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© 2010 IBM Corporation© 2010 IBM Corporation

IBM Global Business Services – Financial Services Sector Forum

Kevin KoenigWednesday, June 23, 2010

IBM Global Business Services

Do you know everything you need to know about your company?A new attitude towards business analytics.

© 2010 IBM Corporation


Why Is Business Analytics and Optimization Important Now?



.

� Unpredictable global factors create more uncertainty than ever before

� Increased market and regulatory demands constrain continuous innovation

� Inefficiencies are being embedded and stacked within the enterprise

� Complex and dynamic business environment generates ever-increasing amounts of data

Increasingly Complex, Unpredictable Challenges Impact Performance

• Exploit changing business conditions

• Incorporate highly diverse and imprecise data in business decision-making

• Integrate advanced modeling with business operations

• Enable operational and planning decisions

Real-time, Informed Decision Making

IBM report surveyed 225 business leaders worldwideSource: Business Analytics and Optimization for the Intelligent Enterprise, April 2009. http://www-935.ibm.com/services/us/gbs/bus/html/gbs-business-analytics-optimization.html



Business Challenges• Need for risk transparency• Losses due to unmanaged

Risk • High rates of Fraud and

Abuse• Increased regulatory

oversight

Business Challenges• Limited access to

customer data• Need for customer

loyalty & profitability• Need for revenue

assurance

Business Challenges• Cost Complexity due to

Acquisitions• Need Data Simplification• Operating expense too

high

Riskand Fraud Analytics

Advanced Customer

Insight

Analyticsand Data

Optimization

Intelligent profitable growth

Cost take-out and

efficiency

Proactive risk management

Business Analytics and Optimization

Companies experience common challenges and issues:



The rapid change in macro economic parameters influ encing margins and competitiveness are making their impacts on each ba nk and forcing them to analyze their common business environments which are needed for p rudent Balance Sheet and & Income Book management� Interest Rate Movements

� Currency Exchange Rate Volatility

� Account Rollovers/ Defaults due to poor credit quality

� Early Closures of accounts

Business issues as faced by Treasury/ Balance Sheet Management Groups�Lower spreads making the credit premium computation a difficult job�Low supply of cheap source of funds viz. CASA –increasing the average cost of funds�Lack of good quality credit for fund deployment with targeted risk adjusted returns- forcing banks to invest heavily on low return G-Secs over the prescribed levels �Increasing size of credit default portfolio- NPAs for both secured and unsecured loans portfolio�Lack of secondary market for securitized assets-making the securitization a difficult business

Why financial institutions need analytics



“The entire globe is now tied together in a single

electronic market moving at the speed of light.

There is no place to hide”

Walter WristonCiticorp.

Business

� Globalization� Deregulation� Blurring Industry Lines� Competition from

new/non-traditional players

Technology

� Data Warehousing� Data Mining� Internet/Collaboration� Human Focus/Intelligent

Agents� Information vs. Data

Regulatory

� Basel II� Central Bank Reporting� IAS / IFRS� SEC� Sarbanes Oxley

Customers

� More sophistication� Increased expectations

for anytime/anywhere service

� More demanding of quality, personalization, value

Markets

� Fragmented� New channels & media� Disintermediation� Mass customized vs.

mass marketed

The market forces today…



� Demand for increased transparency driving Governance, Risk & Compliance agenda

� Continuing market & shareholder demand for increased capital efficiency

� Sustainable growth AND margin from increasingly savvy customers across all lines of business

� Efficient AND effective client servicing AND selling through Multi-channel , agency network etc

� Improving operational performance in the back and middle office, claims management etc.

� Increased ROI from Information Technology (est. 70% dedicated to maintenance, rather than innovation.)

Sustainable insight & continuously improving perfo rmance necessitates alignment of plans, goals, matr ixed functions, business lines, resources and systems.

