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10 May 2018

Cognitive Banking The Personal Touch in Banking

IBM Financial Services Innovation

“It’s easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date.”

Roger von Oech

NGUYEN MANH KHANGBig Data ArchitectIBM Analytics

Challenging Environment

1. Growth & Profitability 3. Digital Disruption 4. Digitalization 5. Becoming Cognitive

Co

gnitive

Digital

Traditio

nal

6. Cloud 7. Operating Model 8. Compliance 9. Security & Fraud 10. Ecosystems

Counter-

party

records

Party C’s

Records

Party B

Records

Party A’s

Records

Bank records

Auditor records

Ledger

Ledger

Ledger

Ledger

Ledger

Ledger

30 35 40

2011

2012

2013

2014

2015

0 100 200 300 400

Public

Transport

R&D

Media

IT

Hospitality

Energy

Consumer

Services

Industrial

Retail

Comms.

Financial

Pharma

Education

Health

2. Customers

Moving to the next frontier – Beyond Banking

Flexible Portfolio

More flexible, on-demand offerings enabled through analytics and cognitive

Digital Front Office

High level of customization through mobile and connected devices based on cognitive insights derived from internal and external data. Digitalized e2e processes to drive agility, faster execution and world class, omni-channel experience

Radically Transformed Back Office

RPA and cognitive built into a new payment system will radically simplify processes, increase agility by seamlessly connecting various channels, drive substantial structural cost reduction, increase security, and provide transparency and insights into transactions

Ecosystem

New Fintech marketplaces

and core competitors

leveraging disruptive

technologies

Distribution of customer

related data amongst

players in value chain

Secure Operations

More secure operations,

reduced risk and

dramatically enhanced

regulatory compliance

enabled through new

payment systems

Ares of focus for

IBM

Partnerships

Cognitive Digital / Mobile

Robotics/RPA Cognitive Targetinghighspendareas:$1TBankOpex+ITSpend;annually

Industryplatformscriticaltorespondingtomarketdisruption

Cognitive

Cognitive Partnerships

High spend areas: $1T Bank Opex + IT Spend; annually

Industry platforms critical to responding to market disruption

Enabled By Data driven transformation

CognitiveComputing

DigitalNetwork

EnablingInfrastructure

BusinessEco-systems

Data Driven

Bank

Mobile & Social

Omni-channel

Analytics

Digital Operations

Integration

Big Data

IT Infrastructure

Security

Resilience

Customer

Value Chains

Customer

Economic Choices

Ecosystem Data,

Services, and Partners

Natural Language

Processing

Machine Learning

Algorithms

Predictive Analytics

Cloud Enabled Platform

Integrating Cognitive Computing, a data driven Digital Network and a secure and scalable

Infrastructure to drive value from business “ecosystems”

To enable differentiation when everybody goes Digital

Customer Experience Data Digitalization

Profitability

Customer

Demographics

Identification

Transactions

Documents

Products

/

Services

Risk Management

Analytics

A totally

integrated

channel

environment

On line and

real time

Component

banking

system with

significant

application

reuse

A single

integrated

manufacturing

environment

Sound risk

management

principles.

95% straight

through

processing

Single

customer

view

“Customer Obsession” Is To Deeply Understand

Your Customer And Their Journeys

Who are they, their personas, their journey?

What are their Interaction & Communication Style?

What are their interest areas?

What products and Channels they use?

What are their preferences ?

What is their Current and Lifetime Value?

What do they Feel, Think and Say about us ?

Know MeDeep Analytics

Compare MeGoal & Peer Analysis

Protect MeSecurity

Advise MeImproved Returns

Alert MeFully Digital

Find MeLocation Awareness

Ask MeEngagement

Excite MeFrictionless Commerce

Stick with MeCentral to My Life

The New Expectations from Every Connection

Customer Centricity, Innovation and Foresight are key priorities for banks to address these Gaps

Engage Discover Decide

Priorities

Constraints

• Simplified engagement across customer journey

• Provide personalized experience through deeper customer insights

• Simplified operations to create focus for “value-adding” activities

• Active Innovation torespond with Speed and agility

• Advanced intelligence to develop foresight to make Strategic decisions

• Complete view of past, present and future scenarios

Evolving customer requirements, Complex Operational processes, Conservative culture, Multiple dimensions for decision making and ever changing market dynamics, etc…

