Setting Up Your Analytics Goals for Success

analytics goalsIn these days of the big data revolution, multiple ways exist in which financial institutions can use analytics to support strategy and drive its execution. Statistics show approximately 90% of senior bank executives believe in the power of big data, and its potential impact on growth and profitability over the next five years. To achieve this, however, institutions need to develop a clear understanding of how to use advanced analytics tools to align with client interactions, anticipate needs, and make decision processes simpler.

Getting the Most Out of Your Analytics

Retail financial institutions typically have narrow margins, which forces them to run lean, efficient operations. Analytics can help them to understand issues such as:

  • Most profitable customer segments, with identifying characteristics
  • Their geographic locations
  • Percentage of market share occupied by them
  • Most frequent needs and wants
  • Communication channels most often accessed
  • Most effective marketing actions
  • Average lifetime value

The availability of rich, real-time data in the form of numbers, text, voice and images now exists for practically every customer interaction, every product and service financial institutions offer, and the processes they use to deliver them, according to McKinsey & Company.

Making Your Analytics Work for You

Set your financial institution up for success by using advanced analytics to identify the real challenges facing the company. Perhaps you have a large market share, but lag behind competitors in products per customer? Find out who your clients are, what products they hold, examine their credit card statements, transactions and point-of-sale data. Review their online and mobile transfers and payments, and map this against their credit scores. By doing so, it’s possible to determine key characteristics that define microsegments in your customer base.

Ensure the data you collect is high-quality information, and the input is done correctly. Use a specialized data model and reporting solution like JOHO OneSource™ to analyze your intel and “connect the dots.” This will enable you to identify insights from different data sets and build a complete picture.

Use the data to inform your product development. For example, knowing what the next product a microsegment is likely to buy enables you to produce a targeted product with a higher chance of success.

Putting Theory into Practice

Some ways financial institutions are making analytics work for them could give you inspiration for using them in your own operations. For example:

A bank in Europe was experiencing significant customer churn, and implemented various retention techniques aimed at making inactive customers active again. By using machine learning algorithms based on big data to predict which active clients were more likely to reduce their interactions with the bank, it became possible to target them with a campaign at an earlier stage before they became inactive. The level of churn was reduced by 15% as a result.

A U.S.-based institution reviewed the discounts private bankers were giving clients and found patterns of unnecessary concessions. By implementing a number of policy changes the bank’s revenue increased by 8% in a few months.

These are completely opposite examples, with one being a cost saving and the other a revenue-generating action, but both would be impossible without insights delivered by analytics data.

Don’t let your institution lose out on the benefits offered by advanced analytics. Contact JOHO today to schedule a consultation and discover what we can do for you.

 

Analytics – Not just about the numbers; It’s about the people

Analytics are a priority for financial institutions to ensure their success and ability to survive. While many believe analytical data is all about number-crunching and dashboard presentation, it’s really about people. Presenting a solution that users aren’t comfortable with isn’t effective. What you need for a successful analytics implementation is a system that delivers results in a format the user wants—whether that’s a spreadsheet, a traditional board-style report, or a dynamic dashboard with bells and whistles. The secret to getting this right is discovering the best approach for each of the primary user groups, and providing solutions that deliver it.

Contact Staff

Customer-facing employees at the branch and operational levels are typically viewed as information consumers, who need access to data to better understand and interact with their customers.

This information could include their client’s history with the bank, sources of income, regular outflows, and whether they have investments to support credit. Having data at their fingertips places them in a better position to help the customer, either at the first point of contact or very soon after, instead of sending them from pillar to post to find someone who can give them an answer.

For example, if a young man walks into his parents’ bank and asks for an auto loan, the response he gets could be very different if his first point of contact can see immediately that both his parents are successful business clients holding numerous financial products.

IT Management

The majority of IT systems are built by technicians focused on delivering information. Whether you’re working with development and maintenance staff, report-writing analysts, solution providers, IT maintenance staff, project teams or business analysts, it’s vital to discover how the end users think, so it can be presented in a way they are comfortable with.

During JOHO’s Are You Ready™ process, for example, intelligence is gathered from multiple potential users to ensure the final product is customizable to suit different styles.

Through the JOHO OneSource Portal™, users can export information in any format they prefer, using the same data, extracted from the same source. Those who know what they want but aren’t sure of the format they prefer can even design their own report using a self-service business intelligence option.

Customers

Improving profitability and growth in financial institutions begins and ends with customers. As business acquisition costs continue to rise, it’s critical to understand the relationships with the people keeping you in business.

It’s not just about having financial products. Success depends on knowing where, when, how often, and what channels customers use to interact with you. A viable analytics solution uses machine-learning algorithms to predict which active clients might reduce the business they do with your bank, and enables you to target them with campaigns to decrease the churn rate.

Operations Managers

Knowing what your customers are using—and how—is the lifeblood of a financial institution’s operations. A top consumer bank in Asia, for example, discovered the value of advanced analytics when it found unsuspected similarities between groups of clients. This enabled it to create 15,000 microsegments within the customer base, and then develop a “next-product-to-buy” option that improved sales three -fold. The opportunity wouldn’t have occurred if the operations people weren’t using the data because they didn’t like the new format, which highlights the importance of taking end users into account when developing a system.

Executive Management

The C-Suite’s job is to determine the overall performance of the business and develop strategic plans based on realistic scenarios. With reliable analytics, your executive team can use business intelligence to measure a range of performance factors, and create budgets and goals based on extrapolating from past results.

This enables them to focus on training and education of employees, performance of products and features, and develop new offerings around customer demand. The executive team may need an entirely different set of report formats from other users, to enable them to develop a long-term strategic view.

Building an analytics reporting system needs to start with the people who will use it. It’s not just about the technology, it’s about delivering a solution that gives users what they require.