Changing consumer & company behavior:More demanding, Less loyal

Cost efficiencies& operating scale

Business ProcessManagement

M&A consolidationCross-product,

Inter and Intra-region

RegulatoryFatigue

Dynamic IT& New

Technologies

eServicesadding

complexity

On shore/ Off shore Selective sourcing,

On-Demand

… have created immense pressure to change and better manage multi-dimensional performance



How to understand & utilize the customer data to di fferentiate in the market?

How to identify and define the right offer and positioning?

How to leverage insights to acquire right customers?

How to monitor and control Credit Risk?

How to develop customers insights?

How to grow the portfolio profitably?

What KPIs/ reports are needed to effectively track business performance?

� What value proposition will help capture the potential?

� How to take the offers to market effectively?

� How to identify & acquire ‘good’customers?

� How to boost my acquisition efforts?

� How to improve underwriting?

� How to minimize credit loss while achieving growth?

� How to improve collection efficiency?

� How to understand customer usage and spend patterns?

� Based on what parameters should customers be segmented?

� What data is required?

� Who are the high-value customers?

� How to retain these customers?

� What is the right product to cross-sell/up-sell and to whom?

� How to integrate data in ‘One-view’mode?

� How to track risk performance?

� How to track campaigns performance?

� What KPIs / reports are required?

Differentiate Positioning &

Offers

Improve Acquisition

Manage Risk Gain Customer Insights

Prevent Churn &Cross-Sell

Track Performance

Major Challenges – Differentiate Offering using Custom er Data



Using analytics to succeed in the “new normal” of today’s complex world.



Optimised analytics is increasingly key to business s uccess in the “new” marketplace driving organic growth and customer intimacy

By 2010, the codified information base of the world is expected to double every 11 hours

Executives are required to make more and faster decisions. Today, 70% of executives believe that poor decision making has degraded their companies’performance

Business Analytics

4in5business leaders see information

as a source of competitive advantage

1in2don’t have access to the information

across their organisation needed to do their jobs

1in3business leaders frequently make critical

decisions without the information they needSource: Business Analytics and Optimization for the Intelligent Enterprise, April 2009. www.ibm.com/gbs/intelligent-enterprise

The management of data and the creation of Business Intelligence is increasingly key to business success

Business Analytics

Risk Mgt. Finance Mgt.

Operations

Marketing



OptimizeWhat is our opportunity to

improve?

ActionWhat should we do to

improve?� Capture the right key performance metrics

that drive optimum value� Measure our performance consistently� Understand and leverage trends� Align to strategic needs� Find opportunities for improvement

� Establish phased targets� Generate and predict alternative actions� Create test and learn approach (control groups)� Choose optimal action(s)� Manage and govern to expectations

� Define new treatments for optimizing the customer experience

� Leverage risk models to differentiate product offerings

� Create new dashboards/monitoring mechanisms

Convergence

Risk Mgt. Finance Mgt.

Operations

Marketing

InsightWhere are we today?

This means better managing a global convergence to ac hieve three core core objectives:



Business operations m

aturity

Information and analytics maturity

How the business applies information to achieve its goals

• Policies • Business

Processes• Organization

How the business manages information and learns from it

Spreadsheets and extracts

Data warehouses, governance and production reporting

Process automation and workflow

Master data management, dashboards and scorecards

Command and control

Task integration (e.g., ERP)

Business process integration (e.g., CRM) and collaboration

Predictions, contextual business rules and patterns

Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.

Ad hoc

Foundational

Competitive

Differentiating

Breakaway!Prescriptive, real-time,

pattern-based strategies with situational context

Breakaway!Prescriptive, real-time,

pattern-based strategies with situational context

Businesses today have an entirely new way to compete , butmost businesses have yet to take analytics the full distance.



Use Structured Data & Unstructured Data

Captured

Detected

Inferred

Made consumable and accessible to everyone, optimized for their specific purpose, at the point of impact, to deliver better decisions and actions through:

Descriptive Analytics

Prescriptive Analytics

Predictive Analytics

What if these trends

continue? Forecasting

How can we achieve the best

outcome and address variability?