Analytics Engagement

Customers, bank staff and

ecosystem partners

Operations

Data

Structured

Unstructured

Better

decisions

New areas of

productivity

Improved

Customer engagement

Digitization Automation Integration Analytics

Understanding (Deep Sensory Capabilities)

Learning(Machine Learning)

Reasoning(Context Computing)

Structured + Unstructured / Internal + External

Productivity

Contact Center

BranchesInternet Banking

Mobile Application Employees

Cognitive

Digital

Data

Interact(Natural Language Processing)

Engagement Customer Service at Scale

Risk Management at Scale Operations at Scale

Personalization at Scale

Risk Management

FOUNDATION

Servicing

Strong Data, Cognitive and Digital Foundation is the Key to Achieving Superior Customer Experience

Analytics driving Customer Insights

In College

Career ChangeStarting a

Business

Kids inCollege

Teenager

In a Relation-

ship

Graduation

FirstPaycheck

GettingMarried

GrowingFamily

Relocation

Buying aHouse Retire-

ment

Empty Nester

Inheritance

Parent Care

Buying aCar

Behavior• What they spend• When they spend• How they manage• Where they go

Life Events

Financial Events• Overdraft• Pay Raise• Award• Crisis

Insight Comes from understanding behavior and predicting financial and life events

Use Analytics to Address Business Challenges Across the Customer Lifecycle

WHOM TO TARGET?

WHAT TO OFFER?

WHAT IS THE PRICE?

WHICH IS THE BEST CHANNEL?

WHEN TO TARGET?

LILLY, A YOUNG PROFESSIONAL, EXISTING SAVINGS ACCOUNT CUSTOMER AND DEBIT CARD USER

Based on Lilly’s Debit card

usage, Open Bank approaches

Lilly pro-actively with most

appropriate Credit Card for her

She fills out an online application

on her laptop

The next day, Lilly receives her

Credit Card with very excitiing

offers to activate it

1 MONTH LATER, LILLY IS POSTED A TWEET ABOUT COMPLETING HER 1ST 5

KM RACE

She is congratulated on her

achievement.

SMS is sent her with two

special offers valid only for a

week, one on joining Gym

membership and another on

FitBit wearable device

She is thrilled to get relevant

offers and She showed her

interest in registering for the

Gym membership.

NO TRANSACTION HAPPENED FOR NEXT 1 WEEK, SO LILLY RECEIVES A CALL FROM OPEN BANK

Lilly receives a call from an Open Bank

customer representative at her preffered

time, asking if she has any questions or

issues with respect to the offer

The rep understands that Lilly was busy

for whole last week, extends the offer for

another 1 week

Lilly is happy with the customer experience

and knows she made the right choice by

selecting Open Bank

Lilly is so pleased with the service she

received with Open Bank, she posts to

Facebook and Twitter about her experience

LILLY SHARES HER EXPERIENCE TO HER SOCIAL NETWORKS

As a Customer, Lilly is a Puzzle Made Up of Many Pieces

Professional LifeEmployers, professional groups,

certifications …

Legal/Financial LifeProperty, credit rating, vehicles, …

Contact InformationName, address, employer, marital…

Business ContextAccount number, customer type, purchase history, …

LeisureHobbies, interests …

Social MediaSocial network, affiliations, network …

Real Time Decisions

Channel(Silo-Omni)

Relevance (Targeting)

Outbound / Basic Targeting Micro-Segments Segment of 1

Real Time Integrated Multi

Channel

▪ Integrated, high quality data▪ Increased focus on analytics▪ Campaign efficiency

▪ Integrated digital/offline data▪ Omni-Channel Interactions▪ Real time Decisioning▪ Advanced analytics and modelling

Manual ProcessesS

ilo

’dC

oo

rdin

ate

dIn

teg

rate

d

< 3% Conversion Rates < 10% Conversion Rates 30% Conversion Rates

Complex Triggers/Events

Integrated Multi Channel Provision

Analytics Optimised Routing

Product Push (Offer of the

week)

Structured Conversations

▪ Simple product driven marketing

▪ Limited event based trigger campaigns

Campaign Automation

Simple Triggers/Events

Event based NBM

IBM has Helped Customers in All Maturity Levels

Solution

Business Opportunity

Results

OCBC uses customer analytics and a new marketing strategy to personalize

customer offers and communications and see huge leaps in sales leads, cross-

selling rate, and conversion rates

▪ OCBC put analytics to work to determine what made each customer

tick.

