IBM Announces Availability of Finance Industry's First End-To-End Relationship Marketing Solution
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IBM has 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. Contact: Nadine Taylor IBM (914) 766-3641/3932, ntaylor@us.ibm.com. Fact Sheet - DecisionEdge for Relationship Marketing, Finance.

Overview:

IBM's DecisionEdge for Relationship Marketing solution includes a comprehensive set of application suites, analytical tools, methodologies, a data warehouse or data mart, industry-specific data model, and consulting and services needed to allow companies in the banking and financial services industry to make better strategic business decisions. It is designed to provide the foundation for an enterprise-wide data warehouse solution with quick-start data marts offering integrated marketing capability.

Focus Areas:

DecisionEdge supports several business application focus areas designed for integrated or stand-alone use. These include:

• Profitability Analysis
• Customer Segmentation
• Marketing Campaign Development and Management
• Customer Acquisition
• Customer Retention
• Cross Selling

Solution Components:

The foundation of DecisionEdge is an IBM BI-ready server.

Banking Data Warehouse for DecisionEdge Data Model -- BDW DE is a subset of the Financial Services Data Model (FSDM) that defines required relationship marketing data elements and provides a means for profiling individual customers. With this information business professionals can analyze customer complaints and customer attrition patterns, identify cross-sell opportunities, and analyze results of marketing campaigns, among other focus areas.
Additional data model components are available for profitability analysis, risk analysis and liability management.

Intelligent Miner for Relationship Marketing -- This end-user application, based on IBM's award-winning Intelligent Miner (IM) uses powerful data mining algorithms to profile customers for cross-selling, loyalty, retention, and acquisition programs.

Visual Warehouse -- An integrated software package for quickly building, managing and analyzing information in data warehouses and data marts of all sizes -- from the departmental data warehouse all the way up to the enterprise-sized data warehouse.

DB2 Universal Database -- The industry's first multimedia, Web-ready relational database management system -- powerful enough to meet the demands of large corporations and flexible enough to serve medium-sized and small businesses. DB2 Universal Database combines power for business intelligence (decision support, data warehousing and data mining) with industry-leading performance and reliability for transaction processing. It delivers on IBM's network computing promise, linking the world's business information with the Internet.

DB2 OLAP Server -- Combines analytical processing engine and application programming interface of Hyperion's Essbase product along with DB2 relational data management family.

Standard Reports -- IBM provides standard reports and OLAP cube views that enable business professionals to quickly and easily obtain information on their business, customers and products as well as profitability to support in-depth marketing and sales analysis.

Consulting and Services -- IBM provides a full range of business intelligence and banking specific services and consulting for business transformation, discovery, installation, integration, implementation, and customization, among others.

Business Partners:

DecisionEdge for Relationship Marketing is built on open standards, enabling customers to integrate a wide range of analytical and data management tools developed by third parties. These include companies such as:

• Exchange Applications' VALEX marketing automation and campaign management software contains a suite of database marketing applications that enable IBM customers to easily create, execute and then analyze highly-targeted direct marketing campaigns. Benefits include increased customer retention, cross-sell and up-sell rates, increased profit-per-customer and higher customer satisfaction.
• Business Objects offers a leading integrated query, reporting and OLAP tool, which enables non-technical users to access, analyze and share data stored in corporate data warehouses, data marts and packaged applications.
• ETI is a leading provider of software to automate data integration management within heterogeneous computing environments. Their EXTRACT tool generates complete data conversions based upon detailed, learned metadata that describes the transformation and demographics of data during the data extraction process. This allows users to extract data from one or more databases or file formats to others regardless of the hardware or software involved.
• Vality Technology is a leading provider of data quality re-engineering software. Vality's INTEGRITY Data Re-engineering Environment™ transforms data, from any source, into high-quality information for populating new target systems -- enabling companies to improve operational efficiencies, enhance customer service and accurately perform relationship marketing and decision support.
• Ferguson Information Systems (FIS) is a firm specializing in data warehousing, as well as an authorized reseller of InfoManager OY's data warehousing solution and IBM's DB2. FIS offers services around the products they sell, including training/education, programming, implementation, installation and consulting.

Architecture:

DecisionEdge uses an open architecture that supports many third-party products.

Pricing:

A smaller bank can purchase a tailored version of DecisionEdge for under $500,000. The full-scale version starts at $1 million.

Availability:

DecisionEdge is currently available.