Stochastic Optimization

What happened?

What exactly is the

problem?

How many, how often,

where?

What actions are needed?

What could happen?

Simulation

How can we achieve the best

outcome? Optimization

What will happen next if?

Predictive Modelling

Analytics Sophistication

• Numeric

• Text

• Image

• Audio

• Video

Increasing analytical sophistication creates breakaway capability



Return to growth

Intelligent profitable growth

Infrastructure ProductivityTake-out cost and improve efficiency

Business ProductivityImprove control, bottom line and stop losses

Analytics Simplification / BAO Foundation

Finance/Risk/Fraud Analytics

Supply Chain/Ops Analytics

Advanced Customer Analytics

Human Capital Analytics

Benefits Areas of Benefits Analytic Solutions

• More effective deployment of headcount

• Improved productivity in sales and field force

• Improved demand visibility and management

• More accurate supply chain management

• Increased sales• Eliminated unproductive marketing

spend• Reduced non-productive customer

contacts

• Lower Finance costs as a % of revenue

• Transactional activity cost reduction

• Headcount reduction

• Increased customer lifetime value

• Improved advertising reach and effectiveness

• Reduced attrition

• Optimized sales activities• More effective service

agents

• Higher productivity of finance FTEs via IT enablement

• Maximize ROI – tactical and strategic cash improvement opportunities

• Better customer channel management

• Increased global operations alignment

• Reduced repository footprints and data model objects• Reduced number of data integration programs and tools• Rationalized the disparate reporting tools and maintenance• Reduced analysts data gathering time• Eliminate multiple data silos• Enhanced trust level of data and broadened access• Increased data accuracy• Increased capability through cross-functional correlations

Three types of analytics programs provide value-driven benefits



Where are theopportunities for

breakaway improvement?



Business Objectives for 2010-2011

Revenue protection and growth

Competitive differentiation such as innovation and deeper insight

Cost takeout and efficiency

Improved risk management and regulatory compliance

Operating enablement such as continuous improvement 10%

12%

33%

41%

71%

Top-line focused

Internally focused

Source: Breaking Away with Business Analytics and Optimization: Enterprise operations meets new intelligence available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.

IBM’s 2009 survey of 398 executives worldwide researc h shows top-line focus is back and it’s a global phen omenon



Current Top Ten Priorities

Next 24 Months Top Ten Priorities

Project Scope

• Pricing and offer strategies• Branding and reputation management• Product/services market selection• Lead generation and pipeline management• Promotion and offer management• Logistics and distribution management

Increase Focus

• Customer segmentation and profitability• Demand forecasting and management• Enterprise goal setting and alignment• Budgeting and resource allocation

Maintain Focus

• Reporting and performance measurement• Cost/expense management• Career path and succession management• Fraud and financial risk management• Leadership development• Channel performance

Re-assess Focus

Impact

Source: Breaking Away with Business Analytics and Optimization: Enterprise operations meets new intelligence available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.

Primary improvement focus : Top-line Top-line and Productivity Productivity

Getting started means aligning existing and future pri orities



Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations available in late 2009 at www.ibm.com/gbs/intelligent-enterprise.

Current Top Ten Priorities

Next 21 months Top Ten Priorities

• Pricing and offer strategies• Branding and reputation management• Product/services market selection• Lead generation and pipeline management• Promotion and offer management• Logistics and distribution management

• Customer segmentation and profitability• Demand forecasting and management• Enterprise goal setting and alignment• Budgeting and resource allocation

• Reporting and performance measurement• Cost/expense management• Career path and succession management• Fraud and financial risk management• Leadership development• Channel performance

Increase Focus Maintain Focus Reassess Focus

Return to growth

Improve Productivity

400 C-level executives are leveraging analytics for for growth



How are industry top performers able to break

away?