▪ By analyzing historic customer data such as number of account visits

and identifying certain patterns and significant events, such as

significantly large deposits, the bank designed an event-based

marketing strategy that focused on a large volume of targeted,

customized marketing communications, selling customers on other

products and services that might appeal to them, and presenting them

with enticing offers driven specifically by each customer’s individual behaviors.

▪ In Asia, banking is booming. Analysts expect retail banking

alone to generate approximately $180 billion in new revenue

over the rest of this decade, owing in part to the rising

consumer class in that part of the world.

▪ OCBC wanted to position itself to capture that expected growth.

▪ The bank needed to transform itself to a more customer-

focused organization. But first, it needed to get to know its 3

million customers.

▪ The strategy has been wildly successful so far, with a 45 percent

increase in overall conversion rates on these communications and 60

percent increase in cross-sales.

▪ Grew campaign revenues by more than 400 percent with data driven marketing

▪ Increased the number of marketing campaigns deployed by 273 percent, most of them geared toward small audiences or individuals

OCBC Bank: Using Real-Time Technology To Achieve Breakthrough Marketing Effectiveness

Optimize Offers and Cross Sell

Contact Center Service Optimization

Increased revenue generating leads by 76% and cut costs by 10%

Major NA Retail Bank

Analyzed tweets to discover life events and build deep customer

profiles that enabled micro-segmentation

Leverage Social Media for Customer Insight

Regional US Bank

Analyzes transactions, payments, channel

interactions, spending to deliver real-time offers

600% ROI on campaign efficiency and 20% reduction in mailing

costs

Increased inbound conversion rates by 20 percent

Uses analytics for near-real-time decision optimization for

agents to improve the customer experience

Japanese Bank

Case References






Productivity

Contact Center



Cognitive

Digital

Data





Risk Management

FOUNDATION

Servicing


Consumers say that messaging is the #1 choice for communication with brands.*

* Survey of 3001 US-based consumers, aged 18-65, conducted by Survata Research, August 2016

The typical Millennial exchanges an

average of 67 text messages per day.

Co

st

48% messaging

cost savings

Bots & AI

Messaging

Voice calls

Time

Additional

bot savings

Americans now spend around 5 times

longer in messaging apps each day

than on voice calls.

WhatsApp and Facebook

Messenger alone carry 22 trillion

messages per year.

Moving to messaging & bots has benefits beyond

better consumer interaction points.

The Consume Shift to Messaging Has Happened

Operations are simpler, as consumers get their issues resolved throughout the day, rather

than in one extended interaction.

800

300

0

600

700

500

400

100

200

6AM 8AM 10AM 12PM 2PM 4PM 6PM 8PM 10PM

Voice

Messaging

Savings from flattening

the peak time “rush”,

when consumers cram

interactions into

lunch breaks

In the Contact Center, Messaging Flattens Staffing & Lowers Costs

26

Extract Other Key Information From a Question

“I’m frustrated, I haven’t been able to login into your internet banking system.”

28

* Leverages Watson Tone Analyzer

Intent Password Reset

Entities Internet Banking System

Emotional Tone Anger*

Context Joseph Tan, 47, Gold Member, High Value

Context Mobile

Take Action: Responses Come in Different Forms

29

I want to update my address.

Someone has stolen my credit card.

Where is the nearest branch/ATM ?

I need to pay my outstanding bill.

Can you provide me details on insurance

covered on my card?

I want to cancel my credit card.

I am married recently and need add-on card.

Question Answer

Dialog

Deflect

Map

App Nav.

