financial services · 2016-06-10 · financial services financial firms learn to love customers by...

Financial Services

FINANCIAL FIRMS LEARN TO LOVE CUSTOMERS BY EXTENDING DATA ANALYTICS

WSJ. Custom Studios ©2016The Wall Street Journal news organization was not involved in the creation of this content. WSJ. Custom Studios is a unit of The Wall Street Journal Advertising Department.

Imagine billions of dollars are locked in a safe sitting in front of you and your colleagues. You have one number of the combination, which you have been instructed not to share with anyone. You don’t know it, but your colleagues are in the same predicament. Each of you is closely hoarding one number. None of you know what the others have. And each of you is so close, yet so far, from being able to open that safe.

Banks, insurance companies and other financial-services firms around the world are in just that fix. They have long possessed mountains of customer data and information that could help them generate greater profits and enhance customer satisfaction. But because the information is spread among multiple people in multiple departments across multiple database systems, most financial-service companies are only now learning how to pull all of their information together and share it with their employees in a way that will help them operate more efficiently and profitably. Some companies are moving along much faster than others.

But here’s the problem... Fewer than one in five financial service companies allows access to information and data consistently across all departments or teams, including critical “customer-facing” employees on the corporate frontlines who could benefit from having the information to better serve customers, according to a new study released by WSJ. Custom Studios and Qlik Technologies Inc., a leader in visual analytics.



The survey researchers questioned 300 high-ranking executives at financial institutions worldwide. The survey found that proponents of greater data usage by front-line employees have their work cut out for them getting their companies on board:

• Only about half of the company officials surveyed clearly understand who in their operations needs what information to best do their jobs.

• A majority of top financial-services executives assign low importance to the use of customer behavior data to improve the performance of customer-facing employees. More than 60 percent believe that their front-line employees lack the confidence to effectively use analytic tools.

• While most executives believe that expanded use of analytic insights is a priority, fewer than one in five plan to substantially enhance their company’s ability to deliver analytic insights to every part of their organization.

Data, Data … Everywhere



Three-quarters of respondents in the WSJ. Insights/Qlik survey are collecting data from different sources and either have access to it anywhere (41 percent) or store it in a centralized location for easy access (34 percent).

The remaining respondents are challenged in terms of data strategy, either because they are still trying to finalize plans about how best to capture, manage and store their data, or because the data is stored in different silos and is difficult to access.

But access to the full range of customer information is much more limited. Larger, more dispersed firms see greater benefits for branch staff and front-office employees (42 percent versus 37 percent) to have access to data and information. For their part, small firms are more likely to see payoffs for the sales and marketing function (39 percent versus 32 percent).

“Financial-services firms are missing a golden opportunity to grow their revenues and profits by embracing analytics,” says Duncan Ash, senior director, global financial services at Qlik. “This survey has identified that customer-facing employees have the most to gain from analytical insights, but that they are the group that is least well-served by the business.”

One Size Doesn’t Fit AllWhile the WSJ. Insights/Qlik survey encompassed the broad financial-services industry, sectors within the industry showed some significant distinctions.

Banks lag other financial industries in understanding who needs what information, but banking leaders are more likely than those from other industries to say that their analytics functions are highly effective at securing and safeguarding data (88 percent versus 76 percent for other industries). They are also better at making strategic decisions based on analytical insights (39 percent versus 33 percent), though the fact that only a minority report high levels of effectiveness shows that there remains a great deal of room for improvement — especially in an environment where smaller, more disruptive companies are finding new ways to capitalize on their customers.

Capital markets organizations are highly effective in getting information to those who need it most, but lack confidence. Information flows comparatively freely, but many respondents express reservations about the abilities within their organizations to make the most of that information. Only 42 percent of capital markets executives believe that line-of-business leaders, department heads and managers are highly confident in using such information to support business decisions or to improve customer outcomes. Opinions regarding the lower levels of the organization are even less encouraging: barely more than one-third of capital markets executives (36 percent) believe that customer-facing employees are highly confident in fully utilizing analytic information.

The insurance industry appears to have well-developed data analytics platforms, yet it lags other industries in providing this information to customer-facing employees. Access to customer data and financial information is most often granted to sales and marketing (35 percent), call-center staff (32 percent) and claims settlement (31 percent). With a handful of exceptions managers are aligned with employees in terms of the data they use. Forty-four percent of insurance executives see branch staff and front-office employees as most likely to benefit from greater access to analytic insights.


