Understanding the Evolving PrePaid Customer Prepaid Summit ... · Consumer Behavior Deteriorating...
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Understanding the Evolving PrePaid Customer Prepaid Summit : Middle East Prepaid Summit : Middle East March 2015 Ranjit Mukherjee – ADCB Customer Analytics
Transcript of Understanding the Evolving PrePaid Customer Prepaid Summit ... · Consumer Behavior Deteriorating...
Understanding the EvolvingPrePaid Customer
Prepaid Summit : Middle EastMarch 2015
Understanding the EvolvingPrePaid Customer
Prepaid Summit : Middle EastMarch 2015
Ranjit Mukherjee –ADCB Customer Analytics
Slower, more measured growth trajectory going forwardEconomy
Tighter credit standards and limitations on fee incomeRegulations
Extended low interest rate environment
Increased transparency Shrinkageof mainrevenuesources
The Context
Deleveraging - fewer dollars to chase and harder to winConsumer Behavior
Deteriorating trust & erosion of loyalty
Fierce & irrationalCompetition
Re-basing of the retail banking market
Shrinkageof mainrevenuesources
Expectationsshaped by
experiencesoutside of the
banking industry
…expect more
Content, interactions and features arericher delivering an
engagingexperience
Role of banks asfinancial experts is
diminishing
…trust theirpeers
Social media andrise of mobility has
seen customersturn to their peersfor information &
advice
Easy access toresearch, data and
expert views.
…are informed
Customers areincreasing
becoming selfdirected and rely
less on traditionalsources of advice
Comparison andpurchase of
financial servicesonline is
widespread.
…have choices
Choices outsidethe boundaries of
traditional bankinghave also openedup – peer to peer
lending
Rise of socialmedia platformshave amplified
customer voice toa tremendous
degree
…have a voice
Customers are nolonger shy about
sharing their viewsand experienceswith their online
community
Today’s customers…
Changing Customer Behavior
Customer expectations are relentlessly rising
Content, interactions and features arericher delivering an
engagingexperience
Social media andrise of mobility has
seen customersturn to their peersfor information &
advice
Customers areincreasing
becoming selfdirected and rely
less on traditionalsources of advice
Choices outsidethe boundaries of
traditional bankinghave also openedup – peer to peer
lending
Customers are nolonger shy about
sharing their viewsand experienceswith their online
community
Volume and variety ofdata available is
expanding exponentially
Data Speed of changeInterconnectedness
Individuals, Companies andMachines are increasingly
interconnected.
Rate of change inbusiness environment is
accelerating.
Rules of the game are being re-writtenValue chain across industries is rapidly digitizing
Rising Complexity
Volume and variety ofdata available is
expanding exponentially
Digital data generatedannually has grown from5 to 2800 exa-bytes in thelast decade – about 400
times the # grains ofsand in the world.
Individuals, Companies andMachines are increasingly
interconnected.
Increase in # Facebook users -13million to 700 million in last 5 years.
Increase in # connections betweenthe users – 600 million to 70 billion.
Rate of change inbusiness environment is
accelerating.