Info Retrieval

Next Best Action Present customer retention offer

Next Best Action Present a cross-sell / upsell offer

Guide the user through a set of steps

Transfer to human agent

Application launches map with direction

Bring user to pay bill screen

Bring back an answer

Digital Personas Must Be Able To…

30

Conduct

conversations

Personalize every

interaction

Provide

assurance

• Interact in natural

language

• Communicate via text

and/or voice

• Answer questions with

confidence

• Seamlessly handle

processes and

transactions

• Possess context

• Offer insight-driven

recommendations

• Learn and adapt

From First Call to First Contact Resolution

From:

To:

SELF-SERVICE LEVEL 1 LIVE AGENTS

LEVEL 2 LIVE

AGENTSSELF-SERVICE LEVEL 1 LIVE AGENTS

LEVEL 2 LIVE

AGENTS

FIRST CALL RESOLUTION

- Self-service solutions unable to resolve calls

- Customers want to be passed to Live Agents quickly

FIRST CONTACT RESOLUTION

- Watson offers better user experience

- Able to resolve calls through integrated actions

Demo

32

2

Now Let’s meet EVA, Open Bank’s Front End Agent, Day In and Day out Delighting Customers

“I wish I was more confident in addressing

customers concerns and knowing where to

look internally for the answer”

Call Center Agent

EVA

EVA’s Scenario:

• Since lot of the customers prefer in-person contact, Eva has to deal with a wide range of

customers all day

• She struggles with navigating the internal technological systems and there is so much

of information on products and policies, which is hard to remember.

• She offer same campaign or offer to everyone, because it is easy to manage this way

• She wishes she could pay more attention on customer preferences to try to up-sell to earn

some extra incentive, but there is always a new issue that she doesn’t know how to

handle

• Her common questions to her manager, “How do I handle a customer who’s angry about

an annual fee?” “Which credit card would be best suited for my customer based on their

personality traits?” “ What products are my customers buying?” “How does my customer

respond to Open Bank’s marketing campaigns and offers”

Chat bot to help response to customer queries at the time of Digital Onboarding

Digital Virtual Assistant






Productivity

Contact Center



Cognitive

Digital

Data





Risk Management

FOUNDATION

Servicing


Trade Finance Market Drivers

Global DemandNo one bank can manage all global demand

Every Geographic Region has a bank facing the challenges of processing Trade Finance deals efficiently and effectively

Manual Processing It is not uncommon for the Banks to have hundreds or thousands of people manually processing thousands of trade documents associated with each deal

Examples:

A large bank in AP has 3,500 people manually processing trade documents

A large bank in Europe has 800 people manually processing trade documents

Customer OpportunityWith Billions spent, any increase in efficiency can produce a competitive advantage and HUGE savings to the Bank

Banks with a more efficient processes (especially earlier adopters) for managing Trade Finance have a capability to market to the field, driving NEW business

Every day in banking institutions around the globe, Trade Financeorganizations struggle to process the associated paperwork with a trade.

As the world becomes smaller and international trade increases, the problem

becomes greater. These organizations hire and train more knowledge workersto address the increase workload - a solution that doesn’t scale long term tomeet the market demand.

There has to be a smarter solution.

The Opportunity: Inefficiency in Trade Finance Departments

Legend

Letter of Credit

Trade Finance Documents Aren’t Structured

Certificate

of Origin

Airway

Bill

Import

ScheduleExport

Schedule

CommercialInvoice/ Draft

Cargo

Receipt

Loan

ApplicationInsurance

Policy

PO /

Draft

Packing

List

Damaged Goods?

Insurance Claims

Exporter

Exporter Bank

Importer

Importer Bank

Bill of

Lading

Customs

Good Carriers

Customs Importer Warehouse

Standard Documents

Enhanced Documents

Payment

Insurance

Policy

Inspection

Certificate

Trade Documents Insurance Co.

CMR

Document

Trade Document Handling – Cognitive Trade Finance

▪ Content Capture

▪ Content

Management

Capture Classify Extract Enrich Annotate Validate

▪ Documents

▪ Letter of Credit

▪ Forwarder’s Cargo

Receipt

▪ Draft

▪ Insurance

Document

▪ Reference Letter

▪ Customer Letter

▪ Invoice

▪ Packing List

▪ LC Number

▪ Amount

▪ Partial Shipment

Supported

▪ Port of

Loading(PoL)/Disc

harge(PoD)

▪ Tenor

▪ Applicant

▪ Shipper

▪ Description of

Goods

▪ List of Document

▪ Additional

Conditions

▪ Description of

Goods

▪ List of Document

▪ Additional

Conditions

▪ Rules Application

▪ Visualization

▪ Comparison

▪ Annotation

▪ Rules Application

▪ Visualization

▪ Comparison

▪ Annotation

10 May 2018

IBM Financial Services Innovation

NGUYEN MANH KHANGBig Data ArchitectIBM Analytics