How Banks Can Use Customer Profitability Analytics To Thrive In Uncertain Times http://owl.li/kStaB

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Read full white paper at http://owl.li/kStaB to uncover how banks can use customer profitability analytics to thrive in uncertain times

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How Banks Can Use Customer Profitability Analytics To Thrive In Uncertain Times http://owl.li/kStaB

  1. 1. www.frost.comHow Banks Can Use Customer ProfitabilityAnalytics to Thrive in Uncertain TimesAn Executive BriefSponsored by IBMMarch 2013
  2. 2. 2 © 2013 Stratecast. All Rights Reserved.March 2013Stratecast | Frost & SullivanHOW BANKS CAN USE CUSTOMER PROFITABILITYANALYTICS TO THRIVE IN UNCERTAIN TIMESINTRODUCTIONMost banks have an idea of which customers are most valuable. Or, rather, they havemany ideas, with each department using various criteria, metrics, and “rules of thumb” toassess and nurture its own account base. Thus, for example, branch managers may valuecustomers with multiple retail products (credit card, checking account, certificates ofdeposit). The trust department may focus on high net worth individuals. Lendersgravitate toward proven borrowers.However, “value” should not be a subjective measure. As banks watch their marginsdwindle, there is only one measure of customer value: profitability. And not just currentprofitability, but profitability over the long term. A bank that builds its business aroundconsistent and accurate measures of customer profitability is armed with the data itneeds to make smart decisions— decisions that help it lower costs, enhance operatingefficiencies, and increase revenues.This is the domain of Customer Profitability Analytics, a field of analytics that utilizessophisticated data modeling to deliver customer-level intelligence that can be used tomake smart business decisions. Using predictive and prescriptive analytics, CustomerProfitability Analytics solutions provide a cohesive, bank-wide view of each customer,their current and lifetime profitability, and their likely behavior in response to varioussituations. The results enable the bank to respond more quickly to regulatory or marketchanges, and ensure that all departments are working toward a common goal.The challenges in the current banking environment call for a new, data-driven way ofdoing business—one that captures a common and useful view of customer profitability. Inthe new world, tools and metrics that have been in place for decades are no longersufficient to identify which customers are profitable, and (more importantly) are likely toremain so. Nor can they adequately predict which customers represent an opportunityfor additional revenue, or the potential “lifetime value” of any given customer.In this white paper, Stratecast defines Customer Profitability Analytics. We show howbanks can benefit from adopting a profitability-driven approach. Finally, we examine therelationship between profitability and customer satisfaction, for banks that are looking tobalance the two.To view the full white paper, visit: http://ibm.co/10W5aRD

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