Money 20:20 ibm cognitive engagement raisch

Watson Customer Engagement
Cognitive
Engagement
In The Age Of The Customer
Warren D. Raisch
Executive Strategist
Watson Customer
Engagement
Warren.Raisch@Ibm.com
760.468.5018

2
Banking In The Age Of The Customer
The Current State Of Cognitive In Financial Services
Welcome To The Cognitive Era
The Cognitive Maturity Model
The Roadmap to Cognitive Customer Engagement
Innovation Break Outs
AGENDA

EASY IS THE NEW
LOYAL
Know MeDeep Analytics
Compare
Me
Goal analysis & Peer Analysis
Protect
Me
Secure Engagements
Advise
Me
Be A Trusted Advisor
Alert Me
Keep My Informed
Find Me
Location Awareness & Context
Awareness
Engage Me
Contextual Engagement
Inspire Me
Frictionless Commerce
Stick
with Me
Be Central to My Life
Customer Expectations

The Digital revolution of banking
1 Customers are increasingly comfortable with
mobile banking and rarely using a branch
Four trends that are disrupting banking
Flood of data from many sources
2 Banks must improve infrastructure, systems and
analytics to properly leverage the data available
from their systems; for example from ~74 billion
credit card transactions every year
Peer-to-Peer, lending and payments3
Peer-to-peer payments & lending, crowdfunding and
blockchain threaten incumbents' existing business
Threats from adjacent industries like Internet
firms and Retailers Entering Bankers4
Amazon, Facebook, Alibaba, Square, and Apple have all emerged
with products that undermine the traditional banking model

Top 10 Industry Challenges
1. Growth & Profitability 2. Customers 3. Digital Disruption 4. Digitalization 5. Becoming Cognitive
Cognitive
Digital
Traditional
6. Cloud 7. Operating Model 8. Compliance 9. Security & Fraud 10. Ecosystems
Counter-party
records
Party C’s
Records
Party B Records
Party A’s
Records
Bank records
Auditor records
Ledger
Ledger
Ledger
Ledger
Ledger
Ledger
Consensus, provenance, immutability, finality,
permissioned
30 35 40
2011
2012
2013
2014
2015
0 100 200 300 400
Public
R&D
IT
Energy
Services
Retail
Financial
Education
© 2017 IBM

6
Banks face new
challenges in how they deliver
engaging digital experiences
 By 2020, customer experience will
overtake price and product as the key
brand differentiator1
 By 2020, the customer will manage 85%
of the relationship with an enterprise
without interacting with a human2
 89% of marketing leaders expect to
compete primarily on the basis of
customer experience by 2018
Source: 1 – Walker Info, 2 – Gartner, 3 - Gartner

Easy is the
new loyalty.
If your customers can’t
go from “want” to “have”,
your competitors are only
a tap away.
7
© 2017 IBM
But Easy is one of the hardest
challenges you will ever
face…

“COGNITIVE IS THE NEW CRM”
“I DON’T NEED TO KNOW EVERYTHING ABOUT EVERYBODY,
I JUST NEED TO KNOW A LITTLE BIT ABOUT A LOT OF PEOPLE”.
Bradley Voytek, Head of Data At Uber
© 2017 IBM
Uber is a technology company That arranges peer-to-peer
transportation with no inventory of vehicles driving $1.3 billion
in peer-to-peer payments without using a bank

Airbnb
is a technology
company that
arranges peer-
to-peer
lodging with
no hotel or
house
inventory

My company, on an
average day:
- $3 trillion in business
and institutional financial
flows
—$9 trillion on peak days,
or more than half the
entire U.S. GDP.
- Nearly all of that is
moved electronically. In
many ways,
11
Michael Corbat
Chief Executive Officer
Citigroup
“We see ourselves
as a technology
company with a
banking license.”

Will JPMorgan Chase & Co.'s
more than $9.5 billion technology
budget leave rivals playing
catchup?
$3 billion spent in 2016 just on
innovation, specifically the areas
of robotics and machine learning.
Zames estimates the bank could
save $30 million in 2017 by using
bots to address 1.7 million
systems-access requests such as
employee password resets with
"substantially" more savings to
come. It has also piloted virtual-
assistant technology -- which
combines robotics and machine
learning to mimic human
judgment to deal with employee
requests.
12
Matt Zames
Chief Operating Officer

Amplify 201713
How do today’s
Financial Services firms
leverage their size,
unique advantages
and customer focus to
win in this changing
landscape?
© 2017 IBM

© 2017 IBM
Winning
Against The
Big Teams!
Focus on winning &
keeping loyal
customers.
Leverage the power of
data & cognitive as a
game changer for your
business
Size & budget are not
the barriers to
exceptional growth it’s
about thinking and
acting differently.
Moneyball Video Clip
https://youtu.be/-4QPVo0UIzc

The demands of the customer
have outpaced our human ability
to deliver customer experiences
at scale. Business and
technology have become forever
interconnected.
…
Adapt or Die!