Time to reach 40%penetration:
Telephone – 64 yearsMobile – 18 years
Smart phones – 10 yearsFacebook – 4 years
TODAY – “do the basicsright” bank
TODAY – “do the basicsright” bank
Desired end stateDesired end state
The“Intelligent
Multichannel”Bank
Self Control• Mini branch / Kiosk – instant account opening & instant
loans / credit cards, IB enhancements – EMI datechange, Financial fitness
Mobility• Location based offers, Mobile wallets, Sales force mobilityNext Gen Stores• Interactive displays, Video conferencing, Community
Next Best Actions• Transaction + Social data; behavior based personalized
offers; Real time decisioningSocial Marketing• Presence + Engage with community –
Facebook, Twitter, LinkedIn, Youtube, Flickr
• Branch network optimization
• Basic multichannel orchestration
• Deep customer understanding
• Need-based offerings
• Web and mobile channel marketingand effectiveness
• Empowered branch front-line andsales tools
• Smart interaction with customers
• Performance management
Improving Customer Experience
The “SociallyEngaging”
Bank
Next Best Actions• Transaction + Social data; behavior based personalized
offers; Real time decisioningSocial Marketing• Presence + Engage with community –
Facebook, Twitter, LinkedIn, Youtube, Flickr
The“Financial /
Non financialEcosystem”
Education• Help & Guidance – financial planning, wills, moving to UAEEngagement• Ecosystem, Interactive experiences - GamificationChanging Conduct• E-locker, Customers engaged in product design
• Branch network optimization
• Basic multichannel orchestration
• Deep customer understanding
• Need-based offerings
• Web and mobile channel marketingand effectiveness
• Empowered branch front-line andsales tools
• Smart interaction with customers
• Performance management
The objectives of micro-segmentation is to build tactical customerinsights and help with targeted strategies and actions
Current Segmentation
High Networth
Priority Banking
MassASPIRE
PRIVILEGE
EXCELLENCY
Micro-Segmentation
Extended Value
AffluentYouth
Excellency
PrivilegeIntegratedSegments
Incr
ease
d gr
anul
arity
of i
nsig
hts
Customer Segmentation
MassASPIRE
• Organizational segmentation• Defines ownership and
organization structure• Defines a common understanding
of business priorities acrossdepartments
• Communicated to both customersand employees
• Tactical segmentation• Build on top of current organizational
segments• Used to define increasingly targeted
strategies and actions• Can be used partly or fully depending
on objectives
Privilege
Aspire GuidanceSeekers
IntegratedSegments
Incr
ease
d gr
anul
arity
of i
nsig
hts
Multi-LevelSegmentation
Combining current broad-level segments and added granularity foradditional insightso Customer Behaviors – product usage, depth of relationships and
channel interactionso Potential Value – available by product type i.e. Cross & up-sell
potential of each client
Micro-segmentation project has yielded significant benefits forADCB
Benefits of Segmentation
DecisionSupport
Strategic e.g. pricing policy, product development, segment investmentplanning
Business e.g. churn prevention & management, campaigns targeting Front-end e.g. integration with CRM to make segment insights
available to customer facing officers
Know-How
Added knowledge for data modelingto continuously evolve thesegmentation process
Capable of re-running the segmentation model and interpretingresults for targeted campaigns
Micro-segmentation is based on actual customer data. More than300 fields are derived to come up with 360o view of customers
Data Sources
CUSTOMER DATA
• Age• Gender• Nationality• Marital Status• Occupation
• Consumer Segment• Income• Salary Flag• Branch Information• Contact Information
RELATIONSHIP
• RuM• AuM• Start Date• Total Active Products
CREDITS
• Personal Loans• Smart Loans• Mortgage Loans• Auto Loans• Islamic Loans
• Credit Balance• Time to Maturity• Approval Info• Credit Risk Balance
INVESTMENTS
• Bond• Equities• Fixed Income Bonds• Hedge Funds• ......................
24 M
24 M
12 M
T1
• Total Amount Inv.• Investment Balance
CREDIT CARDS
• Core• Lulu• Meethaq
• Amount of Trx• Number of Trx• Limit• Revolving Amount• Category Spending• E-Shopping
DEBIT CARDS
• Ownership• Recency• Cash Withdrawal (Domestic / Abroad)• E-Shopping Transactions
24 M
24 M
• RuM• AuM• Start Date• Total Active Products
• Bond• Equities• Fixed Income Bonds• Hedge Funds• ......................
