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March 2016
The Science of Customer Insight
Likhit WagleGeneral Manager
Banking and Financial MarketsIBM
Boxley LlewellynVice President
Banking Analytics SolutionsIBM
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Our industry is in the midst of a perfect storm
Cost pressuresChanging customers and their demands Silicon Valley is coming
Regulatory GrowthIncreasing fraud2
Industry Imperatives: Outcomes Banks are Seeking
Superior Customer Experience
Ecosystem Relevance and Growth
Radical Cost Takeout and Leverage
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Radical cost takeout
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Ecosystem relevance
Copyright 2016 IBM Corporation
Traditional Financial Institutions
FrictionlessCommerce
IoT
Location
ModelsLending
eWallets
Apple Pay
White Label
RoboAdvisor
Data
IoT
Channels
WealthManagers
Social
Payments
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Superior Customer Experience
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Data is not the problem – banks have it
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Customer Insight is about understanding propensities
InCollege
CareerChangeStartinga
Business
KidsinCollege
Teenager
InaRelation-ship
Graduation
FirstPaycheck
GettingMarried
GrowingFamily
Relocation
BuyingaHouse Retire-
mentEmptyNester
Inheritance
ParentCare
BuyingaCar
Behavior• Whattheyspend• Whentheyspend• Howtheymanage• Wheretheygo• Whattheirsocialprofilesays• Whatchanneltheyuse
LifeEventsFinancialEvents• Overdraft• PayRaise• Awards• HealthCrisis• ProductChurn• Attrition
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The Makings of Customer Insight
DeliverInsights
IndustrySpecificKPIs&Alerts
UIDesign&Pre-BuiltDashboards
PerformAnalytics
Pre-BuiltIndustryAnalyticModels
DescriptivetoPredictivetoCognitive
PrepareData
IndustryDataModels&Connectors Internal&ExternalData
Relevant DataSources
Business Roles
Pre-IntegratedCapabilities
Line of BusinessExecutive
Chief DataOfficer
Chief Marketing Officer
© 2016 IBM Corporation9
Building the Cognitive BankCustomer Insight Delivered to Banker’s Dashboards and Customer’s Mobile Devices
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Example Results of Integrated Analytics Models
PREDICTING CASH FLOWS & OVERDRAFTS PREDICTING LIFE
EVENTS
94% 9
91%PREDICTING CHURN
differentlifeeventspredictedwith95+%accuracy
improvement,eliminatingdeliveryofirrelevantoffers
to3.6millioncustomers
IMPROVING TARGETING
improvementover existing models
50%
accuracy a week ahead, 87% accuracy 4 weeks ahead
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Customer Insight - The Business Case Closes
UseCase PrimaryModel Business Case
Millennial attrition Behaviorsegmentation Lifetimeprofitability
Mortgagechurn Productchurnpropensity
Mortgage servicing,loyalty
Cashflowalerts Cash flowprediction Loyalty,personalloanproduct
Autopurchase Life Eventprediction Autoloanrevenue
WealthTransfer Behaviorsegmentation Investment,deposits
Pricing Productpropensity Revenuegrowth
Targeted marketing Upsell,productpropensityandeventprediction
Marketingefficiency,revenuegrowth, personalizedservice
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Building the Cognitive Bank
CognitiveComputing
DigitalNetwork
EnablingInfrastructure
BusinessEcosystems
CognitiveBanking
Mobile & Social
Omni-channel
Customer Insights
Digital Operations
Customer Value Chains
CustomerEconomic Choices
Integration
Big Data
IT Infrastructure
Security
Resilience
Natural Language Processing
Machine LearningAlgorithms
Ecosystem Servicesand Partners
Predictive Analytics
The Elements of the Cognitive Bank
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Transformation Accelerators
Differentiated Offerings
Pre-built Solutions
Innovators, not Disruptors
CognitivePartnerships
Design Thinking
Industry Depth and Eminence
Platforms
Delivery Excellence at
Scale
Data Science Studios
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I
Thank you
ibm.com/analytics
ibm.com/banking
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