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

Source: www.sas.com
Soutiman Das Gupta can be reached at  [email protected]