accurate and full customer analysis 24
Customer data yields insight 24
Banks must manage data as a strategic asset 25
Multichannel integration and customer information systems are the major area of growth 26
RECOMMENDATIONS 29
Recommendations for enterprises 29
Banks should focus on multichannel integration, which is required to achieve consistency 29
Cultural shift is the essential first ingredient 30
The three critical components must be involved: people, process and technology 30
Recommendations for vendors 30
Vendors should create the ability for banks to get the right view of the customer 30
APPENDIX 31
Ask the analyst 31
Definitions 31
Further reading 31
Methodology 31
Disclaimer 32
List of Figures
Figure 1: Please rate the importance of the following objectives to your IT investment strategy in 2010 6
Figure 2: Trust plus high product holding is the holy grail for minimizing switching 9
Figure 3: Challenges of a major US bank 11
Figure 4: Retail banks should seek to propel customers higher up the 'loyalty ladder' 13
Figure 5: Which of the following describes your organization's current customer marketing challenges? 14
Figure 6: Key political/cultural issues impacting customer information data quality 17
Figure 7: Business intelligence architecture 21
Figure 8: CI technologies that banks currently have or use and are prioritizing for investment in the future 22
Figure 9: Uplift or incremental response modeling 23
Figure 10: Banks progressing towards a data driven customer service 24
Figure 11: SAS Banking Industry Data Model 25
Figure 12: Three major areas of customer data and consequently customer intelligence 26
Figure 13: Global retail banking technology spending through 2009-2014 by business function ($m) 27
Figure 14: MI/CIS technology spending globally 28
Figure 15: MI/CIS technology spending by subregion ($m) 29

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