Banking Capital Markets

Insurance


Getting Data to the Frontline

Working from the assumption that big-data analytics and business intelligence technologies are revolutionizing the financial-services industry worldwide, WSJ. Insights set out to explore two hypotheses:

• While financial services companies have access to powerful insights from their data, often this data doesn’t make its way to employees at the frontline of the organization — that is, those who are customer-facing and need it the most.

• Additionally, different teams within financial institutions, from marketing and sales to customer service, are shifting away from transactional approaches to focus on relationship building. To succeed, the employees who actually create the relationships with the organization’s customers need greater access to information and data as well as insights gleaned from that information and data to deliver value to their customers.

.



The online survey was conducted March 28 to April 29, 2016 by WSJ. Insights, the marketing research unit of WSJ. Custom Studios.

The respondents were evenly distributed across North America, Europe and Asia. They were also spread evenly across the

banking, capital markets and insurance sectors, with 60 percent of the companies represented reporting annual revenues greater

than $1 billion. Thirty percent of the respondents were C-suite-level technology executives (including CIOs and CTOs), while 21

percent were financial officers (including CFOs) and 15 percent were operations executives (including COOs). Twenty-one percent

categorized themselves as directors, executive directors, vice presidents or senior vice presidents.

Across the board, respondents see the need for greater use of their customer data to increase business, but they see plenty of obstacles between their organizations and that goal.

“There’s gold in these servers, and the trick is how do we extract that gold from the ore,“ says J.R. Reed, a senior manager for financial analytics at Deloitte Consulting LLP. “Data is an asset — a very important asset. Companies have been gathering this information about their markets and their customers. They’ve been accumulating all of this information that they can use to positively impact their customers and positively impact their business.”

Top-level executives have long embraced “big data” as an essential tool in their management of large organizations. But still in the developing stage is the dissemination within organizations of accessible, easy-to-use customer data and information to employees further down the corporate ladder.



The ideal: A big bank’s local branch manager sitting with a local businessperson seeking financing for a new project. The manager has at her keyboard all of the bank’s accumulated data on the customer’s transactions, outstanding loans, payback records, even personal financial information, such as credit ratings or recent major purchases. The manager can then use this information to tailor a bespoke package of services to fit her customer’s unique needs.

Or an investment adviser can craft a custom portfolio with allocations that will best match market conditions with his client’s investment style, risk tolerance and goals.

Or an insurance broker can curate a package of products designed to match each of his customer’s precise needs.


“ Analytics is still most prevalent in head-office functions, and the people in the field who need it the most are getting the least,” says Qlik’s Ash.

“ Firms struggle with the volume and complexity of data, and with the basics of communication and data management.”


A Boon to Financial Businesses … Up to a Point

Financial industry executives believe greater access to analytics insights would benefit their companies, from increasing revenues and improving customer relations to expanding their product lines. But that doesn’t always translate into a commitment to making data available to more departments in their companies. It can be a burden to overcome corporate inertia and other obstacles.

“We’re wresting access to the data from a centralized group and getting it out to the large base that actually talks to customers,” says Deloitte’s Reed. “We’re seeing increasing velocity getting actionable data down to the frontlines.”

The great majority of those surveyed say the impact of fully leveraging financial and customer data would be both deep and widespread. More than four in five (83 percent) agree that the estimated value or revenue gain of fully leveraging their financial and customer data would represent an increase of at least 5 percent of their annual revenue.



That’s right in line with the experience of Abe Ouano, director and team leader of Citi Private Bank’s Global Investment Lab. Citi Private Bank, which serves clients with investible assets of at least $25 million, embarked on a major data push three years ago. The plan was to equip bankers, investment counselors and product specialists with more timely, relevant, and actionable information that they could use to enhance the client experience at Citi Private Bank. The expansion of analytics capacity is likely to help companies expand their catalogues of financial products or services. About two-thirds (65 percent) say that their customers are interested in more extensive access to analytics related to their financial activities, from spending patterns and return on investment to a variety of other performance metrics.

“We’re combining our investment platform with best in class technology when we analyze our clients' portfolios,” Ouano says. “But more important than that is the speed and relevance with which we communicate to our clients, either in response to an inquiry or a proactive investment idea.”

