Professional Documents
Culture Documents
Business
in Financial
Analytics
Services
Content
Preface
From the Editors Desk
Analytics for a New Decade
01. Post-Crisis Analytics: Six Imperatives
05
13
21
29
37
47
55
61
69
77
85
Customer Understanding
Fight Fraud More Effectively
12. Developing a Smarter Solution for Card Fraud Protection
93
103
109
117
125
135
Analytics in
Financial
Services
08
Analytics in Cross Selling
A Retail Banking Perspective
Balwant C. Surti
Industry Principal and
Head-Solutions Architecture
and Design Group,
Finacle Solutions Consulting
Practice,
Infosys Technologies
Limited
The case for cross-selling to the existing customers of a bank is an easy onethe difficult
part is executing it. Today, there are several different techniques for cross-selling effectively.
The common thread that runs across them is data and analytics. Predictive analytics based
on various models have created offers that are just right, just in time. Data mining and
analytics have helped in discovering trends and populating models that are the backbone
of predictive analytics. Value analytics is another approach to cross-selling that is available.
The call center, the branch, the webevery distribution/ service channelall leverage
analytics in some way to cater to the entire gamut of customer needsnot just what the
customer seeks. This article analyzes the different ways in which cross-selling works
with analytics, its intrinsic challenges, and the emerging trends in the analytics field.
Approaches to Cross-Selling
Cross-selling is selling additional products
to existing customers or prospects. It may
happen along with the initial sale or after
the initial sale is made. Often, the customer
may not explicitly mention specific needs
or be aware that the bank offers products
that meet their needscross-selling taps into
this unmet potential using a variety of
techniques:
1. Person-based Approach: This is based
on either the skill of the Customer
Service Representative (CSR) or through
a structured question-based approach. In
either case, the emphasis here is to elicit
the need through customer interaction.
Often, the skill of the CSR is the deciding
factor of success, and little or no use of
analytics is made.
2. Rules-based Approach: The system
defines a set of rules and uses the
information collected from the customer
to arrive at a cross-selling offer. Some
analysis of the customer data is made. For
example, while processing a loan
application, enough information is
available to decide whether the prospect
qualifies for a credit card as well.
3. Value-based Approach: This follows a
portfolio approach to the customer's
assets and liabilities with the bank. Here,
a customer is given a scenario with one
product that he or she has asked for.
Then, based on other information
obtained from the customer, alternate
scenarios are offered. Certain value
metrics (for example, net assets,
installments per month, average rate of
interest paid, etc.) under multiple
scenarios with additional products are
presented to the customer highlighting
benefits and opportunities for growth.
Value-based approaches are often more
62
Figure 1
Predictive
Value
Social networks
Rules
Person
Analytics in cross-selling
Figure 2
Other technology
used in cross-selling
includes event
processing, rules
engines and more.
Reporting
Business
Intelligence
Text
Analytics
Crossselling
Predictive
Analytics
Data
Mining
63
Role of Analytics in
Cross-selling
The role of analytics in cross-selling is
described in Figure 3.
Cross-Selling Solutions
1. Home-grown or Assembled Solutions:
Amongst internal initiatives to use
predictive analytics, the most common
application is often cross-selling. Inhouse data warehouses provide the data,
and business intelligence tools, predictive
analytics tools, rules engines and coding
provide cross-selling solutions.
2. CRM Solutions: CRM solutions from
leading vendorssuch as SAP, Oracle,
etc.come with cross-selling modules,
which can be configured and used along
with the sales and marketing modules of
the solution. CRM analytics are used to
provide the data and power the crossselling engine, with the operational CRM
providing the delivery. Some core
banking solution suites that offer a CRM
solution also offer cross-selling solutions
through their customer analytics module
(for example, Finacle Analyz).
3. Point Solutions: These are specific
solutions that are made for the primary
Challenges in Leveraging
Analytics
Analytics certainly present a summative view
of customer transactional and behavioral
patterns. However, the following challenges
are slowing down the adoption of analytics by
financial institutions:
Role
64
Figure 3
n
Lack of Expertise: A combination of
domain knowledge and data analysis
ability, a pre-requisite for effective
implementation of analytics, continues
to be elusive. A banking end-user,
though an expert in his domain,
often faces a challenge to interpret
and analyze the myriad statistics
thrown up by the analytics platform.
A data analyst can compile the statistics
quickly, but is dependent on the business
user's domain expertise to organize
and analyze the data and communicate
it in the form the end-user needs it, to
facilitate an actionable decision.
The whole process may involve several
iterations, resulting in a significant
lag time between data collection and
action and frustration on both sides.
Predictive analytics, especially, are
considered a niche realm, requiring
extensive training for effective
implementation.
Need for Clean Data: Statistical
n
models are only as good as the data
fed into them. The majority of statistical
models not only demand accurate data
with the least possible approximations,
but also require that data be scrubbed
and neatly formatted in a particular
way to ensure quick and meaningful/
actionable recommendations. However,
a significant portion of the customer
data, maintained by banks happens to
be inconsistent and siloed, making it
difficult to meet the formatting standards
of analytics models.
Operational Difficulties: The process
n
of deploying sophisticated analytics
models usually involves accessing
data from and/ or transferring data
among numerous machines and
operating platformsrequiring seamless
interoperability of various applications
65
Figure 4
What are your firms plans to adopt the following business intelligence technologies?
Expanding/
upgrading
implementation
Planning to
implement in
the next 12
months
Implementing/
implemented
Reporting tools
31%
31%
17%
18%
16%
15%
11%
10%
10%
15%
10%
11%
10%
Advanced analytics
9%
22%
11%
9%
10%
10%
9% 3% 7% 6%
1%
3%
29%
2% 4%
12%
18%
15%
11%
Interested
but no
plans
Planning to
implement in
a year or more
8%
10%
9%
9%
27%
28%
28%
16%
8%
20%
7%
18%
8%
22%
29%
9%
28%
34%
13%
28%
33%
13%
41%
3%
7%
22%
21%
Dont
know
10% 5% 2%
19%
13%
11%
Not
interested
19%
Base: 853 North American and European software decision-makers responsible for
packaged applications (percentages may not total 100 because of rounding)
Source: "The State Of Business Intelligence Software And Emerging Trends: 2010." Forrester Research. May 10, 2010
n
Packaged Analytics Applications are
in Demand Business users, especially
financial institutions, are increasingly
demanding packaged analytic
applications that are specifically
designed for online marketing/ crossselling, fraud detection, online credit
analysis, online trading/ investment
advisory, and others. To date, many
organizations have attempted in-house
customization of analytics applications
to meet such specific ends. Such
re-architecture may no longer be
necessary with the emergence of
sophisticated event-driven/ complex
event-processing products and predictive
analytics platforms that can support
these capabilities.
Software as a Service (SaaS) Finds
n
Demand with Smaller Banks SaaS
66
Conclusion
Analytics have a key role to play in
helping the banks to increase revenue
by discovering and fulfilling genuine
customer needs. The pressure to increase
sales is even more urgent now than ever
before and the use of online analytics and
predictive analytics can make the job of
cross-selling a non-invasive, seamless part
of every customer interaction. Predictive
analytics provide the much-needed,
data-based support to cross-selling, which
will convert the task of selling more into
an act of fulfilling a customer need by
preemption. By ensuring that the cross-sell
is aimed at optimizing value to the
customer, banks can gain additional
business as well as customer loyalty and
stickiness.
67