With their extensive volumes of customer and transaction information, banks in Australia and New Zealand are leveraging their data assets to transition to more customer-centric organisations. They are focusing on the best customer experience and positioning themselves as relevant and valued providers of financial services. In doing so, Australian and New Zealand banks are leading the charge to become fact-based decision makers driven by big and small data.
Even though opportunities around customer engagement are plentiful, regulatory change and new prudential standards and guidelines are requiring increased agility to accommodate new data management, credit reporting and risk aggregation obligations. Increased focus on addressing and responding to fraud and cybercrime in more challenging economic conditions is also top of mind for the industry.
Data on its own is not valuable. Value is only realised when organisations employ genuine and sustainable approaches to analytics and insight to generate business outcomes. I thought it would be worth considering what SAS has seen in some recent customer use cases.
Customer data – doing good and right things
We all want to do what is good and right. There are two interesting use cases where customer data is being used to derive actionable insight to deliver valued business outcomes for SAS customers and their customers. Westpac’s KnowMe project is using customer data to better understand how to serve and interact with its customers and deliver to them, offers which are relevant appropriate and have higher levels of potential acceptance based on preferences and behaviour. Not only are customers rating Westpac 10% higher for their Net Promoter Score but in knowing and understanding their specific needs, Westpac has attained 37% improvement in new business acceptance in branches and 60% improvement in call centre interactions. With such impressive early gains and ROI at more than double initial targets, you cannot challenge the age-old saying that knowledge is power! Power to the customer and bank alike for good outcomes.
Commonwealth Bank is leveraging customer data for a considerably different purpose. Understanding customer behaviour from the insights gained from extensive customer transaction data can also be used for good in responding to a need to both detect and prevent unexpected and adverse customer activity due to fraud or cybercrime.
If security is not maintained, trust is the first casualty and reputational damage and regulatory intervention is likely. Commonwealth Bank has used real-time analytics and SAS’ proprietary hybrid technology for right-time fraud prevention and detection. With rules, predictive models and neural learning brought together, they assess growing transaction volumes in both real-time and right-time at speeds exceeding 250 transactions per second and an average response time per transaction assessed of 40 milliseconds. This approach not only optimises coverage but actively assesses unexpected activity using a risk-based model with higher levels of overall coverage and lower dollar values for fraud.
Against a backdrop of exponential increases in customer transaction activity and revenue, the ROI and value to both customers and CBA – as a trusted and reliable bank from real-time detection and prevention based on actionable insight and scoring – gives Commonwealth Bank knowledge and power to meet the expectations to protect depositers and shareholders. Knowing what is normal and what is abnormal proves the value of rich customer information.
Risk-reward remains a key focus for CROs
We all know that pricing risk should be in the DNA for all banks, particularly in today’s environment with subdued demand and lower growth rates for retail lending. Lenders must remain focused on risk-reward trade-offs and writing business which is priced right and reflects the quality and capacity for borrowers to repay. There are continuing demands from both global and domestic regulators to implement and comply with new capital adequacy standards such as Basel III. Meaning that the sourcing and sustainable allocation of funding requires increasingly sophisticated and transparent capabilities in advanced analytics to better support and manage credit and financial risks. Optimising available capital and funds for lending purposes and attracting and retaining customer profitability over the life of the banking relationship means that risk-reward optimisation is the main game for CROs.
Seeing the right story in complex data
Making better business decisions earlier and at lower costs is what financial services executives continue to ask for as both time and funds remain scarce and markets change quickly. Having the right information at the right time is important but to derive actionable insights which are capable of being understood is more important. New capabilities for business intelligence, reporting and data visualisation enables all available data – internal and external - to be analysed and presented clearly, accurately and reliably for real-time insights to support decisions and create meaningful conversations. Making complex information simple and meaningful means the time to value is reduced and opportunity for competitive advantage improved.