Horget CRM. Its an overused, underwhelming notion that wide-ranging information on customers is a springboard to cross sellinghardly an earth-shattering idea, nor one thats new to retail banking. But what if, for arguments sake, it wasnt the notion that was all wrong, but the way technology has been used to support it? Hence the growing interest in business intelligence technology.
The problem with most CRM projects is that usable data is limited to one system, a rather large problem given that institutions are a tangled mass of various systemstransaction, customer analytics, marketing customer information, financial, human resource and credit risk systems. Business intelligence technology sits on top of banks various systems, letting them access data from each to analyze and share internally with employees and externally with customers and business associates.
An [insurer] may want to see how an agent performs in a certain territory against agents in other territories. An HR manager might want to know how many people left the company in a given month and the cost of lost potential. A broker may replace a monthly status report with electronic access, says Andy Hirst, director of worldwide financial marketing for Business Objects, which provides business intelligence software to nearly 90 percent of the Fortune 100 companies.
Advocates of business intelligence argue that analysis derived from the technology leads to better resolution of business issues such as customer profitability, product performance, campaign management, employee productivity and labor cost assessments. And its making believers out of some of the industrys most complicated IT shops. Among them are Citibank, Bank of America, Mellon, Morgan Stanley and ABN Amro.
Its no surprise. A number of dramatic influences are lining up to make 2002 the Year of Business Intelligence, such as notable improvements in the accuracy and performance of the software used to accumulate and analyze data and a crowded field of vendors jockeying for position.
Thats driving down costs to just north of $10,000 for a business intelligence suite; a couple of years ago the same technology could cost up to $500,000. As these costs go down, overall spending on business intelligence software is expanding at a pace that will take it to nearly $30 billion in 2006 from $17 billion in 2001, according to Gartner. This is something that any organization large enough to have their own IT departmentsomeone who spends more than $1 million per year on technologyis going to be interested in, says Joe Guerra, manager of the business intelligence unit at Andrews Consulting. The cost of setting up a separate computer and storing a massive amount of information has gone down sharply.
When a consumer conducts a transaction such as a deposit, withdrawal or transfer, the information is stored in one data location, while information not normally connected with the transaction such as customer demographics, credit and information on other transactions and relationships is stored elsewhere. Financial firms wishing to access all of that data in one location need to relocate it to a separate location, a process thats long been a cumbersome and expensive proposition.
The reduction of that expense plays right into the hands of marketing departments looking to squeeze maximum profits out of the most profitable accounts. It also benefits IT units with the contradictory missions of upgrading while slashing dollars from the budget. Financial people just love to be able to analyze data, whether its for cross selling additional products, offering a line of credit, or approving a customers request for a loan, says Dave Andrews, founder of Andrews consulting and co-author of Revolutionizing IT: The Art of Using Information Technology.
The lineup of business intelligence adopters are as varied as the uses. The Principal Financial Group, for example, uses business intelligence to create an extranet for its corporate customers to improve control of their medical benefits. T. Rowe Price is using the technology to analyze performance of 401(k) accounts. The firm runs reports on six fund options, focusing on how employees with various plans change their investments and how they perform. Morgan Stanley uses it in its high-net-worth division, cross referencing activity in individual accounts with that of family members to get a more thorough view of each account.
One thing is clear: intelligence buys are on the rise. Whether that favorably affects business firmwide has yet to be determined.