� Based upon an independent, worldwide, cross-industry survey undertaken in August 2009 with 398 respondents

– Roughly 60% of respondents were C-level executives

– Roughly 80% of respondents were business executives representing

• General management

• Finance

• Supply chain

• Sales and Marketing

• Human resources

– Roughly 50/50 mix between product-based and services based industries

� Study segments respondents based upon business performance relative to industry peers

– Top performers were in the 1st quintile

– Lower performers were in the 4th and 5th quintiles

Source: Breaking Away with Business Analytics and Optimization: New intelligence meets enterprise operations at www.ibm.com/gbs/intelligent-enterprise.

Our study probes deeply into understanding “breakaway ”companies



ChallengingDisrupt the status quo to improve the business and create new opportunities

EmpoweredEnable and empower employees to analyse,

decide and act

AnticipatingPredict and prepare

for the future by evaluating trade-offs

proactively

21.9X5.6X

15X

Chart shows differences at the highest achievement levels

Key: Top performers (i.e., 1st quintile relative to industry peers)

Lower performers (i.e., 4th and 5th quintile relative to industry peers)

Relative difference of top performers to lower performers

32.5%

1.5%

22.7%

1.5%4.4%

25%


Top Performer AdvantagesWinning Characteristics

3X High quality information

3.2X Strong decision support toolset

2.5X Keen focus on driving business change

Top performers are able to seek, evaluate and act on opportunities



Data Governance Levels

42%

14%

25%

32%

33%

54%

SophisticatedProcesses and management systems that are strong with some supporting automation in place

Competitive Defined processes and management systems that are understood and adopted by most people

Rudimentary A few basic processes and the beginnings of a management system

Top performers(i.e., 1st quintile relative

to industry peers)

Lower performers(i.e., 4th and 5th quintiles relative to industry peers)

3X


Data governance helps top performers move faster and collaborate



Above average BAO platforms and toolsets

Analytical and predictive tools

Content management

Dashboards and visualization

Master data management

Data integration tools

2.7x

2.5x4.4x 2.0x2.4x

Business direction Trusted information

Business rules management

2.4x

Key: Top performers (i.e., 1st quintile relative to industry peers)

Lower performers (i.e., 4th and 5th quintile relative to industry peers)

Relative difference of top performers to lower performers

17% 17%23% 24%

27% 27%

55%

65%60%

56%

45%

74%


Top performers are armed with state-of-the-art tools



2.5XTop performers nearly triple their odds of success through their keen focus driving change

• Culture and people change

• Data governance

• Business process change

• Organizational alignment

2XFocusing on driving change is more than twice as important to success as having a well run project

• Program governance

• Project objectives

• Multi-phased roadmap

• Sponsorship

• Capability assessments

• Funding process management

GoodSound justifications

BetterWell run project

BestDriving change

Beating the odds for success


Focus on making the value-driven operational changes that matter



How do you get started with Business Analytics

and Optimization?



IT leadership• Widen and Increase agility of the data

platform by eliminating redundancy and creating comprehensive customer views

• Create self funding opportunities by rationalizing ETL and data repositories

• Establish a Customer Enterprise Service Bus to increase efficiency and implement strong governance

Business/IT leadership• Answer hard data-intensive

business questions such as next best product, retention strategies, marketing spend optimization

• Business Intelligence Generator with dashboards, analytical data-marts and business treatment rules

• Advanced Analytical Decision Support System for consumer clustering development and management

Business leadership• Strategic culture change for

competitive differentiation• Clearly articulated end state across

process, organization and technology enablers for all stakeholders

• Realistic understanding of the complexity of transformational change and a comprehensive approach to addressing adoption

Data and Analytical

Simplification

Advanced Analytics

Operational Transformation

Start with pilot, strategy or diagnostic

BAO leverage points for value creation



Data & Contentto Run the Business

InformationOn Demand Stack

Connecting Line of Business with IT

Leveraging information for business optimization…



• IOD Software & Solutions

• Information Infrastructure

• Information Agenda

•Business Analytics & Optimization Strategy Services

•Analytics & Performance Management

•Advanced Analytics & Optimization Services

Leveraging information for business optimization…



What value is realized through advance business

analytics and optimization?



