Bank Product Development: Cross Selling to John Smith

“Who is John Smith?”

Most large banks have done a great job over the past several years getting their vast amounts of customer information organized.  There was a time when every bank system had its own unique customer records.  This made it impossible for banks to understand how many customers they had, who they were and what additional products and services to market to them.  The customer John Smith was “J Smith” in one system, “J R Smith” in another, “Jon Smith” in another and so on through perhaps 10 or more systems, not to mention the different permutations that likely existed for his address and other pertinent details.

Simple questions like the following were simply not easy to address in this environment.

• “How many customers do we have?”
• “Who are our most profitable customers?”
• “What does it cost us to serve John Smith?”
• “Which of our products/services has John Smith purchased?”
• “What was the most recent offer we made to John Smith?”

Banks realized the significant strategic and tactical value of building a single, comprehensive, enterprise-wide view of all their customers. Customer Information Files (CIF) were created for shared access to customer data.  Now many banks are employing data warehouses and Master Data Management (MDM) disciplines.

Why have banks spent so much time and money in pursuit of a “single view of the customer”?

The driving factors have been many, but they fall into two broad categories: regulatory compliance and marketing (which includes cross-selling, relationship pricing, and life-event based marketing).  None of these are possible without a single view of the customer.  On the regulatory front Know Your Customer (KYC) rules require banks to verify the identity of the customers with whom they are doing business and maintain records confirming this.  According to McKinsey in the late 1990’s as much as 40% of bank IT budgets were spent on customer information management¹.

Cross-Selling to John Smith (with Attractive Relationship Pricing)

Once financial services organizations have a single, comprehensive view of their customers, they can aim to leverage it with cost-effective revenue growth and customer-retention strategies by cross-selling products and services to all their “John Smiths”.  This single view of the customer should enable attractive pricing that reflects the overall value of John’s relationship with the bank.

How important is cross-selling?  A simple glance through the agenda for the upcoming BAI Retail Delivery Conference demonstrates that cross-selling is a hot topic as it is included in numerous sessions.

The next question becomes “what should we offer John?”  What products/services do we have that best match John’s needs?

• “How many products do we have?”
• “Which are our most profitable products?”
• “How much would it cost to deliver this product/service to John Smith?”
• “What is the right price for this product/service for John Smith?”

Do these questions sound familiar?  These are exactly the types of questions banks were asking about their customers back in the 1990’s or even early 2000’s.  And like those customer questions at that time, the answers to these questions are not readily available.  Information is scattered across multiple individual systems.  Each line of business system has its own store of product information.  Often each customer-facing system has its own copy of product data making it difficult to match customers with the right products and services.  Some of this information may even be isolated in hundreds of individual spreadsheet files stored in multiple hard drives across the enterprise.  To effectively cross-sell, relationship-price and bundle products and services together, banks are required to not just have a single view of their customer, but a similar enterprise-wide view of products and services is required.

Compelling Offer = Customer Intelligence + Product Agility

Product Agility is being able to effectively respond to the product questions listed above enabling the creation of compelling stand-alone and bundled offers of products and services priced appropriately given the overall value of the customer relationship.  Without this agility even the most sophisticated centralized single view of the customer will only be providing banks with a portion of the value they can offer their customers.

If you would like to learn more about product agility and how it can help you centralize product information needed for the development of compelling offers for your customers,  please visit www.camilion.com to download the white paper Surviving and Thriving with Enterprise Product Agility

If you are attending the upcoming BAI Retail Delivery Conference and would like to discuss these topics further, please contact Allan Neil at 905-482-3450 ext. 2417.

"Information is scattered across multiple individual systems. Each line of business system has its own store of product information. Often each customer-facing system has its own copy of product data making it difficult to match customers with the right products and services."