INSURANCE
• No of Policies• Annual Premium
T1DEPOSITS
• Current Account• Savings Account• Call Account• Time Deposits• Islamic Products
• Account Balance• Number of Accounts• Number of Active
Accounts
24 M
• Total Amount Inv.• Investment Balance
• Ownership• Recency• Cash Withdrawal (Domestic / Abroad)• E-Shopping Transactions
CHANNELS
• ATM• IVR / SMS• Online Banking• Branches
• Possesion info• Amount of Trx• Number of Trx
LOYALTY
• Touch point based accrual of Loyalty Points• Touch point Redemption of Loyalty Points
12 M 24 M
DELINQUENCY
• Credit Card Delinquency• Loan Delinquency• Call Account• Time Deposits• Islamic Products
24 M
1. Domain-BasedBehavior Analysis
CC_Recency CC_Own CC_ActvCC_AutoPaym_Flag CC_EBill_Flag CC_Core_Cnt CC_Lulu_Cnt
CC_Meethaq_Cnt
MEAN_CC_PAY_AMT
W_MEAN_CC_PAY_AMT
TREND_CC_PAY_AMT
MEAN_CC_TRX_CNT
W_MEAN_CC_TRX_CNT
W_MEAN_CC_TRX_CNT
TREND_CC_TRX_CNT
MEAN_CC_BALANCE
W_MEAN_CC_BALANCE
TREND_CC_BALANCE
CC_TDCC_PAY_AMT
CC_TDCC_TRX_AMT
CC_TDCC_BALANCE
R_CC_Revolving
CC_EverRevolve_Flag
CC_Revolve_Flag
MEAN_CC_Utilisation
R_CC_Utilization
CC_Total_Trx_Cnt
CC_Total_Trx_Amt
s_CC_Total_Trx_Cnt
CC_Abroad_Pay_Amt
R_CC_Abroad_Spending
CC_Amt_per_Trx
R_CC_POS_Trx
R_CC_Mwd_Trx
W_MEAN_CC_PAY_AMT_LogN
W_MEAN_CC_BALANCE_LogN
CC_Amt_per_Trx_LogN
CC_Total_Trx_Amt_LogN
2. Clustering perDomain
3. ClusteringAcross Domains
4. Decision TreeRules
Our methodology detects differentiating behaviors per productdomain and uses clustering analysis to define behaviors segments
Method
Customer ActivenessType of CCActual Usage (Amount & Transactions)Usage Trend (Amount & Transactions)Trend CategorizationRevolving FlagLimit UtilizationTrasaction & Amount of Payment – 12 monthsAbroad SpendingAmount per TransactionTransformed Variables
Example - CC
Domain basedbehavior analysis iscompleted to detect
differentiating behavior
CC_Recency CC_Own CC_ActvCC_AutoPaym_Flag CC_EBill_Flag CC_Core_Cnt CC_Lulu_Cnt
CC_Meethaq_Cnt
MEAN_CC_PAY_AMT
W_MEAN_CC_PAY_AMT
TREND_CC_PAY_AMT
MEAN_CC_TRX_CNT
W_MEAN_CC_TRX_CNT
W_MEAN_CC_TRX_CNT
TREND_CC_TRX_CNT
MEAN_CC_BALANCE
W_MEAN_CC_BALANCE
TREND_CC_BALANCE
CC_TDCC_PAY_AMT
CC_TDCC_TRX_AMT
CC_TDCC_BALANCE
R_CC_Revolving
CC_EverRevolve_Flag
CC_Revolve_Flag
MEAN_CC_Utilisation
R_CC_Utilization
CC_Total_Trx_Cnt
CC_Total_Trx_Amt
s_CC_Total_Trx_Cnt
CC_Abroad_Pay_Amt
R_CC_Abroad_Spending
CC_Amt_per_Trx
R_CC_POS_Trx
R_CC_Mwd_Trx
W_MEAN_CC_PAY_AMT_LogN
W_MEAN_CC_BALANCE_LogN
CC_Amt_per_Trx_LogN
CC_Total_Trx_Amt_LogN
Most diffrentiatingvariables for eachdomain is selected
after clustering analysis
Example - CC
Cred_Actv
Cred_Own
Cred_Amt_per_TRX
Cred_Recency
Cred_Revolve_Flag
CC_Utilization
Final clusteringiterations are
completed to come upwith final segments
Clustering rules aretranslated into decisiontree rules to enhance
robustness of model forthe reruns
Integrated Segments are defined by combining extended valuesegments with behavior segments
Integrated Segments % ofCustomers
CurrentValue
Trends GrowthPotential
ACTIVE WEALTH 4% Very High Increase Medium/High
WEALTH IN REST 17% High Stable Medium/Low
FADING WEALTH 5% High Decrease Medium/Low
PROMISING 19% Medium Increase High
UNIQUE ACHIEVERS 15% Low/Medium Increase Medium/Low
FUNCTIONALISTS 9% Medium/High Stable/Increase Medium/Low
DISTANTFUNCTIONALISTS
