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IBM Announces Availability of Finance Industry's First End-To-End Relationship Marketing Solution

Banks Ranging from KeyCorp to First National Bank North Dakota are Gaining Enterprise View of Customers, Increasing Profitability

New Orleans, LA - 22 Feb 1999: . . . IBM today announced availability of the finance industry's first complete relationship marketing solution that allows small community banks through large global financial institutions to better understand customers, tailor their marketing strategies and thus, increase profitability while reducing costs.

DecisionEdge for Relationship Marketing, Finance, enables companies to change their business model to focus on the best long-term interests of the customer rather than on their individual product lines. A complete business intelligence (BI) solution that combines hardware, software, consulting and services, DecisionEdge allows banks to analyze customer behavior and use this knowledge to assess the risk of losing a customer; classify customers with seemingly unrelated characteristics into segments; predict demand for products and services and the channels through which they should be delivered; and manage marketing campaigns.

IBM developed the DecisionEdge solution by working with early customers including KeyCorp, First National Bank North Dakota, Peoples Bank & Trust in Indianapolis, and Santa Barbara Bank & Trust.

KeyCorp, the first nationwide retail bank, uses DecisionEdge to streamline its product lines to more accurately reflect consumer demand and leverage information on its seven million customers for cross-selling opportunities via each of its delivery channels. These include voice response units, direct mail, telesales, Internet, tellers and relationship managers.

At each point of contact with the customer, DecisionEdge will recommend specific marketing messages based on an understanding of the customer's relationship with the bank. For example, KeyCorp marketed its check overdraft protection via its voice response system to its checking customers who are among the four million monthly callers to its 1-800-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, 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 ten percent on our direct mail campaigns, up from one to two percent.

"We achieved full return on our investment in just 14 months after installing the data warehouse component of the DecisionEdge solution," Boylan added.

"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. "Taking a page from the retail industry book, they're changing their product mix based on the needs of customers in different geographies. They are evaluating sales and costs, and finding niche markets."

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. 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," says Michael Winkel, Chief Financial Officer, First National Bank North Dakota. "We want to deliver the best elements of large banking organizations coupled with hometown service."

Based in Indianapolis with $600 million in assets, the 12-branch Peoples Bank & Trust Company uses DecisionEdge in offering its customers individualized products and services.

For instance, DecisionEdge can identify when a CD (certificate of deposit) of one of its most valuable customers is about to mature and then offers the customer a new promotion with a higher-interest money market account. The system triggers a direct marketing effort, initiating a personalized letter or a call from the branch sales manager. Results are tracked daily by DecisionEdge at the bank, branch and sales officer level. In a recent promotion of this type, the bank achieved 135 percent of its sales goal.

"Our BI system evaluates margins to determine if the type of business we're bringing in today is profitable," said Bob Connors, senior vice president, information services, Peoples Bank & Trust Company. "One of our primary goals is to identify customers we serve well and offer them a level of value and expertise that sets us apart from the competition."

A new customer, Santa Barbara Bank and Trust with $1.6 billion dollars in assets, will 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.

"We need to identify our most profitable customers," said Scott Matthew, assistant vice president, enterprise systems manager at Santa Barbara Bank & Trust. "DecisionEdge will give us the ability to determine which of our good customers might leave so we can take the steps necessary to retain them, improve customer service for all our customers, and assist our managers in making better business decisions."

DecisionEdge is built on open standards so it can be used with a variety of third-party analysis tools.

BI is the gathering, managing, analysis of data. The data is transformed into information which can be distributed throughout an enterprise to drive strategic decisions.

For more information about this solution, visit IBM's business intelligence Web site at http://www.ibm.com/bi.

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Contact(s) information

Nadine Taylor
IBM
914-766-3641
ntaylor@us.ibm.com

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