Banking and Baseball: It's All About Analytics

As bankers continue to see industry challenges, it seems like even good news, such as the first-quarter financial reports released May 24, must include negativity, evidenced by a quote from FDIC’s Acting Chairman: It "remains to be seen whether banks can continue to sustain revenue growth going forward."

That same day, a group of close to 100 optimistic bankers and technologists came together at the SAS Financial Services Executive Summit for a day of conversation to spark the innovations and changes that will be needed to sustain revenues, attain and retain customers and maintain regulatory compliance. The summit keynote was Billy Beane, profiled in the book Moneyball: The Art of Winning an Unfair Game and in the major motion picture Moneyball.

Attendees, expecting to hear only baseball stories, were surprised and delighted to hear Beane say that in baseball "Every event has a value." When discussing the importance of decision-making based on numbers -- not intuition -- Beane also quoted his assistant, Paul DePodesta, a Harvard economics graduate, who said that "If you trust the mathematics, it will work."

Another quote that resonated with me was Beane explaining that "It all comes down to getting the most information to make the best decision." Could it be that he really has the soul of a data-driven banker?

Know Your Customer?

The first of two panel discussions asked the most important question for bankers who hope to grow revenues today -- How Well Do You Know Your Customer? Greg Holzwarth, SVP and Managing Director of SunTrust Bank’s Client Information Group, discussed how his institution redesigned the client experience in the midst of the recent recession. Using an in-house client loyalty model, SunTrust redesigned branches, telecenters, the website and client experiences to cater to loyalty-generating indicators using analytics. By connecting this work to more traditionally measured client behaviors, Holzwarth said, "Now we can understand the quantification to building loyalty and how that drives greater revenues or greater retention."

Harvey Koeppel, President of Pictographics Inc. and Former CIO and SVP of Citigroup's Global Consumer Group, shared the "mega-challenge" of understanding the needs of 150 million customers in 54 countries following the merger of Citicorp and Travelers. According to Koeppel, Citi harnessed analytics to better define a 360-degree view of the customer, and then used behavioral data models to drive best-next conversations and offers.

Citi's analytical models were transformed to real-time so customer interactions were added instantly to profiles and then shared across all channels. This provided the same information at the same time across the company about the customer experience and channel interaction -- which was then fed back into the models.

The panel also discussed the challenges around social media data, both from a "big brother" perspective to a compliance and legal perspective. Koeppel said the industry needs to overcome these challenges since consumers are looking at social media such as tweets and Facebook wall posts as a way of better understanding institutions.

What’s the Big Data Idea?

The second panel focused on Big Data for the Next Big Idea. Aditya Bhasin, Consumer Marketing and Online/Mobile Banking Executive at Bank of America, explained that big data is a way of life at the bank. Bank of America has more than 65 petabytes of customer and interaction data, where they use maybe one percent of it for analytics.

Bhasin said their focus is on deepening customer relationships, and big data is the only business strategy. He highlighted the promise of analyzing disparate, distributed and unstructured data sources, saying that "The utilization of the vagueness is what we’re excited about" for customer insight. Bhasin stressed the importance of data citing how the bank's new BankAmeriDeals program matches shopping behavior with relevant deals and then loads offers on the bank's debit and credit cards.

Meanwhile, Charles Thomas, Research and Analytics Executive, USAA, discussed the creation of an analytics center of excellence at USAA. It will drive fact-based decisions as part of the insurer's need to look at members differently. Thomas explained how integrating market researchers and traditional analytics into a single organization answers the important question of "what happens next" to better support military members. According to Thomas, USAA's analytical direction is moving from hindsight to insight and from there toward foresight.

My overall takeaway from the summit? Executives from an industry known for analytics and big data can find innovative ideas from the unlikely source of a baseball general manager and a game. Beane's analytic innovation turned on-base percentages into record-breaking ROI. Perhaps the ideas he sparked at the summit will help financial services firms grow stronger customer relationships and sustainable revenue growth.

David M. Wallace is Global Financial Services Marketing Manager at SAS.