Business intelligence solutions can seem very abstract for those who have not worked directly with them. Dealing with millions (maybe billions) of bits of unstructured data flowing in from various far-off data silos can be hard to visualize. Seeing how BI can impact everyday business situations can be easier to understand. One key benefit is reducing the time it takes to drill down into data to find its hidden insights.
As consolidation, mergers and regulations continue to change the business model for financial institutions, the need to glean insight from data to take quick action has become even more imperative. With the right tools, financial services companies can gain that insight quickly and make faster, more effective decisions about how to retain customers, market new products, increase efficiencies and improve the bottom line.
One roadblock to achieving quick insight is disparate data, which is a problem that one Seattle-based brokerage and investment bank faced. Without a central view of customers and financial performance across business lines, it depended on personal experience and individual judgment for many decisions.
The company solved its problems by implementing an IBM BI platform. Today, the investment bank segments customers based on investment style, current holdings and transaction history, targeting customers to drive cross-selling and upselling. Historical analysis uncovers patterns that help identify lucrative investment opportunities, develop promising financial products and manage risk.
Users can now compile comprehensive reports in a single day rather than 10 days — a 90 percent improvement that helps the company manage risk and take advantage of investment opportunities. What’s more, instead of a handful of full-time employees, the enterprise can delegate that task to one person and divert the additional resources to more critical tasks.
Financial services companies that have different branches or divisions using different systems and applications also can present challenges. That was the case for a large national retail bank, which in 2012 came to the realization that its 365 branches often deployed disparate systems and applications to capture customer information. Bank executives believed that by better leveraging this fragmented data, the bank could improve efficiency and service delivery while driving new sales. After implementing a SAP BI solution, the bank realized a 180 percent increase in outbound sales through improved customer insight.
For an insurance firm in Stamford, Conn., the problem was its strategy. By changing from a product-push marketing strategy to one that was more customer focused, the company believed it could better acquire new customers and cross-sell to existing customers more effectively. The challenge was finding a way to analyze large quantities of existing data, identify the characteristics of target customers and then enable the appropriate teams to act on that insight.
By implementing a portfolio of BI solutions, the insurer improved its predictive models to identify clients with a high probability of accepting an offer, created a cross-selling organizational capability, developed deeper integration with the sales channels and, through customer analysis and modeling, created guided offers tailored to the customer requirement. In addition to growing revenues, the organization boosted margins by 60 percent.
Another bank, located in Buffalo, N. Y., suffered from a lack of accurate reporting information. Without access to key budgeting and reporting information on demand, branch and department managers didn’t have the tools they needed to make fast, accurate decisions.
With the IBM Cognos BI and Planning solution, managers now have robust reporting capabilities that allow for stronger, more accurate decision-making. This helps bank staff quickly refine strategies and gives finance and accounting teams the information they need to quickly determine where they are compared with budget, and to pinpoint budget variances so they can make more informed decisions going forward.
In a worsening threat environment, every financial services firm needs fast insight to reduce risk and prevent fraud. A large global banking division based in London needed a business intelligence tool to provide better insight into all risks across the enterprise so it could actively manage those risks. The company’s existing counterparty risk system didn’t support a consolidated view of counterparty credit risk, which led to inaccurate exposure measurements. The bank also needed to manage capital and credit more efficiently to conduct additional business without increasing overall risk. With the new system, 70 percent of bank counterparty exposure measurements adjusted by more than 20 percent, and the top 10 percent of counterparty exposures changed by 50 percent or more. The result was increased profitability without increased overall exposure.
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