Enabling a new banking experience with predictive analytics

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© 2015 IBM Corporation
Transforming Customer Engagement with Analytics
Robert Palmer, Global Banking Industry Marketing Leader, IBM Analytics
Chris Yaldezian, Global Banking Industry Marketing Leader, IBM Commerce

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• IBM’s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice at IBM’s
sole discretion.
• Information regarding potential future products is intended to outline our general product direction and it should not be
relied on in making a purchasing decision.
• The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to
deliver any material, code or functionality. Information about potential future products may not be incorporated into any
contract.
• The development, release, and timing of any future features or functionality described for our products remains at our
sole discretion.
Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment.
The actual throughput or performance that any user will experience will vary depending upon many factors, including
considerations such as the amount of multiprogramming in the user’s job stream, the I/O configuration, the storage
configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve
results similar to those stated here.
1
Please Note:

2
Consumer empowerment and digitization are rapidly changing how individuals and
organizations interact
•Channels are governed by different silos and
incentives
•Organizations drive consumer experience
•User experience is typically unintuitive
•Marketers group consumers into broad
segments
•Focus groups and market research represent
consumer input
Organization-centered economy
•There is a seamless experience no matter the
channel
•Consumers expect experiences “my way”
•Marketers deliver a personalized experience to a
“Segment of One”
•Data and analytics reveal insight from consumer
behavior
•Focus is on ease of use and curation
Individual-centered economy

3
Engagement requires a
systematic approach
Data is the new basis
of competitive advantage
Cloud is the path to
new business models
Data is becoming
the world’s new natural
resource
The emergence of
cloud is transforming
IT and business
Mobile and social are
transforming individual
engagement
At the same time, technology innovation has spawned a new era defined by three shifts
that address this consumer centric world

4
Change is required to meet customer expectations
Source: IBM Institute for Business Value CEO Study
CEO’s realize they must to improve their understanding of individual customers and
respond faster to their needs
Improve understanding of individual customer needs
Improve response time to market needs
Harmonize customer experiences across channels
Include customers across product / service life cycle
Increase transparency and corporate accountability
Increase social and environmental responsibility
72%
68%
67%
44%
55%
38%

5
CMO’s feel most challenged with the very factors that, when successfully managed,
can most impact their success
The most prominent challenges for Chief Marketing Officers
Data explosion1
Social media2
Growth of channels and devices3
Shifting consumer demographics4
71%
68%
65%
63%
Source: IBM Global CMO Study: “What areas do you feel most underprepared”. 2014

6
Drive improved business
outcomes
by applying more sophisticated
analytics across more disparate data
sources in more parts of their
organization.
Capture the time value of
data
by developing “speed of insight”
and “speed of action” as core
differentiators.
Change the game
in industries and professions by
infusing analytics into everything.
L E A D E R S W I L L:
Organizations that maximize the power of data and analytics can transform
their industry

7
Leading marketers realize there is room to improve segmentation using analytics, but also to
impact the activities that drive engagement
Use of Customer Data
Source: IBM Global CMO Study: 2014
61%
54%
46%
45%
41%
40%
Segmentation/Targeting
Action/Buy
Awareness/Education
Interest/Desire
Use/Enjoy
Bond/Advocate
Transaction Focused
Relationship Focused

8
Alert me
- Real-time predictive analytics and
personalized customer communication
Advise me
- Bringing expertise to every client
interaction
Educate me
- Digital online education and tips “in the
moment”
Let me choose
- Options vs. prerequisites, roadmaps vs.
checkboxes
Know me
- Offer new products and services based on
understanding my wants, needs
Trade with me
- Sharing data, location, and new ideas in
return for better products and value
Excite me
- Unexpected services at unexpected moments
Find me
- Using visualization and analytics to discover
new customer segments
Compare me
- Offer peer analytics in virtual channels
Protect me
- Multifactor security that doesn’t punish the
innocent
Ask me
- Consulting customers on products,
services, and social issues
Grow with me
- Data and insight connecting the lives of
customers, households
New data and analytics capabilities can enable improved customer engagement and
deliver more value to the relationship…

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…through improved insight of consumer needs, preferences and behavior that can help
drive tangible business outcomes
Advanced analytics enables you to:
• Analyze, understand and anticipate customer behavior across all channels
• Deploy web and social network analytics as a source of valuable insight
• Offer personalized products and services tailored to the individual
• Manage the optimal balance between service and cost of delivery
• Predict life events, attrition risk, customer satisfaction and customer lifetime value
• Improve service levels and knowledge of front-line employees
•Improved customer lifetime value
•10%–25% increase
•Higher loyalty and affinity
•Increased retention rates
•Improved conversion rates
•20–40% increase
•Reduced default rates
•10%–30% reduction
•Improved Products Per Customer
Potential Outcomes
Analytics

