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© 2008 IBM Corporation
The Customer Centricity Imperative:Optimizing Customer Care and Insight in Financial Services for Growth and Efficiency
Bob Palmer
Global Financial Services Executive
Information Management and Information On Demand
IBM Software Group
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© 2008 IBM Corporation
Agenda
Financial Services Trends and Challenges Demand a Customer Centric Approach
What Analysts and Companies Are Saying
The Customer Centricity Business Problem
Why Many Customer Initiatives Fail to Deliver the Value Expected
The Four Building Blocks of Customer Care and Insight
Innovate with Information to Optimize CC&I
Customer Care and Insight Critical Success Factors
Case Example - A World Leading Bank
IBM Banking Customer Care and Insight Framework
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© 2008 IBM Corporation
Industry Trends and Challenges
Trend Challenge
Market Disruptions
Manage cost without losing
competitiveness
Differentiate Product Commoditization
Risk and Compliance
Optimize risk and compliance processes
Empowered Customer
Offer right mix of products and
services
Consolidation & Globalization
Achieve value and synergies from
mergers
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© 2008 IBM Corporation
CRM Imperatives: The Game is Changing
Business Imperatives*Business Imperatives*Streamline application infrastructure for efficiency and reusability
Integrate enterprise information for ready access to lines of business
Simplify network infrastructure and administration
Achieve differentiation and profitability through improved customer experience and innovative offerings
Gain competitiveness through improved efficiency and optimized processes
Balance risk, security and compliance
Technology Imperatives*Technology Imperatives*
*Sources: Analyst reports and IBM Institute for Business Value
“Having long rested on a foundation of trust, traditional products, and resilience, financial services institutions are being awakened by tectonic forces altering the industry landscape.”
Source: Guillermo Kopp, TowerGroup 2007
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© 2008 IBM Corporation
The Empowered Customer
“During the past decade, consumer needs have changed significantly, but the financial services industry has not evolved to meet these needs. This is why most financial services firms do so poorly in our customer advocacy rankings.”
Bruce Temkin, Forrester Research
There is a industry transformation around today’s empowered customer that represents a significant challenge, yet a growing opportunity for organizations that succeed in delivering the value and choice that financial consumers demand.
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© 2008 IBM Corporation
Customer Centricity Imperatives Demand an Enterprise Approach
ObjectiveImperativesBusiness Area
Be customer centered to grow profitable
revenue
Enable a valued customer experience in order to create customer advocates
Develop a single view of the customer relationship and deliver targeted relevant offerings
Turn service issues into sales opportunities to maximize cross-sell opportunities
Deliver consistent service across all channels to capture sales opportunities and reduce customer attrition
Marketing, Sales, Customer Service & Compliance
Gain competitiveness via continuously
improved efficiency
Respond to new business models and opportunity
Differentiate offerings in the marketplace
Achieve optimal cost/income ratios
Simplify operational environment
Product and Operations
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© 2008 IBM Corporation
What Analysts are Saying
“FSI’s that wish to grow and prosper are rebalancing their strategic objectives and bringing customers back into a position of primacy. Satisfying customers is as important as driving operational efficiency and minimizing risk.”
Guillermo Kopp, TowerGroup
“During the past decade, consumer needs have changed significantly, but the financial services industry has not evolved to meet these needs. This is why most financial services firms do so poorly in our customer advocacy rankings.”
Bruce Temkin, Forrester
“Institutions around the world are trying to improve their abilities to manage their businesses and their customers with one hand tied behind their back. In many cases, both the business information that is the cornerstone of effective management and the customer data that is the cornerstone of any relationship-building approach are still locked inside multiple back-end systems and datamarts.” Jim Eckenrode, TowerGroup
“Move away from balkanized data that is unavailable to users in other functions or business units. A single piece of data can provide value to many users. (Organizations)…need a single version of the truth, and an integrated customer profile can help provide it.” Kathleen Kirallah, TowerGroup
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© 2008 IBM Corporation
What The Industry Is Saying
“We are challenged with the complexity of cultivating millions of individual customer relationships across multiple channels with increasing volumes of data.” Matt Harris, Head of CRM, Barclays Bank
“Our goal was to gain a ‘360-degree’ view of the customer, which we saw as the foundation for a better customer experience and a way for us to be more proactive in meeting their needs.”