Outcomes & Benefits• High-value self-funded cost and revenue growth initiatives

• Expected 5-year revenue growth: $400M

• 5-year cost savings: $246M

� 70% reduction in repository footprints

� 10X reduction in Data Model objects

� 10-25X reduction in Data Integration objects

� 50-75% reduction in replication

� 50-80% reduction in analysts data gathering time

Client Challenges•10-years of acquisitions resulted in highly complex information environment -- driving up cost and operational risk.

•Historical approach to analytics has resulted in hundreds of siloed/departmental systems

•No single view of customer, prohibiting ability to act competitively

•Deliver: Quality, Cost take-out, value add, control

IBM Consulting Approach•Establish consolidated core analytics footprint with a re-usable data integration architecture

•Provide decentralized reporting that leverages a single tool

•Agree on common enterprise metrics for comparisons and leverage off-shore reporting

•Gain-sharing agreement; transformation fees tied to client business objectives

30 6/24/2010

The case for an integrated, simplified data platform



Outcomes & Benefits• $200M+ budget approved for build and deploy

• New Web 2.0 enabled Internet Bank jointly envisioned by IBM and the bank in production

• Conservative business benefits estimated to be $1bn over 5 years:

� More active Internet Banking customers

� Increased sales and more product holdings

� Lower attrition

� Cost reduction through e-Marketing, paper statements and lower platform costs

Outcomes & Benefits• $200M+ budget approved for build and deploy

• New Web 2.0 enabled Internet Bank jointly envisioned by IBM and the bank in production

• Conservative business benefits estimated to be $1bn over 5 years:

� More active Internet Banking customers

� Increased sales and more product holdings

� Lower attrition

� Cost reduction through e-Marketing, paper statements and lower platform costs

Client Challenges•New Internet Banking Platform needed

•Rapidly growing customer base of Internet banking customers who are 20% more profitable and:

� more loyal bank advocates

� have more product holdings

•Significant growth of sales through Internet Banking

•Competitive threat from other players e.g. HSBC

•Realise group-wide synergies

IBM Consulting Approach•Work co-located in London and Boston (utilizing MIT Media Lab) - real-time testing of innovation concepts

•Full Web 2.0 Internet Banking prototype built and consumer tested by IBM

•Accelerated end-to-end Web 2.0 IB visioning completed with reference to customer experience, business innovation and technology leadership

The case for driving more integrated insight



Forecasted Benefits• Total Est. Growth Benefits Over 5 Years: £1 – 1.5b

• Total Est. Cost Savings Over 5 Years: £115 – 175m

• More tightly integrated sales an marketing efforts across bank lines of business and customer care business operations.

• 1.5% increase in customer retention

• Average increase of products per household to 4.8

Forecasted Benefits• Total Est. Growth Benefits Over 5 Years: £1 – 1.5b

• Total Est. Cost Savings Over 5 Years: £115 – 175m

• More tightly integrated sales an marketing efforts across bank lines of business and customer care business operations.

• 1.5% increase in customer retention

• Average increase of products per household to 4.8

Client Challenges•The bank spends between £105m and £180m annually on business intelligence (BI)

•The business does not always recognize the importance of BI as a corporate asset nor its role in achieving desired financialoutcomes

•There is an interest in saving cost, but the real appetite is for improved business performance and profitable growth

•There are between 1200 and 2000 dedicated FTEs within the business engaged in BI related analytics.

