Analytics’ payoff is innovation

Economic and technological cycles are an unavoidable part of banking. Some banks become victims of ever-changing market conditions, while others emerge even stronger from turbulence.

What makes the difference? Innovation.

Those banks that will thrive are those that are open to new technologies, new products, and new ways to address both top and bottom line pressures by adapting new strategies, business models, and technologies. Embracing change and innovation is a choice.

The choice to adapt and implement an advanced analytics program within the bank is something many bank leaders have considered. Some may perceive this new technology as just the latest buzz or trend.

I submit that that’s not the case for advanced analytics. When data becomes actionable, and leads to meaningful results, that is what bankers term, “the view from the summit.”

Beyond greater marketing ROI and better cross-selling, the untapped potential an advanced analytics program can bring to the bank happens with internal change and innovation. Advanced analytics must be applied to realize the bank’s investment in it. A program that’s woven into the fabric of the bank’s strategic planning, compensation structure, goal setting, and workplace culture will help drive improvement.

Having explained the thinking behind analytics in Part 1 and given key definitions to understanding analytics in Part 2, I’ll close this series with some practical application.

Can community banks reap benefits?

As I wrap up this three-part series, you may be asking, can you really make advanced analytics part of your bank’s culture and business model?

Absolutely! As you start the process, consider these three ways advanced analytics can help your bank achieve innovation:

1. Performance innovation: Advanced analytics programs can positively impact performance within the bank. As analytics identify best practices, management can continue to refine and repeat what works. The program helps the bank create statistically derived formulas for applying best actions and segmenting the customer base to take advantage of the greatest opportunities.

2. Cultural innovation: Management can distribute targeted lists of opportunities to personnel—branch and relationship managers, and loan officers. The bank will soon recognize the best performers, and use their behaviors to improve the performance of other employees. In this way, the right analytics program can deliver continuous improvement of franchise value and also enhance customer service.

3. Goal-achieving innovation: Once advanced analytics is integrated into employee score cards and incentive plans, your bank can build top-performing sales teams. Reaching goals becomes easier because the bank now has a way to accurately target the right products, to the right customers, at the right time.

In short, the data-driven bank becomes empowered to reach an impactful ROI and distinct competitive advantage.

About the author

Steven Simpson is senior vice-president—financial institutions at Saggezza—a global solutions provider that develops and implements leading analytics products. He can be reached at [email protected] or at 786-859-4100.

Part 1 of this series: 5 key questions on advanced analytics—answered

Part 2 of this series: 12 key definitions in advanced analytics

Also see “Dawn of the data-driven bank,” which discusses the experiences of two banks with advanced analytics