Todd Okuley, Director, Nationwide Insurance
“We want to deepen existing and future customer relationships with differentiated capabilities to exceed customer expectations and grow market share.” CEO, WW Top 10 FSI
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© 2008 IBM Corporation
Balancing Efficiency and Growth is Critical
Too much focus on cost
reduction /containment…
Can lead to poor customer
experience and limited revenue
While too much focus
on revenue…
Can ruin the customer experience
and hinder cost reduction
opportunities
Too much focus on customer
experience…
Can hinder cost reduction and revenue
growth
We must find the right balance…
or optimally, maximize all three?
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© 2008 IBM Corporation
Common Landscape in Financial Services Hinders Optimized CustomerCentricity
Inconsistent View of CustomerSilos of Information
Information Locked in RepositoriesInconsistent Data
No Single Version of the TruthPoor Channel Communication
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© 2008 IBM Corporation
Why Many Customer Initiatives Fail to Deliver Expected Value
CRM Application Software as Panacea
No True Enterprise View of the Customer
Poor Data Quality Processes
Poor Channel Integration
Poor Business Process Optimization
Lack of Proper Information Infrastructure
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© 2008 IBM Corporation
CC&I is focusing on front office, customer oriented business problems across marketing, sales, service and compliance.
Customer Centricity Requires Effective Customer Care and Insight
Customer oriented, information driven processes related to marketing, selling or servicing customers in financial services.
Examples include:LOB and enterprise marketing processes Sales processes at all touch points including
branch, agent, ATM, kiosk, web, and call center. Customer Service processes through all
channels including branch, agent, claims, call center, web chat, and web self service.Compliance processes such as Know Your
Customer and AML.Process truncation and optimization
Customer oriented business intelligence and analytics that provide fact based input to drive intelligent business decisions
Examples include:
Market analysis
Customer segmentation
Customer profitability
Channel usage, preference and profitability
Product profitability and design
Business Performance Management
What is Insight?What is Customer Care?
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© 2008 IBM Corporation
Four Building Blocks of Customer Care and InsightCase
Management
Event Based Decisioning
Disputes
Contact Center OptimizationMarketing
CommunicationCampaign
Management
Customer Segmentation and
Profitability
Cross-sell Up-sell Customer Onboarding
Dynamic Product BundlingLending
Optimization
Know Your Customer
Customer Preferences
Supports Key Initiatives
Information Foundation Master Data ManagementCustomer Data IntegrationService Oriented Architecture
Data and Process ModelsData WarehousingInformation Integration
Data QualityHouseholding3rd Party Data
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Customer Analytics Search and Discovery Analytics Threat and Fraud IntelligenceBusiness Insight•Segmentation•Customer Profitability•Predictive Analytics•Channel Preference
•Branch Performance•Financials•Product Profitability•Planning
•Entity Analytics•Name Recognition
•Analyze Free Form Notes•Monitor Service Levels•Churn Detection•Legal Discovery
Insight
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Sales Processes
Marketing Processes Service Processes
Compliance Processes
Enterprise BPMContent ManagementBusiness Applications
Enterprise BPMContent ManagementBusiness Applications
Enterprise BPMContent ManagementBusiness Applications
Enterprise BPMContent ManagementBusiness Applications
Business Processes
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Channel Integration4
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© 2008 IBM Corporation
Organizations Must Create an Information AgendaAn approach for unlocking the business value of information
Creating a vision to guide decisions & help the
organization determine how to best support business goals
StrategyIdentifying the technology
components & capabilities to establish a common
information framework
Information Infrastructure
Establishing a plan for executing discrete projects
to realize short and long-term returns on investment
Roadmap
Implementing policies & practices for managing,
using, improving & protecting organizational information
Information Governance
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© 2008 IBM Corporation
Innovate with Information to Optimize Customer Care and Insight
CustomerSecurity
Storage
AnalysisData
Quality
Access
GovernanceMaster Data Management
Integration
InformationCapabilities
CapabilitiesBPM
CustomerAnalytics
Sales & ChannelManagement
Service
ProductManagement
CampaignManagement
MarketingAnalytics
SelfService
Core
Analyze Demographics, Channel Usage, Profitability, and Buying Patterns
Perform risk analysis and business performance reporting with accurate trustworthy information
Create Personalized Products and Services with Dynamic Pricing
Perform Segmentation, Personalization, Channel Effectiveness and Propensity to Buy Analysis
Manage multistage, multi-channel campaigns with accurate and timely customer information
Use BPM and ECV to optimize sales and distribution
Leverage real time view of customer relationship and channel integration to provide exceptional service
CustomerLifecycle
Deliver multi-channel, real time client information to self service channels
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© 2008 IBM CorporationIBM Internal Only
Effective Customer Care and Insight Delivers Clear Business Value
Increase revenue and customer retentionIdentify the most valuable customers to provide differentiated
serviceLeverage cross-sell and up-sell opportunities
Cost reduction and operational efficiencyIntroduce new products and reduce time to marketStreamline and automate business processes for greater
efficiency
Increase flexibility to support existing and new business strategy
Meet the dynamic requirements of the business with customer care and insight solutions rooted in SOA
Support new strategic initiatives with an integrated information framework
Meet compliance requirements and reduce risk exposureA complete understanding of customers and prospects
increases compliance visibilityProactively uncover and action fraud risk
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© 2008 IBM Corporation
Critical Success Factors for Customer Care and Insight
Successful organizations break down silos of information and use an enterprise wide approach to customer information and insight.