• The business lacks confidence in IT’s ability to meet their changing BI needs in a cost effective and timely manner, leading to communication issues and fragmentation of BI investment

• The BI environment has become overly complex, in part redundant, costly, benefits limiting and unsustainable in the long term

The case for better business intelligence



There is significant opportunity to improve the current business intelligence landscape within the bank focused on driving more meaning outcomes and revenue to the bottom line. Critical observations of the past 6 weeks include the following:

• The current funding model drives tactical projects that do not advance an ‘enterprise’ view

• The current environment is an order of magnitude too large (too many tables, too many jobs) making the environment overly complex, difficult to support, and difficult to use

• Inefficient and expensive archiving practices (e.g. full copies instead of changes only)

• There are too many similar tools related to ETL, analytics and reporting

• Business continuity procedures and processes are not sufficient to meet current expected business SLAs

• There is a lack of overall data governance and metadata management resulting in perceived data quality issues; Lack of an overall owner

• Poor or missing business metadata directly contributes to data quality issues

• The business has a general lack of confidence in technology related information management. Business perceives that changes are many times cost prohibitive, will take too long and/or the result is unreliable

• Resources are not being effectively used on strategic business activities, for example:

� Performing data management activities

� Understanding data and developing reports

� Chasing analytical ghosts

� Analyzing and defending results

Program Summary:



BI Simplification & Transformation Program Lifecycl eBI Simplification & Transformation Program Lifecycl e

Year 1 Year 3Year 2 Year 4 Year 5


£10 – 15m £20 – 30m £25 – 35m £30 – 45m £30 – 50m

Cost Savings

Total Est. Cost Savings Over 5 Years: £115 – 175m

£50 – 75m £75 – 120m £120 - 180m £250 – 350m £500 - 700m

Growth

Total Est. Growth Benefits Over 5 Years: £1 – 1.5b

Even applying a very conservative level of estimation, the potential benefits to the company are inarguably significant. Although the immediate inclination is to focus on a cost reduction play, the real benefits are in the

business’ ability to drive more meaning growth leveraged through a “smarter” organization

Estimated PotentialGrowth Benefits and Cost Savings by Year



Retail Bank Card New Markets

• Risk Scoring improvement created an additional $120 million (EBIT) over 5 years through more informed decision making

• Creation of a global relationship-based risk evaluation raised average per customer card net profits by more than five times, with annual profits >$140 million.

• Leveraged total relationship and external data to reduce processing backlog to less than three days (from weeks), reduced application fraud by 80%, reduced analyst staffing by 40%

• New account authentication based on geographic, risk, demographic and source factors virtually eliminating fraud, first-payment default declined 84%. Total process time reduced 90%, with staffing levels reduced by >60%.

• 35% improvement in Customer marketing event identification/conversion rate resulted in $75million (EBIT) a year in benefits

• Fact-based efforts reduced marketing campaign cycle time from 16 weeks to 4 weeks while increasing the number of campaigns generated by >20 times

• Customer-centric integrated treatments created 1 point increase in company-wide loyalty score resulting in +1.7% increase in market share and +1.2% increase in gross margins

• More informed decision making in self directed channels and among frontline associates increased cross-selling proficiency boosting average number of products owned from 3.6 to 6.7

• Decreased merchant agitation, increased merchant promotional sales, increased charge volumes by >25% among targeted groups

Competitor BI Related Business Objectives for 2010- 2011Revenue protection and growth

Competitive differentiation such as innovation and deeper insight

Cost takeout and efficiency

Improved risk management and regulatory compliance

Operating enablement such as continuous improvement 10%

12%33%

41%71%

Top-line focused

Internally focused

Note: Respondents were asked “What are the main business objectives of your enterprise over the next two years? Select two.” Source: Breaking Away with Business Analytics and Optimisation: Enterprise operations meets new intelligence available in late 2009

Top line focused

Internally focused

In order to achieve needed growth and competitive differentiation, the bank must shift focus of BI to meet demands of the market and it’s competitors. This new shift represents an optimised, cost effective model focused on deeper market penetration and customer advocacy.