14% Low/ Medium Decrease Medium/Low
COLD 18% Low Stable /Decrease Low
Segment Opportunities
Potential Additional Value **
1,000
ACTIVE WEALTH4%
PROMISING
19%
High Potential
Medium/High Potential
Medium/Low Potential
Low Potential
4%
22 K0
5 K
ACTIVE WEALTH4%
WEALTH IN REST
17%
FUNCTIONALISTS
8%
FADING WEALTH
5%
UNIQUE ACHIEVERS
15%DISTANTFUNCTIONALIST
14%
COLD ***
18%
* Revenue figures are calculated by mutlipllying product balances with spreads** Average monthly figure per customer*** Excluding Inactive customers
Revenue*
4%
PROMISING
19%
We adopted the following high level tactics for implementing the segment strategyCluster # CMs Strategic Principle
(Value)Strategic Principle(Behavior)
Behavior
Active Wealth 35,000 First Priority for Retention Offer Daily Banking and Investmentproducts and assign RMs
Branch Users
Wealth in Rest 40,000 First Priority for Retention Offer long-term products to deepenthe relationship (e.g.mortgage),flexible pricing
Limited to DepositTxns.
Promising 45,000 First Priority for Growth w/Cross Sell
Offer Wealth products and assignRMs
Increasing Potentialand high potential
Fading Wealth 50,000 First Priority for Growth w/Cross Sell
Cross Sell Loans and Credit Cards Decreasing trend inDeposits Balance.
Fading Wealth First Priority for Growth w/Cross Sell
Decreasing trend inDeposits Balance.
Unique Achievers 80,000 First Priority for Growth w/Cross Sell
Propensity towards Deposit andaccounts.
Low interaction w/Bank
Functionalists 25,000 First Priority for Growth w/Cross Sell
Propensity towards loans Credit hungry andlow interactions
Distant Functionalists 12,000 First Priority for Growth w/Cross Sell
Offer extra Touchpoints on dailybanking products
Low activeownership w/decreasing trend
Cold 15,000 First Priority for Up selland Cross Sell
Increase debit and credit cardsusage. Offer additional points onspends and utility payments.
Lowest wealth anddecreasing trends
Multichannel & easy touse channels
Customer ExperienceManagement
Analytics & SocialMarketing
ObjectiveSimplify and make every
interaction easySimplify and make every
interaction easy
Design ecosystem
Design educative andentertaining experiences
Design ecosystem
Design educative andentertaining experiences
Scope
All customer touch points- Branches, Sales, Tele-
Sales, ContactCenter, Internet, Mobile
etc.
All customer touch points- Branches, Sales, Tele-
Sales, ContactCenter, Internet, Mobile
etc.
Products & servicesProcesses & solutions
CRM , Loyalty &Campaign management
Innovation
Products & servicesProcesses & solutions
CRM , Loyalty &Campaign management
Innovation
Relevant offers
Community building
Relevant offers
Community building
AnalyticsMarketing &
CommunicationsMerchant alliances
AnalyticsMarketing &
CommunicationsMerchant alliances
Capability
Capability driven strategy calls for a capability driven structure?
Mass PriorityBanking
HighNetworth
Convenience Personalization
Revenue is just an outcome
Sub Segment 1Sub Segment 1
Sub Segment 2Sub Segment 2
Sub Segment 3Sub Segment 3
Sub Segment 4Sub Segment 4
Sub Segment 1Sub Segment 1
Sub Segment 2Sub Segment 2
Sub Segment 3Sub Segment 3
Sub Segment 4Sub Segment 4
Sub Segment 1Sub Segment 1
Sub Segment 2Sub Segment 2
Sub Segment 3Sub Segment 3
Customization
Closing thoughts…
