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

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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

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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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