6%

48%

17% 29%

ESTIMATED REVENUE

GAIN FROM FULLY LEVERAGING

DATA AS A PERCENTAGE OF

ANNUAL REVENUE% of respondents (n=300)

• OVER 10%

• 5-7%

• 8-10%

• UNDER 5%



Departments most frequently thought to benefit the greatest: Branch or front-office staff (37 percent), advisory services and relationship management (35 percent) and sales and marketing (32 percent). The exception to this is customer support (call center, claims settlement and the like), in last place at only 16 percent. While this function clearly depends upon access to accurate customer information, its low ranking on this question suggests that executives may believe that these employees would not benefit greatly from analytical insight.

Likewise, a majority of survey respondents agree that the primary benefits of granting customer-facing employees greater access to analytical insights would be enhanced revenue from existing customers (57 percent) and reduced customer churn (51 percent), with increased customer satisfaction (48 percent) following close behind.



Enhanced revenue from existing customers

Reduced customer churn

Greater customer satisfaction

Closer integration of the customer experience between touch points

Increased upselling and cross-selling opportunities

Reduced operating costs

Enhanced forecasting/predicting of customer needs

Lower cost of customer acquisition

Greater transparency into the day-to-day operations of the business

What would be the primary benefit of granting greater access to analytical insights to customer-facing employees?

% of respondents (n=300)


57%

51%

48%

40%

40%

21%

17%

15%

9%


Still, Implementation LagsEven with so much evidence on the side of greater data dissemination, not everyone is jumping on the bandwagon quickly. The obstacles can be summed up as confidence, communication and complexity.

Confidence may be the one big reason why executives aren’t eager to share data with their front-line employees. The C-suite financial executives surveyed reveal considerable confidence in their own ability to use analytic tools well, but they show a marked skepticism in the confidence of their customer-facing employees to use data and information to improve business.

More than 60 percent of survey respondents rate their customer-facing employees as low or just moderate in their ability to turn data into knowledge that supports their business. According to the survey researchers, these findings should be interpreted in the context of currently used tools for presenting complex information to customer-facing employees. The findings may point to a need for better visualization platforms, customized by employee function, since existing tools may be optimized for executives and not customer-facing employees.

Training and simplification of data apps are the keys to overcoming the confidence gap, Ouano says. At Citi, senior management heartily supported the data effort and let the troops know it. “Everyone was behind the initiative,” Ouano says.

Leader confidence in

using data well


49%

25%

26%

• HIGH (8-10) • MODERATE (6-7) • LOW (1-5)

• HIGH (8-10) • MODERATE (6-7) • LOW (1-5)

21%

38%

40%

Employee confidence in

using data well




But there are obstacles as well, notably problems related to communication.

Organizations are challenged by these communication issues as well as data complexity. One of the top internal challenges to getting information to the right people is the fact that information is spread across different, often mutually incompatible systems (42 percent). Other problems include critical information being lost due to poor communication (43 percent) and a lack of recognition of data as a shared corporate asset (41 percent).

In terms of external challenges, a majority of respondents agree that information is frequently too complex to be processed, analyzed and disseminated in a timely fashion. Data security (48 percent), regulatory compliance and privacy concerns (48 percent) and the speed of real-time transactions (46 percent) are also seen as major hurdles.

The information is often too complex to be processed, analyzed and disseminated in a timely fashion

Data security

Regulatory compliance/privacy concerns limitwhat information can be communicated

Real-time transaction speed makes it difficult to keep pace

Lack of accurate/reliable information aboutanalytics products and services

Lack of standards for analytics applications

What are the biggest external obstacles in disseminating the right information to the right people across your organization?



57%

48%

48%

46%

33%

32%


Despite these impediments, proponents of data dissemination programs insist that the benefits are considerable and implementation of such programs is well worth the incremental costs.

Among the lessons of the survey: • Management can expect significant revenue increases from empowering employees with analytical tools. • Companies should make data analytics and training in its uses a priority for front-line departments and employees. • Simplified and purpose-built applications enhance confidence and wider adoption within organizations. • Better analytic insights strengthen relationships with customers, including greater customer retention and satisfaction. • Real-time and agile access to data can be achieved quickly, especially for companies committing to major computer

system upgrades or transformations.



“This is the democratization of data,” says Deloitte’s Reed. “Transformations have tended to focus on the back end, the central office, creating analytical insights for the select few. What we’re seeing now is that for a relatively small cost, you can get a lot of leverage by extending that out to the frontline and not retaining it behind closed doors at the top of the house.”



Financial Services

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This work was commissioned by Qlik Financial Services. www.qlik.com

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financial services · 2016-06-10 · financial services financial firms learn to love customers by...

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