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Exploiting all data and all perspectives delivers new insights to attract, grow and retain
customers
360 Degree
Customer View
Data and
Analytics
All perspectives
• Past (historical, aggregated)
• Present (real-time)
• Future (predictive)
Descriptive data
• Attributes
• Characteristics
• Company info
• Demographics
• Weather Patterns
•Location Data
•Social Media
Behavioral data
• Orders
• Transactions and Spending Data
• Payment History
• Usage Patterns and Service
Records
Attitudinal data
• Opinions
• Product Reviews
• Needs and Desires
• Market Research
• Social Media
Interaction data
• E-Mail / chat transcripts
• Call center / CRM notes
• Click-streams
• Lead Generation
• Mobile Marketing
•Tradeshows and Events

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Advanced customer insight can transform the customer experience
Customers get mass offers Customers get timely personalized
recommendations
…analyzing customer interactions, spending
patterns, social media and more
Customer treatment based on broad
segments with little differentiation in
experience
Personalized customer treatment …using advance analytics to create behavior-based
micro-segmentation and “segments of one”
Customers frequently check balances Customers receive regular analysis of
spend and cash flow
…analyzing spending patterns and applying
predictive analytics
Employees act on dated information Employees access real-time customer
status and suggested actions
…performing real time profile updates and adjust
recommendations as interactions and events occur
Customers are surprised by overdraft
fees
Customers get event predictions and
ways to plan for their future
…analyzing behavior to predict future events
Customers ignore notices Customers seek advice, based on life
events
…using predictive analysis to uncover life events
and proactively provide options
Banking Today With Advanced Analytics By…

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Large Chinese bank improved marketing
offer response 300%
Need
• The bank wanted to improve marketing efficiency
• They wanted to uncover new insights about
customers that took into account their entire
relationship with the bank to improve cross sell
Solution
• Analyzed credit card transactions for new customer
insight
Benefits
• Increased credit card marketing response rate from
3 percent to more than 10 percent
• Improved the bank’s ability to identify customer
attrition risk and take preventive measures to
improve customer retention
12 © 2015 IBM Corporation

13
European bank rapidly analyzes client
behavior for improved marketing
results
Need
• To speed analysis of client behaviors to offer
personalized marketing offers across all channels
Solution
• Predictive analytics on customer behavior
Benefits
• 3X improvement in customer response to next
best action propositions
• A 98 percent increase in key client interaction
performance metrics such as click stream data,
analytical reporting and queries
13 © 2015 IBM Corporation

#ibmamplify
Driving Change in
Banking - Engagement
in the world of
empowered individuals
March 2015

#ibmamplify
© 2015 IBM Corporation 15
72% of CEOs are
making major
changes to
understand their
customers’ individual
needs
35% of the general
population is
influenced by social
media, vs. 52% of
Gen Y (Millennials)
The Smartphone is the
omni-present channel
for sharing and 91%
keep the phone close
and access it up to
150 X a day
What’s changing in the world of Banking client engagement

#ibmamplify
Bank Marketing’s universe is changing too…
Marketing must re-imagine its role…
Know your customer as an individual
Create value at every touch
Be an authentic brand and culture

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It’s awfully hard to re-imagine marketing when the technology
infrastructure looks like this…
SMS
Marketing
Files
Files
Files
Files
Files Customer
Database
Files
Email Service
Provider Web Analytics
Provider
Website Behavioral
Targeting
Search Marketing
Dashboard
Customer Insight
ToolPredictive Analytics
Marketing Finance
Mgmt
Digital Asset Mgmt
Call Center/Inbound
Decisioning
Marketing
Operations Mgmt
Lead Management
Local Marketing
Predictive Analytics

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IBM Commerce strategic vision for Bank CMO’s: Provide the best
customer experience through an integrated set of capabilities
Analyze
to identify opportunities and
predict outcomes
Collect
data that augments
each customer profile
Manage
marketing processes and
measure results
Decide
on the best action, offer, content
and/or channel
Deliver
relevant pricing, engaging
messages, and capture reactions

