ase Study: Standard Chartered’s CRM

Banking on customer relations

Standard Chartered Bank was looking for a tool that would help it analyze the huge volumes
of data captured by its OLTP systems. The objective was to analyze new business
opportunities, provide better customer service, and boost profitability. by Soutiman Das
Gupta

Standard Chartered Bank (SCB) previously used OnLine Transaction Processing (OLTP)
system, which facilitated and managed transaction-oriented applications. "The system was
reliable but provided little scope for in-depth customer analysis, which is the key to survive
in the fiercely competitive financial marketplace. It answered the financial queries and
generated reports at a broad portfolio level, which included total earnings, debt situation,
interest income, cost, fee income, and profits," said Sedjwick John Joseph, Head-Business
Intelligence Unit, SCB.
In a nutshell

The bank realized that it needed to go a step further and • The company
deploy a solution which it can use to analyze the huge Standard Chartered Bank has
over 2.2 million retail
volumes of data captured by its OLTP systems. The idea was customers and over 1.3
to search for crucial nuggets of information from the vast million credit card customers
nationwide. Its products and
amounts of transactional data at its disposal to get the right
services include cash
information, to the right executive and at the right time. This management, custody,
information can help a bank take critical business decisions in lending, foreign exchange,
interest rate management,
the dog-eat-dog financial world.
and debt capital markets.
• The need
The bank's IT team looked at the business requirement in The bank needed to manage
detail and deduced that the organization needed a data and analyze the huge
volumes of data captured by
warehousing and analytical solution that would help analyze its OLTP systems. It had to
customer data to enable fact-based decision making in areas get the right information, to
ranging from acquisition and risk management to cross- the right people, at the right
time, in order to carry out a
selling and portfolio management. After evaluating a number number of critical business
of vendor offerings, SCB decided to use a suite of products activities and provide
from SAS. It went for the SAS Customizable CRM Solutions excellent customer service.
(See box: The solution up close). • The solution
SCB decided to go for SAS
Customizable CRM Solutions
Varied services to address its business
needs.
A better way to understand the bank's need would be to
understand its customer base and the varied services it
provides. • The benefits
The bank can now exploit
changing and widening
SCB has over 2.2 million retail customers and over 1.3 million markets; implement a
customer-centric approach;
credit card customers nationwide. It claims to be the first to concentrate on financial
launch initiatives like a Global Credit Card and a Photocard in budgeting, cost control, and
India. Its products and services include cash management, risk management; and figure
out new ways to minimize
custody, lending, foreign exchange, interest rate costs, while increasing
management, and debt capital markets for corporates. And profitability and shareholder
credit cards, personal loans, mortgages, deposit taking value.
activity, wealth management services to individuals and
medium-sized businesses, and mutual funds to retail customers.
"Our customer base has grown three-fold in the last three years. Such a fervent pace
needed to be supported by efficient management of the huge volumes of data generated
and captured at each touch-point. After all it is absolutely essential to keep up the bank's
unchallenged reputation of efficiency," said Sedjwick.

Defining benefits
The bank's vision was to champion fact-based strategic business decisions using best-in-
class analytics. The objective was to enhance the organization's competitive advantage and
boost profits. The bank was looking forward to the following broad benefits:

• The ability to exploit changing and widening markets.

• The ability to implement a customer-centric approach focused on optimizing the
lifetime value of the customer.
• The ability to concentrate on financial budgeting, cost control, and risk management.
• To look for new ways to minimize costs, while increasing profitability and shareholder
value by effectively managing consumer relationships.

Solution needs
It was clear that in order to achieve the desired benefits, the bank had to implement a data
warehouse and analytical solution. Sedjwick said, "We wanted a solution that can perform
analytics on the valuable customer data to answer queries across divisions. The answers
would then enable us to proactively service customers and thereby ensure customer loyalty
and retention. This exercise is a must for survival in a fiercely competitive environment."

He continues, "Any bank today cannot ignore the risk:reward equation. Calculating it is a
complex and challenging task that all bankers have to accomplish. It's the process of
applying a variety of scoring techniques across product lines to arrive at the probable risk
associated with each product sale and the possible rewards. Examples of products are credit
cards, auto loans, and personal loans. We wanted the solution to leverage information on
customer profiles and segments and enable us to spread our risks based on empirical data
analysis."

"We also wanted the solution to be scalable. This was crucial as the solutions would be very
critical to our business, and the volumes of data kept increasing exponentially."

Evaluation
The bank created a team of 25 people in Bangalore and called it a Business Intelligence
Unit. This unit was responsible for deriving and implementing strategies to analyze and
exploit customer data.