How are You going to
compete and win against
the new realities in your
market?
Knowledge is Power.
Data is Key – What story is
your data telling you?
Data growth is out pacing
most organizations’ ability to
capture, interpret and
leverage effectively
448,800
New Tweets
156,000,000
e-Mails Sent
29,800,000
Messages
4,100,000
Videos Viewed
3,300,000
Posts
1,800,000
Snaps Created
46,200
Posts Uploaded
3,500,000
Searches
© 2017 IBM

Watson Customer Engagement17
AUGMENTED INTELLIGENCE
WELCOME TO THE
COGNITIVE ERA

AUGMENTED INTELLIGENCE
State of Artificial Intelligence Usage
79%
32%
38%
49.3%
US Senior Marketers Who
Believe Consumers Are Ready
for Artificial Intelligence
Voice recognition
and response
solutions
Predictive analytics
and modeling for
customer success
Predictions on activity related
to customers or business or
financial health
© 2017 IBM

DISRUPTIONFrom The Sharing Society
Peer-to-Peer Lending Forecast $300 Billion -2020
Morgan Stanley Global Forecast

With Watson
21
Welcome To The Cognitive Era!

+ Half of our footprint will be in cognitive solutions and software platforms business
+ Our mix will continue to shift as it has for the past 100 years
+ These new technologies are embedded into and enrich our base offerings – Power, z, storage,..
+ All is underpinned by IBM Security
IBM’s next era is all about the power of cognitive
solutions, Cloud platform, delivered to transform industries
1.
Cognitive
2.
Cloud
3.
Industry

The North Face customers
shop with Watson
Transforming the Tax Preparation Industry Watson Insights helps Under Armour fitness
app users make better health decisions
Cognitive systems augment human intelligence, allowing
faster and more informed decisions
24
+ Watson is at the core of our cognitive technology
+ 1 billion customers will be reached by Watson in 2017
+ Watson solutions are being built, used and deployed in more than 45 countries and across 20 different
industries
+ Watson is being trained in eight languages besides English

25
Welcome To
The Cognitive
Era
Where Personalized
Customer
Experiences Scale
With Watson!
Understand
Like humans do
Reason
to extract ideas
Learn
From past results
Interact
In a natural way
cog·ni·tive
/ˈkäɡnədiv/

26
Cognitive systems are creating a new partnership
between humans and technology
Humans
excel at
Cognitive Systems
excel at
DILEMMAS
COMPASSION
DREAMING
ABSTRACTION
IMAGINATION
MORALS
GENERALIZATION
COMMON SENSE (with many biases)
ELIMINATING BIASES
LOCATING KNOWLEDGE
PATTERN IDENTIFICATION
MACHINE LEARNING
NATURAL LANGUAGE PROCESSING AT SCALE
REGULATORY COMPLIENCE SUPPORT
FRAUD DETECTION AT SCALE
PROTECTING Customer DATA
Watson reads 800 million pages per second

DIMENSIONS OF A COGNITIVE CREDIT UNION

DRIVING THE CUSTOMER FOCUS IMPERATIVE
LEARN & IMPROVE BUILD SPEED & AGILITY COLLATE HUMAN INTELLIGENCEINTERACT IN A NATURAL WAY

Who is Innovating?
With Watson

Watson Customer Engagement30
H&R Block With Watson
Click on Image to launch Video or
go directly to:
https://youtu.be/pVK5UeimatQ
From the Cloud to the Tax Desk,
IBM Watson to Help Tax Pros
Maximize Tax Outcomes with H&R
Block. For more information, visit
http://ibm.co/2kseLOj

H&R Block Tax pros are working
with Watson to help clients
maximize their refunds,
across 11,000 U.S. locations
running the Watson program
H&R
• Two-point increase in overall
client satisfaction
• Two-point intent-to-return
increase,
• Three-point price-to-value
increase.
• Increase web traffic and retail
appointments
RESULTS:

32
ING
Needed to rapidly analyze client
behaviors for personalized marketing
offers across all channels
Benefits:
• Improved offer acceptance for
incomplete product requests by
50%
• Earned $35M in 8 months
• A 98% increase in key client
interaction performance metrics
such as click stream data,
analytical reporting and queries
• IMG marketing division is
exploring additional applications
given the success of the solution

First Tennessee Bank
Needed a more granular understanding of each
customer’s banking needs to improve offers and
cross sell.
They also wanted to improve the accuracy and
speed of their predictive models.
33
© 2016 IBM Corporation
Benefits
• An increase of 3.1% offer response
rate for marketing campaigns
• A 600% ROI on predictive analytics
• Achieved a 20% reduction in mailing
costs due to campaign efficiency