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A IBM Commerce approach helps CMOs improve the
customer experience at the bank
Grow your knowledge of
customers as individuals so
you can better target offers
and information.
Deliver an omni-channel
marketing experience to
give the customer one
consistent brand experience
Better anticipate customer
needs to deliver more
relevant and timely offers
that are more likely to
be accepted.CMO Agenda
GAIN CUSTOMER
INSIGHT TO ACT
PERSONALIZE
INTERACTIONS AND
ENGAGE
CUSTOMERS WITH
RELEVANT OFFERS
DELIVER AN OMNI-
CHANNEL
MARKETING
EXPERIENCE
DELIVER A BETTER
MOBILE BANKING
EXPERIENCE
Deliver an improved mobile
banking customer experience.
And ensure that mobile is not
a stand-alone silo, with Omni-
Channel marketing.
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First, you need to GAIN CUSTOMER INSIGHT
with Customer Analytics & Digital Marketing
FROM TO
Understand Customer
Demographics
Understand Individuals &
Ecosystems
CMO

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First Tennessee Bank uses web analytics to optimize mobile banking interactions by
driving targeted content
Business challenge: First Tennessee Bank wanted to make the most of the time customers spent on its web
and mobile sites by delivering personalized content and targeted marketing messages. The bank also wanted
to tap in to the data captured during virtual interactions to help tellers and call center employees improve
customer service and identify more up-selling opportunities.
The smarter solution: The bank implemented a web analytics solution that draws insight from customers’
online behaviors. It uses the data to create targeted content, email messages and product suggestions. The
solution also provides bank employees with insightful information about the customers they serve.
“Our goal is to make it easier for customers to do business with us on every channel. Today, we have all the
tools we need to deliver outstanding service across every device.”
—Nicole West, web analytics manager
3% lower
home page bounce rate as a result of better
insight into the page’s design
Increased frequency
of detailed web traffic reports from monthly
to weekly
13% faster
logins due to a better understanding of what
customers experience on the bank's home page

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Customer engagement framework

#ibmamplify
Customer engagement framework
Manage budgets,processes &
measure results
Analyze data
to find actionable insights
Decide on the best offer,
action or communication
for each customer
Collect data that augments each
customer profile
Learn, Optimize and tune iteratively
Build and integrate assets, offers,
promotions for customer
engagement
Deliver engaging messages and capture
reactions

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The Value of the Customer Engagement Framework
Precise Efficient Proactive
Individually identify clients,
actions, and outcomes for
targeted and unique offers
Predict likelihood of success,
and focus on the most
impactful actions
Base your market strategy and
actions on future outcomes, not
just past events
sophisticated analytics provide actionable insight to ExperienceOne

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PERSONALIZE INTERACTIONS
with Real-Time Personalization
CMO
FROM TOStatic Offers Tailored Moments

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improvement in response outreach
Decrease in direct marketing costs
And a very Large European Bank grows revenue and
loyalty with personalization across branch, call
center, and web experiences.
3X
PERSONALIZE INTERACTIONSCMO
35%
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#ibmamplify
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ENGAGE CUSTOMERS
with Omni-Channel Marketing
CMO
FROM TO
Traditional Seasonal
Campaigns
Relevant Lifecycle
Customer Marketing

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targeted offers per week; more offers
than previously sent in an entire year
growth in sales volume for a particular
savings product
IBM helps SNS Bank create an Inbound Marketing
Machine to Spur Growth
4.5 M
ENGAGE CONTINUOUSLY WITH CUSTOMERSCMO
5%
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CREATE A SUPERIOR
mobile banking experience
CMO
FROM TO
First generation mobile
banking
Seamless brand
experience extended to
mobile

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How Banking CMO’s Leverage IBM’s Marketing Solutions
 Coordinated inbound, outbound marketing, Real-time offers across web and call-
center, & integrated marketing operations
 Sophisticated event detect that outperforms all other methods of lead identification
 Comprehensive cross-channel lead management
 End-to-end customer lifecycle optimization - attract,
on-board, monitor and act on behavioral profiles
 Cross-channel, multi-wave, lights out outbound marketing

IBM Commerce for Banking
delivers personalized content
in context to drive customer
engagement

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350,000+
Global trading entities
connected
5.5 million
Transactions
exchanged through
B2B cloud daily
Nearly
15X ROI
For every dollar spent
on IBM Commerce
#1 Banking
tech vendor as ranked
by the FinTech 100
$100 billion
Commerce transactions
analyzed in Holiday
Benchmark Reports
5 years
in a row the Gartner Magic
Quadrant leader for Multi-
Channel Campaign
Management
IBM Commerce for banking delivers value at speed
Sources: Internet Retailer Top 500, IBM and Nucleus Research Provided for illustrative purposes and is not intended to be a guarantee of future growth rates or market opportunity.
© 2015 IBM
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