"The company evaluated a number of solutions from Brio, Cognos, Business Objects, and
SAS. SAS was chosen as the preferred solution partner and SCB today relies on SAS
solutions across Asia for its customer analytics," said Sedjwick.

The SAS solutions reside on an IBM RS/6000 server running the AIX operating system. The
SAS software accesses and integrates data from multiple sources and disparate systems
across the enterprise. This data is then used for a variety of analyses by the Business
Intelligence Unit and is disseminated to all information consumers across the bank. The
information consumers include sales managers, finance resources, credit resources, product
heads and managers, and the head of consumer banking via the SCB Intranet. "As a result,
analytics provide a key competitive edge and are used seamlessly for empowering business
manager in their goals," said Sedjwick.

Analytics' benefit
The solution has helped the bank effectively manage and optimize profitability of all the
products that constitute its retail portfolio.

Sedjwick said, "SAS's solutions forms a central part of the bank's CRM strategy. It is easier
for us to run targeted campaigns and elicit substantially higher returns since we perform
profit modeling for each account. This also enables micro-segmentation. Using analytics, and
a test and learn culture we know the likelihood of customers to take a new product. We now
know which card member is more likely to take an auto loan. This has resulted in more
focused marketing campaigns and reduced costs with improved customer satisfaction."

The organization's marketing team is now empowered with information to increase cross
holding, and can target its most valuable customers (not accounts within a product line) and
also help in the next best product strategy for a customer.

New products
With the help of the Business Intelligence (BI) solutions, SCB was able to successfully
launch DIVA. DIVA is a specially designed women's international credit card targeted at the
Indian woman and bundled with several features. It includes discounts and zero interest
rates on categories like jewellery, cosmetics, apparel, consumer durables, leather products,
and mobile phones.

"This was possible due to an in-depth analysis of our customer data provided by the BI
solutions. We realized that a significant proportion of our business came from the upwardly
mobile Indian woman and was likely to grow substantially from this section in the coming
months. This gave us an impetus to launch a product which catered to the needs of this
segment and consolidate our position in the mind of the customer," said Sedjwick.

The bank also launched the aXcess plus savings account. Customers who have this account
can access cash at over 1800 ATMs worldwide through the Visa network. Besides, they can
use this account to shop for goods and services at over 25,000 outlets in India and at 10
million outlets worldwide. "This strategy was validated and facilitated by the information
provided to us by the BI unit. We realized that by using this technique we could provide
more value to our savings account customers and help increase customer loyalty," declared
Sedjwick.

Other benefits
"We are successfully able to calculate our risk:reward equation," said Sedjwick. SCB uses
SAS for scoring virtually all its products in the asset portfolio ranging from its 1.3 million
credit card holders to its loan portfolio in excess of $ 860 million. "Information on customer
profiles and segments forms the backbone of product strategy for us. It allows us to tailor
our products across a diversified consumer base, enabling us to spread the risk across a
much wider spectrum," explained Sedjwick.

SAS solutions are also used to carry out simulations that help the bank assess its overall
profitability and balance its exposures across portfolios. The bank can carry out stress tests
on its portfolios and learn about the best case and worst case scenarios. The working of the
SAS library of advanced statistical techniques helps in achieving the results and arriving at
an optimized risk-adjusted capital.

"The solution can scale to handle different sizes of data and takes much less time to analyze
SAS data sets than it takes to analyze a standard relational database," said Sedjwick.

Future plans
In future SCB plans to embark on SAS' data mining technologies for various predictive
modeling and advanced scoring initiatives to strengthen its risk management framework in
the area of retail lending.

"Now that we know our customer well enough to provide effective customer service and
maximize shareholder value, we will keep using information strategically so that it
contributes in providing a cutting edge to our organization," said Sedjwick.

The solution up close

Standard Chartered Bank uses SAS Customizable CRM Solution.

SAS feels that a company has to adopt a truly customer-centric approach to manage its business.
It means that fundamental decisions on strategy and resource allocation must be based on a
detailed and accurate understanding of customers and the overall market. It feels that
customized CRM solutions can provide access to the information you need to come out on top.
The customizable CRM solution can:

• Integrate information from multiple sources, eliminate data errors and redundancies,
tailor data for efficient access and analysis, and reduce the complexity of data
management.
• Anticipate customer expectations and predict customer behavior like, propensity to
purchase, lifetime profitability, and credit risk.
• Allow to cross-sell and up-sell. It can help identify the best candidates for purchasing
particular combinations of products and services, and focus the marketing efforts on a
more receptive audience.
• Combine business rules and analytic models to accurately segment and profile
customers, and construct a personalized strategy for each group.
• Deliver customer intelligence into front office systems to enable smarter customer
interactions through various channels.

• Combine behavioral insights derived from analytics with attitudinal data obtained from
online and offline customer surveys.