New Focus

Example benefits for the bank



Risk, Reporting & Compliance

Actionable Insight & Outcomes

Customer Focus and Insight

Innovation & Opportunity

Indicates focal point of business value across wave s


� Cross-sell revenues increased by 15%

� Customer loyalty score increase of 1%

� 10% to 20% Accuracy improvement in Customer profitability scores

� Campaign/Event effectiveness improving conversion rate by 35%

� Fraud/Loss reductions of 20% to 40%

� Event/incident detection across channels and products improved by 40%

� Shift in focus from 70%/30% gathering to analysis ratio to 40%/60%

� Shortened development lifecycle by 50% due to the co-location of conform data

� Predictive analytics across channels increase sales effectiveness by 20%

Deliver Improved Testing and Control

Systematically Communicate Opportunity and Problem Incidence

Improve data quality based on standardised data model, metadata strategy and rules

Align loss predictions and provision for loss reserves

Capture Event & Macro-Economic Dependencies

Integration of reconciled customer data

By example of

Estimated Opportunity of Business Benefit Over Time



Example MetricsExample MetricsNo of jobs under DQ execution/measurement

Source systems though DQ(0 – XXX)

Number of tables

Number of batch jobs x y = n

Number of datamarts

Number of in-database models executed

SAS database replication on servers

0

0

166k

6600

788

0

400%

10%

100

149k

TBD

700

0

350%

20%

300

100k

TBD

500

5%

300%

40%

500

70k

TBD

400

12%

250%

60%

700

60k

TBD

300

20%

200%

80%

800

40k

TBD

200

28%

150%

This 3-year transformational program will be underpinned by three critical activities to ensure its success and delivery of value.

Program Management & CouncilProgram Management & Council

Change Management & CommunicationsChange Management & Communications

Benefits Tracking & RealisationBenefits Tracking & Realisation

Staged ApproachIntegration and simplification stages are prioritised, based upon existing complexity, cost, and potential value to the business

Incremental Value Generating CapabilitiesCost savings will be based upon clear metrics underpinning productivity gains through reduced: complexity, error rates, cycle times & improved availability

Wave 1Baseline Wave 2 Wave 3 Wave 4 Wave 5

Estimated simplification model based on what we kno w today

*Wave 1 Wave 2 Wave 3 Wave 4 Wave 5

Customer Risk & Compliance Product & Operational

Wave 6

100%

908

20k

TBD

200

35%

150%

Wave 6

*Wave = 6 month release



Accountability� Lack of service-level accountability for information provided

� Lack of clear definition, in terms of rights and obligations, ofdata owners subjecting the company to unnecessary exposure, both operational and regulatory

� Total lack of insight into corporate-wide BI spend due to “federated” construct and resulting issues of traceability

� The majority of technology-related spend is devoted to tactical efficiency programs and process areas

� Exposure to FSA fines and reputational damage due to significant gaps in data protection and security policies

� Lack of flexibility in evolving reporting needs limit internal accountability and increase the cost of external compliance

Governance & Culture� Information generally not treated as a critical input for timely

day-to-day business decisions

� “Doing things right” seems to be less important than doing what has always been done or what is convenient for the situation at hand

� Past data strategy and BI initiatives have not been clearly linked to business goals/priorities

� Certain BI assets remain largely unused while others are being used for purposes other than their original intent

� Decision making tends to be done based on personal experience and gut feel rather than rigor and proof

� No BI centre of competency across lines of business to integrate learning and resolve ongoing BI issues

Technology Enablement� No focus on building a common, extensible BI infrastructure

� Legacy policies and lack of standards has resulted in multiple uncoordinated and redundant solutions

� Former attempts to create a corporate BI strategy has created a false sense of impossibility and a lingering skepticism about its potential value, resulting in a plethora of disjointed business Unit BI initiatives with limited value

� Technical competencies within critical areas of BI are noticeably lacking within the organisation

Data and Information � No corporate-wide approach to single version of the truth

� Current focus on tactical BI performance issues combined with an historical lack of quality analytical data is limiting its ability to leverage information as a competitive advantage driving growth and differentiation

� There is no common framework to address data acquisition and integration needs across business units that is timely enough toinfluence daily business decisions (client interactions, sales, marketing, risk, pricing, etc)

