IBM, Somers, NY, announced today the availability of a relationship marketing solution aimed at small banks and large global financial institutions called DecisionEdge for Relationship Marketing, Finance.
The business intelligence solution, which combines hardware, software, consulting and services, is designed to help banks better understand their customers, tailor their marketing strategies and increase profitability.
According to IBM, DecisionEdge allows banks to analyze customer behavior and use this knowledge to assess the risk of losing a customer.
“Banks can face an annual attrition rate of up to 25 percent, and in the age of shrinking margins and demanding, price-sensitive customers, DecisionEdge helps these institutions allocate marketing dollars for the greatest return,” said Ben Barnes, general manager of IBM Global Business Intelligence Solutions.
IBM developed the DecisionEdge solution for banks because banks are currently transforming themselves into customer-centric companies because of a competitive marketplace stemming from consolidation and a rise in the number and types of players offering bank services. And, large and small banks are learning that they can meet their customers' needs through their information technology investments.
“By using business intelligence tools like DecisionEdge, banks and financial services firms can gather, manage, and analyze customer information [from these sources] and then use that data to devise ways to attract, identify, and retain good customers,” said Wirt Cook, IBM's general manager, finance sector.
Over the past few years, IBM has worked with customers to develop the product including KeyCorp, Cleveland; First National Bank North Dakota, Grand Forks, ND; Peoples Bank & Trust, Indianapolis; and Santa Barbara Bank & Trust.
KeyCorp has been using DecisionEdge for more than 14 months to streamline its product lines to more accurately reflect consumer demand and leverage information on its 7 million customers for cross-selling opportunities via each of its delivery channels such as voice response units, direct mail, telesales, Internet, tellers and relationship managers.
At each point of contact with the customer, DecisionEdge recommends specific marketing messages based on an understanding of the customer's relationship with the bank. KeyCorp marketed its check overdraft protection via its voice response system to its checking customers who are among the 4 million monthly callers to its toll-free voice-response line.
“We have an enterprise view of our customers and can understand the products they use and their financial value to our organization,” said Jo Ann Boylan, executive vice president of key technology services, KeyCorp. “In one case, we simplified our selling process by discontinuing the sale of nine products that had become unprofitable. And, we're getting response rates as high as five to 10 percent on our direct mail campaigns, up from 1 percent to 2 percent.” The company also has achieved full return on its investment.
First National Bank North Dakota, a community bank with $500 million in assets, uses DecisionEdge to retain its most profitable customers by offering product and service lines comparable to those of much larger banks.
“If one of our most profitable customers is evaluating a new auto loan, DecisionEdge can instantly flag that customer as highly valuable,” said Michael Winkel, chief financial officer, First National Bank. “If that customer is price sensitive, the system will indicate to the bank to offer that customer a competitive rate on the new loan. The customer remains happy and loyal and the Bank remains profitable, having just sold another loan that could have gone to the competition.”
Santa Barbara Bank and Trust also is planning to use DecisionEdge to track customer transactions from ATMs, teller, and other automated contact points to develop new products and services and to reduce customer attrition. It is planning to fully roll-out its system by the end of this month.
The foundation of DecisionEdge is an IBM BI-ready server, but it also includes a banking data warehouse, Intelligent Miner for Relationship Marketing — an application written with IBM's Intelligent Miner software — IBM's Virtual Warehouse, IBM's DB2 database, IBM's DB2 OLAP server and IBM's consulting services. The open system also includes Exchange Applications' Valex campaign manager, Business Objects query, reporting and OLAP tools, and tools and services from other business partners.
A smaller bank can purchase a tailored version of DecisionEdge for under $500,000. The full-scale version starts at $1 million.
This summer, the company is planning to formally announce a DecisionEdge solution for the retail industry. Three other DecisionEdge solutions are also available: An insurance solution was introduced last year, and the telecommunications and utility solutions were introduced in 1997.