Credit card arm of large
Japanese bank
Needed to analyze massive amounts of customer
data to more quickly target and deliver reward
programs and offers to more granular customer
segments
34
Benefits
• Significant improvement in offer
response rate
• Increased net margin 13%
• Faster processing of massive
amounts of customer data including
transactions, contact history, and
customer behavior
• More timely and responsive
marketing activities, as a result of
real-time campaign analysis

Needed the ability to uncover insights about
customers and their entire relationship with the bank
to improve cross sell.
Benefits
• Reduced the time required to generate
summary reports by more than 95%, from
as many as 10 hours to seconds.
• Increased credit card marketing response
rate from 3% to more than 10%
• Improved the bank’s ability to identify
customer attrition risk and take preventive
measures to improve customer retention
35
Large Chinese bank improved
marketing response rate by
300%

37
Where Do I Start
Building My
Cognitive
Roadmap? Cognitive
End-To- End Lifecycle
LOYALTY
Customer Experience
Front Office
GROWTH
Analytics
Mid
PROFITABILITY
Operations
Back-Office
EFFICIENCY
COGNITIVE
CUSTOMER
ENGAGEMENT
COGNITIVE
INSIGHTS
COGNITIVE
OPERATIONS
• Risk Management
• Regulatory
Compliance
• Call Center
Optimization
• Fraud Detection
• Optimizing Ad &
Marketing Spend
• Streamlining
Customer
engagement process
• Struggle Detection
• Personalized
Customer
experiences
• Omni-channel
Marketing
• Automated Real Time
Marketing & Loyalty
Cognitive
Maturity
Model

What if you could…
38
Enable all your
marketing systems to
speak to each
other to improve
performance?
Predict which
Customers are at the
greatest risk of
attrition?
Leverage a trusted
advisor to help
create and optimize
your campaigns?
Modernize your
marketing efforts to
achieve your
business goals?
Automatically tag
and classify the
content in your
CMS to use the
right asset?
Can your systems
do this today? How
much effort does is
require?
If you could, what
kind of message or
offer would you
extend to them?
How would you find
someone who knew
your campaigns well
enough to do the
job?
How many vendors
would you need to
involve? Can one
vendor really help?
How much time do
you spend doing
this? Is the end
result accurate?

Building A Cognitive Bank That Understands, Reasons, and Learns From Every
Customer Engagement To Deliver Trusted Relationships At Scale
Cognitive
Computing
Digital
Network
Enabling
Infrastructure
Business
Ecosystems
Cognitive
Banking
Mobile & Social
Omni-channel
Analytics
Digital Operations
Customer
Value Chains
Customer
Economic Choices
Integration
Big Data
IT Infrastructure
Security
Resilience
Natural Language
Processing
Machine Learning
Algorithms
Ecosystem Services
and Partners
Predictive
Analytics

Watson
Marketing
40
Watson
Commerce
Watson
Supply Chain
Watson
Customer
Engagement
Platform
Cognitive Personalized Marketing Building
Trusted Relationships
Digital Experience Customer Insights
Omni-Channel Commerce
Order Management and Fulfillment
Supply Chain Optimization
Cognitive
Platform
Category
Cognitive
Solutions
Built For
Practitioners
• CMO
• VP of Customer Relationships
• VP of Digital Marketing
• VP of Digital Advertising
• VP of eCommerce
• VP of Merchandising
• VP Store Operations
• Dir. Inventory Management &
Fulfillment
• VP of Supply Chain
• VP of Procurement
• Chief Technology Officer
• Dir. EDI / Data Trans, VP IT
B2B Collaboration
Watson Customer Engagement – The End-to-End Cognitive Customer Engagement Framework

3 Core Business
Areas of
Cognitive
Automation &
Optimization
7 Cognitive
Solution Sets
ONE
COGNITIVE
END-TO-END
CUSTOMER
ENGAGEMNT
PLATFORM

ONE
COGNITIVE
END-TO-END
CUSTOMER
ENGAGEMNT
PLATFORM
21 Cognitive
Modules

© 2017 IBM
A View of
Marketing
With Watson
Leverage the power of
data & cognitive as a
game changer for your
business
https://youtu.be/Z6fKqK
HG9eY

Applying Cognitive To Drive Growth,
Profitability and Operations Optimization
at scale
Cognitive
Banking
Breakout
Sessions

Roundtable Topics
Cognitive Driving
Growth &
Profitability
Breakout
Session

Roundtable Topics
Cognitive Driving
Customer
Engagement
Breakout Session

Roundtable Topics
Cognitive Operations
& Regulatory
Compliance
Optimization
Breakout Session

THANK YOU!
Warren D. Raisch
Executive Strategist
Watson Customer
Engagement
Warren.Raisch@Ibm.com
760.468.5018

Money 20:20 ibm cognitive engagement raisch

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