Customer Analytics Drive Initiatives in Financial Services
This is the second in a series presenting the findings from the IBM Institute for Business Value and University of Oxford’s Big Data study and excerpts from the white paper, “Analytics: the real world use of big data in financial services.”
When asked to rank their top three objectives for big data, 55 percent of the banking and financial markets industry respondents with active big data efforts identified customer-centric objectives as their organization’s top priority (compared to 49 percent of global respondents, see figure below).
In their paper, my colleagues David Turner, Michael Schroeck and Rebecca Shockley write that banks are under tremendous pressure to transform from product-centric to customer-centric organizations. Today, the customer must be the central organizing principle around which data insights, operations, technology and systems revolve. By improving their ability to anticipate changing market conditions and customer preferences, banks and financial markets organizations can deliver new customer-centric products and services to quickly seize markets opportunities while improving customer service and loyalty.
For example, one of the largest banks in the Singapore and Malaysia markets has been widely successful with its customer-focused big data initiatives. The Oversea-Chinese Banking Corporation (OCBC) analyzed historic customer data to determine individual customer preferences. It designed an event-based marketing strategy that focused on a large volume of coordinated, personalized marketing communications across multiple channels and touch points including email, call centers, branches, ATMs, direct mail, text messages and 3G mobile banking.
Today, using marketing algorithms atop a sophisticated analytics infrastructure, OCBC more precisely targets customers based on their activity, yielding double- and triple-digit percentage increases in key customer performance metrics since the program began in 2005. OCBC achieved a positive return on investment (ROI) on its implementation within 18 months. To date with these campaigns, OCBC has experienced a 45 percent increase in overall conversion rates and 60 percent increase in cross-sales. Overall, campaign revenues have increased by more than 400 percent. The bank has also increased its overall marketing productivity and is running over 1,200 campaigns a year – 12 times more than it did before its enterprise marketing management system was installed.
In addition to customer-centric objectives, almost a quarter of the banking and financial markets companies (23 percent) with active big data pilot projects and implementations are targeting ways to enhance enterprise risk and financial management. These organizations are using big data to optimize return on equity, combat fraud and mitigate operational risk while achieving regulatory and compliance objectives.
 IBM Software: Smarter Commerce. “OCBC Bank nets profits with interactive, one-to-one marketing and service.” July 2012. public.dhe.ibm.com/common/ssi/ecm/en/zzc03162usen/ZZC03162USEN.PDF