Contextual offers in Retail Banking

Introduction to Retail Banking

When talking to retail banks there are multiple products and services they typically offer. These are products like:

Transactional accounts -  Checking/Current accounts, Savings accounts / Certificates of deposit/Term deposits, Payment Services, Funds Investment (direct investments on customer?s request), Debit cards / ATM cards, Credit cards, Currency exchange/Travellers cheques, Mortgages / Home equity loans, Personal loans & Retirement planning.

The main challenge for the banks is to respond to customer needs while not increasing costs. There is also an ongoing need for the banks to improve margins and work on on improving their customer segmentation (AuM) which is no longer sufficient with todays evolving digital marketplace. Some of the reasons for this are as follows:

Margin Pressure

• Relationship Manager to Customer Ratio: > 1 : 1000
• Very tough to stay profitable on Interest Operations due to ultra-low prime interest rates set by EZB, SNB, BoE
• New regulations need to be implemented (demand for high IT investment); harming the profitability
• New Fintechs entering the market (i.e. payment services, crowd lending, social trading etc.)

Classical customer segmentation (AuM) is no longer sufficient

• Customer needs have changed and now include a variety of product/services
• New go to market strategies, service offering and processes have to be adopted to stay relevant
• Many older organizations are in silo's (product oriented) both organizationally and operationally.

If we look at a typical Retail Banking customer journey today, we will see that banks miss many signals that would allow them to anticipate the needs of the customer. 

The example below is from a Swiss banking customers experience, but the principles are the same in many other use cases:

In the described scenario the bank missed multiple signals like: accumulated wealth (assets constantly on account), looking for new products (Fund Income Plans), transferring funds to another FSI, checking price information, installing standing order to cover car leasing payments, spending regularly in "exotic" locations, regularly booking flights and hotels, receiving funds from other FSI?s accounts (also on his name).

As a result the bank has missed a number of signals, meaning that:

• Events in customers' lives are not understood and/or ignored
• Despite a active products, mortgage in the above case, no relationship was established or built (no blue bar in the graphic)
• No customer retention measures were taken/executed, such as
  • No interaction when it was approaching the time to renew the mortgage
  • Obtaining an understanding of why a 3rd party brokerage is used
  • Obtaining an understanding of the customers risk appetite in order to define jointly, suitable Asset Allocation incl. the products/services associated with it
  • Understanding of the car leasing obligation (termination date, future plans) so to offer suitable services. 

As a result, the customer does not renew the mortgage and closes the other accounts to go to an alternative lender and thus leading to a significant loss of revenue for the bank. 

Spotfire's value proposition can help avoid this lost revenue, by ensuing that the right information is available to the banks staff so that they can assist and inform the customer so that the customer can be retained. 

Spotfire Value Proposition

Spotfire's Connected Intelligence platform allows the bank to augment customer value.

This is achieved by analyzing past data, such as transactional and behavioral data, of each of your customers. Identifying patterns by applying machine learning and artificial intelligence techniques to build models of customer behavior. Then correlating real-time data against these statistical models in order to take appropriate actions when a customer interacts with you across any channel (ATM, phone, e-banking, and banking apps). Actions can include everything from a direct push of an special offer, a PR message to foster the understanding of a specific service or product, or the assignment of a task to a relationship manager.

Spotfire's Architectural Blue Print

This architecture helps the banks to:

• Connect to data sources (Structured or unstructured data)
• Select relevant predictors to driving business objectives
• Create statistical model(s) and test them against the historic data set
• Define real-time operational analytics process flows
• Deploy tested models into these flows
• Take action in real-time

Benefits in a Nutshell

Differentiators of the Platform

Customer Success

KB Kookmin Card

Citibank

Where to go to learn more

Read the solution brief for how Spotfire can help improve the Customer Journey

Download the Spotfire case management accelerator. This accelerator is a "quick start pack" for building case management applications based on ActiveMatrix BPM Case Models and patterns.