There must be a commitment from senior executives that information is an enterprise asset and that insight has a central role in decision making processes.
A single, accurate, accessible enterprise customer view is essential to the success of any organization that wants to differentiate on customer centricity .
An enterprise commitment to data governance and data stewardship must be made early for success of any major CRM initiative, with particular attention paid to data quality.
Management of content centric processes - their truncation, automation and optimization will be a key success factor in improving operational efficiency and customer satisfaction.
Business intelligence and customer insight must be more than a look back-it must also be applied in real time, in-process and at the point of customer interaction for maximum effectiveness.
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© 2008 IBM Corporation
Top 10 WW Bank Achieves Efficiency AND Enterprise Customer View
Create enterprise customer view
Increase cross sell and up sell
Consolidate redundant customer systems and improve data access
Bank Strategy
Current customer information infrastructure was duplicative and costlyData synchronization between systems and customer data stores complexHigh CPU and maintenance costs of multiple systemsInitial initiative to replace CIF’s with CRM application MDM not viable solution
Business Problem
Implemented IBM customer data hub with services orientationEstablished SOA/ Component Model Architecture Integrated CIF information to hub in phasesWill replace additional CIF’s from acquisitions in phases
Solution
Bank Objectives
Become a more customer focused bank
Assimilate acquisitions and drive organic growth
Rationalize infrastructure and reduce costs
Business Outcomes
Effective enterprise view$50+ million in annual cost of ownership savings - infrastructure and FTE60% improvement in efficiency and 40% infrastructure workload improvementImprovement in customer centricity greatly improved but not yet measured
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© 2008 IBM Corporation
IBM Banking Customer Care and Insight Framework
What is an IBM Framework?
It is a recommended set of prescriptive industry
solutions, services and roadmaps that address
specific business problems. They are composed
of: IBM software, industry data and process
models, pre-integrated accelerators, partner
applications, reference SOA architecture, and IBM
services.
The IBM Banking CC&I Framework helps organizations apply products and services from IBM
and its partners together as a synergistic whole to address customer oriented business
problems.
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© 2008 IBM Corporation
IBM Banking Customer Care and Insight Framework Key Components
Information Foundation Info Sphere MDM ServerWebSphere Business FabricWebSphere Process Server
InfoSphere Warehouse Rational Data ModelerTivoli Access Manager
Customer Analytics Search and Discovery Analytics Threat and Fraud IntelligenceBusiness Insight
IBM CognosPartner Apps
IBM Entity Analytic SolutionsIBM Global Name Recognition
Insight
Sales Processes
Marketing Processes Service Processes
Compliance Processes
IBM ECM with FileNetBPM Lotus FormsPartner Applications
Component Business Services
Business ProcessesChannel Integration
IBM Industry ModelsIBM Information ServerIBM ECM with FileNet
IBM Cognos IBM OmniFind AnalyticsIBM OmniFind Discovery
IBM Global Business Services
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IBM ECM with FileNetBPM Lotus FormsPartner Applications
Component Business Services
IBM ECM with FileNetBPM Lotus FormsPartner Applications
Component Business Services
IBM ECM with FileNetBPM Lotus FormsPartner Applications
Component Business Services