Predictive Analytics in Banking_fractal


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Former HSBC Walter Menezes and Pranay Agrawal of Fractal Analytics present at The IE Group's Predictive Analytics in Banking conference in NYC, 2011. Topic on collaboration of risk and marketing to create analytics that drive effective credit card cross-sell programs.

Predictive Analytics in Banking_fractal

  1. 1. ® Collaborating between risk and marketing analytics to fuel growth and profitability Creating Competitive Differentiation through Analytics Walter Menezes Pranay Agrawal Principal EVP Global Client Development Menezes and Associates Fractal AnalyticsProprietary Information of Fractal Analytics Inc.This document contains proprietary and confidential information of Fractal Analytics and subsidiaries (Fractal) and shall not be reproduced or transferred to other documents,disclosed to others or used for any purpose other than that for which it is furnished, without the prior written consent of Fractal. It shall be returned to Fractal upon request.
  2. 2. ® Big Data, Big Impact 1.8 zettabytes of data added in 20111 50% CIOs cite2 Business Intelligence is #1 priority 200k shortfall in experienced analytics staff to leverage Big Data3 40% executives cite4 implementing data-driven results as biggest challenge to institutionalizing analytics 1. 2011 Digital Universe study 2. Hilbert & Lopez – Science, 2011 3. McKinsey Global Institute Research titled “Big data: The next frontier for innovation, competition, and productivity” 4. Fractal Analytics internal researchConfidential | Copyright © Fractal 2011 2
  3. 3. ® Analytics creates 2:1 competitive advantage Survey* Results: Higher performing companies leverage analytics Use analytics for strategic planning Harvard Business Review, 2006 Analytics has been instrumental to Top Capital One, which has exceeded 20% Performers 45% growth in earnings per share every year since it became public. Bottom Performers 20% Use analytics for day to day operations Amazon CEO Jeff Bezos “For every leader in the company, not just for me, there are decisions that Top Performers 53% can be made by analysis. These are the best kinds of decisions. They’re Bottom fact-based decisions.” Performers 27% *MIT Sloan Management Review Research Report “Analytics: The new path to value,” Fall 2010.Confidential | Copyright © Fractal 2011 3
  4. 4. ® Advanced analytics enables smarter decisions Customer Lifetime Value (LTV):  Is a powerful cross- functional analytic  Critical to increasing profitable decisions  Needs collaboration between risk, marketing and finance  Enables more effective target of profitable segmentsConfidential | Copyright © Fractal 2011 4
  5. 5. ® Embarking Institutionalizing analytics journey Situation Leading global bank seeking higher card profit Need to develop and implement data-driven decisioning Challenges Disparate data sources Lack of organizational readiness Support for data-driven decisions Insufficient analytics staffConfidential | Copyright © Fractal 2011 5
  6. 6. ® Overcoming Integrated Campaign Challenges Integration Business Overcoming Constraints Constraints ImpactNon-optimized data Limited insights Integrate data, analytics toand infrastructure optimize decisionsTrust in analytics Lack of Measured and publish results cohesive engagementAnalytic talent Unrealized ROI Leverage 3rd party analytics team and ineffective with business insights decisionsTranslating results Lost Connect results to organizationalinto actionable opportunity goals and celebrate successdecisionsConfidential | Copyright © Fractal 2011 6
  7. 7. ® Journey Institutionalizing analytics journey Approach Multiple card portfolios Standardized datamart Increased analytic development Translated analytics into data- driven decision strategies Implemented across functional areas Measured results Feedback learning into next campaignConfidential | Copyright © Fractal 2011 7
  8. 8. ® Analytics drives growth and profitable acquisitions Credit Card, Auto, Mortgage, Personal Loans Checking, Savings, Investments Internal Data Risk Credit risk Optimization Decisions & Bankruptcy risk Analytics Fraud risk Decisions External Data Profit CLTV Marketing Offer - Pricing Response Revenue AttritionExternal Scores Integrate Integrate Integrate decisions database models & metrics Confidential | Copyright © Fractal 2011 8
  9. 9. ® Key learnings and best practice Institutionalizing analytics journey Business Impact Analytics supported growth and profitability 4x in 3 years Best Practice Success Factors Executive sponsored analytic culture Infrastructure investment in data and analytics Deep analytics talent acquisition Results tracking and reporting Integrated adaptive feedback Relentless executionConfidential | Copyright © Fractal 2011 9
  10. 10. ® Summary Success today requires greater competitive differentiation Market leaders making data-driven decisions create differentiation Integrating data across functions and LOB creates more value Best practices: Standardize and integrate data, variables, models & metrics Develop customer-centric analytics Continuous test and control environment Create data-driven decisioning cultureConfidential | Copyright © Fractal 2011 10
  11. 11. ® Fractal delivers analytic excellence at unparalleled value to scale analytics in your business. United States | United Kingdom | Singapore | IndiaWalter Menezes Pranay PAB_NY.92111