First Niagara Using SAS Analytics to Measure Profitability

The upstate New York bank has doubled in size in the past year and has upgraded its profitability system to guide business decisions.

In spite of the recent global economic crisis, First Niagara Financial Group ($20 billion in assets) in upstate New York has more than doubled in size within the past year. First Niagara turned to SAS to upgrade its financial tools when transforming from a community bank to a top 30 bank by market capitalization. Using SAS Activity-Based Management and Profitability Management, First Niagara has built a solution for calculating profitability by product, organization, customer and account.

“Since our leadership team believes in fact-based management, we needed best-in-class data and tools to support major decisions. As we continue to grow, we need to grow profitably,” said Brent Bahnub, senior vice president and director of business intelligence at First Niagara, in a statement.

First Niagara is using SAS Activity-Based Management to model costs, activities, processes and behaviors. SAS Profitability Management calculates profit and loss for each of its over one million customer accounts, and also by product, branch, or any combination of these cost objects. The results will dramatically improve First Niagara's capacity to strategically focus business, align resources toward the most profitable products, and lower costs by identifying and sharing organizational best practices. With SAS, the organization also plans to use intelligence to extract value including pricing optimization, utilizing capacity efficiently and other process improvements.

“Our executive management ranked this as the number one priority project in the company because they recognize the value of having the right information at the right time,” said Bahnub. “Since we know the profit of every account, we can price for profitability. We also know the capacity utilization of all of our branches and operating centers, so we have the information we need to optimize efficiency. This allows us to focus on shareholder value, to grow not just for growth’s sake, but to become more profitable overall.”

GJ Nolan & Co., a SAS partner and management consulting firm specializing in assisting financial services companies in measuring and managing for long-term growth and profitability, advised First Niagara in choosing a cost and profitability solution.