� Trusted data standards are not universally applied resulting in questions around quality of the data and output

� Numerous BI practices, knowledge on information location and data relationships are in the heads of “a few” resulting in potentially high risk to business operations

� Data requirements and performance metrics are almost nonexistent creating an inability to measure results and value of BI related investments

Observations, concerns and risks



Key Themes

Customer Focus & Insight

Actionable Insight & Outcomes

Innovation &Opportunity

Risk, Reporting & Compliance

• Effective understanding of the customer through single view, supported by an enterprise data model and metadata strategy

• Actionable information for Customer strategies to drive higher quality & more personalised and profitable experiences

• Access to Customer interactions, behaviours, trends and events across all channels and interactions

• Improve data quality and accuracy in reporting through the radical simplification and reduction of redundant sources and repositories

• Ensure timeliness of information to front line through removal of sequential batch processing and reduction in manual intervention

• Increase efficiency and predictability of outcomes through role-based access rules, security and optimisation of supporting tools

• Leverage customer and household relationships to maximise profitable growth

• Integrated view of market, industry and customer segment trends• Predictive analytics to guide and inform of potential opportunities,

e.g. atomic level data, managed sandpit environment• Introduction of a scalable BI environment and supporting processes

• Timely access to complete customer history and transactions across the business to better track behaviours and trends and manage risk

• Profiling and analysis of account/external data for early warnings• Greater agility in meeting new reporting and compliance obligations• Predictive analytics to guide and inform next actions, mitigation and

enterprise-wide risk

Customer Profitability

Customer-related Fraud

Customer Related Regulatory Compliance

Sample Benefits

Business Model Optimisation

Operating Expenses

Process Efficiency

Compliance Losses

Credit / Risk Exposure

Mgt. Of Capital Requirements

Consumer Deposits

Profitable Growth

Marketing Effectiveness

Opportunities

Pink = cost savingsBlue = revenue generatingGovernance & CultureGovernance & Culture



Marketing & Offers Management

Corporate Banking Client Manager

Financial Services Advisors

eCommerce / Online Banking

Regional Executives

Contact Centre

Banking Centre

Branch Manager

• Customer

• Risk & Compliance

• Product & Operations

• Event capture

• Branch interactions

• External events & data

• Internal customer data

• n…

Information Management BaseInformation Management Transformation

WHAT’S DIFFERENT & NEW?• Data from >150 interactions per

second (across customers-

segments-channels-products)

• Currently siloed by disparate

systems and distribution points

• Data integrated in one place

with improved ease of access

and productivity

• Robust atomic data retained

for deep quant innovation

• “De-siloed” customers, segments,

channels, and products

• Single “version of the truth” for

integrated analytical data

• Productive, closed-loop innovation

Model Optimisation

Predictive Modelling

Network Optimisation

Customer Behaviour & Response Modelling

Customer Relationship Pricing Analysis

Test & Learn

• Reduced data latency, improved

data usability, and data quality

• “Drudge work” reduced for deep

quants who want to spend time

innovating

• Embedded insight in daily processes

• Tracking of customers across

lifecycle, channel usage, and

interactions

• Real-time data feeds to improve

integrated analytics

Current State

Risk Analysis, Profiling & Treatments

Customer Solutions Development

Target Experience :

• They Know Me

• It’s Simple

• They’re Transparent

• I Trust Them to Help Me

• They Are Reliable

• Act in My Best Interest

Based On:

• Right information +

• Right Time +

• Flawless execution

Resulting In:

• More advocates

• Greater market share

• Quality business

• Higher retention rates

Information Management & Governance

Custom Views

Today Integrate the Data Provide Access Create Trust Empower the Frontline

Line of BusinessSubject / Operational Area

Views

Per

ceiv

ed V

alue

Ove

r Tim

e an

d R

elea

se –

6 S

tage

s

Data Warehouse Conformed / Modelled

Semantic Layer

Time Persistent RepositoryAtomic Data

Documents

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