Monday, February 4, 2008

Case Study Monday: InfoCentricity and First National Bank of Omaha

As you know, we are firm believers in the power of data and analytics. When direct marketing professionals are able to use technology to improve performance, I love hearing about it. We hope you do, too :)

Here's a success story from InfoCentricity, an analytic solutions company that helps companies discover and leverage key insights hidden in their data. Their software, Xeno, helps direct marketers and risk management professionals build predictive models, perform profiling and create clustering solutions.

First National Bank Investing Successfully in Predictive Analytic Initiatives

In a recent marketing campaign, the bank achieved a 10 percent increase in net response rates using prediction scores developed with InfoCentricity's Xeno.

With over $17 billion in managed assets and over 7,500 employees, First National Bank of Omaha ranks as one of the fifty largest banks in the U.S. First National is the fifth-largest in-house credit card processor, the seventh-largest merchant processor, a top-ten commercial card issuer and the eleventh-largest issuer of bank cards in the United States.

The Challenge

First National's card division is growing fast. With close to two million active customers in the credit card division alone, successfully managing and retaining its current customers, as well as intelligently reaching out to new customer prospects, is an ever-increasing challenge.

Needle in the 10 Terabyte Haystack

According to Vice President Mihaela Kobjerowski, who manages the bank's Decision Science group working with the credit card divisions building predictive models to help determine who to market to, who to extend credit to--and how much--is also becoming more difficult.

Analysts sift through more than 10 terabytes of information dating back 10 years to find specific nuggets of information that might suggest trends. In addition to the rapidly growing customer database, credit card customers often post multiple transactions per day. Plus, the bank further enriches its data warehouse by regularly purchasing third party credit bureau and demographic data.

Prior to incorporating InfoCentricity's Xeno predictive modeling tool into their analytic environment, most of the bank's model development work was done in SAS. "We are a heavy user of SAS, but in the predictive analytics area we found that a significant amount of our analysts' time was being spent on coding, instead of analyzing what the data was telling them," Kobjerowski said. "Using Xeno we are able to do modeling that we were not previously able to do at the same level of detail, and then download the Xeno code seamlessly into SAS. A very powerful solution."

So, what did all that number crunching get them?

The Results

First National added a substantial number of new credit card accounts in 2006, the success of which can easily be associated with the efforts of the Decision Science group. The company's annualized growth rate in the last quarter was in double digits--well above the industry average. In the new account acquisition program alone, the group has more than 100,000 tests from 2006 alone to read and model. "Xeno provides a very robust tool to get insight into so much data," Kobjerowski said.

Kobjerowski said a recently completed model development project for marketing showed the performance of the score improved by as much as 30 percent through new development work using Xeno. That translated to a 10 percent increase in net response rates for a large marketing campaign, while also increasing approval rates. "That is huge in our world," Kobjerowski said.

Well, it's huge in our world, too!

Kudos to First National Bank of Omaha and their technology partner, InfoCentricity.


Ted Grigg said...

Banks generate an enormous amount of data. But in spite of the analytics at their disposal they are challenged like no other industry to sell one to one, one at a time.

In other words, they are cursed by knowing a lot about customers without ever truly connecting with them.

In this mountain of data, they need to find a way to go back to the basics.

If I am a customer, then please, please make an effort to understand me as an individual who longs for the days when I had a real relationship with my personal banker.

Are those days gone forever?

Please stop the mergers already! If you merge again, then I know that I have to renew all of my relationships. This action only makes it more likely that I will, once again, search for a bank that cares about me.

Thanks for another great post on the banking industry.

Suzanne Obermire said...

Yep, Ted, all the data and analytics in the world will get you nowhere if you still treat your customers poorly.

And, all the large banks have CRM and analytics groups. Yet, they can still fail miserably at building customer relationships. Yes, there are a few rays of hope (and I do believe that tools like the one outlined in our case study help).

I look forward to seeing a bank that 'gets' it, and on a daily basis so that I feel valued and like my bank appreciates my business (by offering me the most optimum bundle of services at the very best price). Then, they'd win a loyal customer, for life.