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Q1 2014
FIS Strategic Insights
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KeyBank’s Digital Relationships

Discover how KeyBank employs digital banking initiatives to reinforce its
relationship banking strategy and provide seamless customer experiences.


Digital Industrialization

See how industrialization to simplify operations supports investment in
digital initiatives that grow revenue while improving the customer experience.


Enabling Digital Commerce

Learn how digital technology is shifting the focus of payments to commerce
and how financial institutions can profit through enabling digital commerce.

Welcome – Q1 2014

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Welcome to FIS InMotion

Frank Martire photo

Frank Martire

Chairman and Chief Executive Officer, FIS

Welcome to our second issue of FIS InMotion. Our theme for this issue is “Engaging the Digital Consumer.” I want to thank our contributors for providing insight into opportunities and challenges that financial institutions face as rapidly growing numbers of mobile and digitally savvy consumers dramatically affect the financial services landscape. We selected this editorial theme because we believe it’s critical to understand today’s digital consumers and we want to support you in engaging them and providing them with safe, secure ways to transact.

The market insights, industry research and client success stories in this issue – as in every issue – are developed to provide actionable information to help you achieve success. We welcome your feedback on “Engaging the Digital Consumer” and your ideas for forthcoming issues.

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Client Profile – Q1 2014

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KeyBank’s Digital Relationships

Matt Lehman Photo

Matt Lehman

Senior Vice President, Head of Online and Mobile, KeyBank

In this interview, Matt Lehman discusses the role of digital channels in supporting KeyBank’s relationship banking strategy. Lehman has been with KeyBank since 2012 and involved in online financial services for the past 14 years of his career. Cleveland-based KeyBank is a regional bank with assets of approximately $91 billion and 1,044 full-service branches in 12 states.

KeyBank is positioning itself in the marketplace as a relationship bank. What goals has Key outlined in its positioning, and how is Key addressing those goals?

Lehman: We view relationship banking as “responsible banking” – understanding our clients’ financial goals and developing solutions to help them meet those goals. It’s also about giving our clients the opportunity to choose channels and interactions that best suit their needs at any point in time. We strive to deliver consistently high-quality and operationally sound service across all channels and to minimize channel conflict.

We use the term “focused forward” to describe our broader corporate strategy. In the past few years, the corporation focused on rationalizing our cost structure and improving efficiency. But now we’ve shifted to being laser focused on those areas where we can drive revenue. While we can still gain further efficiencies, our growth will come through focused initiatives, including building relationships through the digital channel.

Fig 1. - KeyBank uses the term 'focused forward' to describe broader corporate strategy - this image is required

How does relationship banking manifest itself within the Key community bank group, and how do Key’s digital banking initiatives support that?

Lehman: Historically, our personal bankers sat down with clients and held a relationship review with them at the beginning of each year to understand their goals and discuss how their various financial relationships – not just their relationship with Key – can help them meet their goals. We are beginning to bring that same kind of experience into the digital age. We’re looking at how we can we use the data we have about clients to provide them with more tailored plans and solutions. How can we use digital communications to make interactions more seamless and convenient for clients? Are there opportunities to show clients how to use digital channels during the relationship review?

Our recently launched account origination application represents another example of how we’re enabling clients to open an account easily in whatever channel works best for them regardless of how we’re organized. The application is responsively designed to work seamlessly from tablet to handheld to desktop device. A future step will be to put those seamless experiences in the hands of personal bankers and call center associates.

We aim to leverage our technology investment across channels. A key criterion of assessing any technology investment is whether the solution is designed for multi-channel application.

Fig 2. - KeyBank new account opening application

What are the primary business goals of Key’s digital banking initiatives, and how do you track them?

Lehman: Broadly, we look at three pillars – digital acquisition, client engagement and operational excellence. The recent rebuild of the account origination product area is a big step toward driving more growth through digital channels.

We measure client engagement in multiple ways to determine how active our clients are with us digitally – how many are using our core services and how often, for example. Then we examine how digital engagement relates to outcomes such as retention and products per household.

In measuring operational excellence, we determine if we are building and maintaining the digital platforms that at least meet, and exceed, clients’ expectations. In addition to internal measures, we also use objective third-party resources to determine how well we are performing.

Key has formed an Analytics Center of Excellence. How is the digital group using analytics in its initiatives?

Lehman: What’s great about digital is there is so much data derived – every click, every page view, every outcome. While we continue to build a repository around digital activity, the challenge is not in collecting an adequate volume of data – it’s piecing the information together analytically in a thoughtful and purposeful way.

It’s not just about features and functionality. It’s marrying feature and functionality with client data to deliver a truly differentiated experience.

As an example, we collect a huge amount of data around alerts, but we need to ensure that clients are receiving their alerts in the way that’s optimal for them and they can easily update their preferences. Making alerts accessible to clients in the way they want to receive them reinforces our position of responsible banking.

Key, like a number of banks, is looking at branch consolidation where it makes sense. How can banks leverage their digital banking services to turn branch consolidation into a positive experience for affected clients?

Lehman: Bankers should gain a thorough understanding of clients’ digital usage well before the consolidation takes place. We look at not only how many people are logged in and the digital products they use but also the devices they are using to give us a good technographic view of clients using the branch. Leading up to the consolidation and even afterward, we try to move those clients up the digital engagement ladder and measure progress each step of the way.

Technology is quickly changing the way clients interact with bankers. Especially with the advent of tablets, the notion that an older demographic isn’t digitally inclined is going out the window. We strive to tell a cohesive story in our communications and ensure our branch associates are comfortable about articulating the benefits of the digital channel.

In 2012, Key became a self-issuer of credit cards. Is this important within the context of mobile commerce?

Lehman: We think there is a huge opportunity in this space to offer clients different ways to pay for goods and services beyond the traditional credit card. The ability to issue cards and having strong network partners are table stakes to get in the game, but ultimately, winning will depend upon delivering value to clients in order to drive alternative payment methods. We are thinking about how to integrate the mobile payment into other components of the Key experience such as our Relationship Rewards program, which is one of the best in the industry.

We feel that Key specifically and banks in general are in a great place to participate in mobile payments as the capability of accepting them at the point of sale becomes widespread. We have a very strong position of trust with our clients. Protecting that trust is first and foremost, but we can leverage that position to lead the way in mobile wallet and mobile payments. Not only are many of our retail clients currently using mobile apps, but we also have a tremendous number of small business and retail business relationships. Our strong merchant services offering provides us with a venue to help our business clients understand the benefits of accepting mobile payments. The beauty of our model is that we can influence both sides of the equation – consumers and businesses – and deliver great value to both.

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Thought Leadership – Q1 2014

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Digital Industrialization

Eric Disend photo

Eric Disend

Capco Partner,
Capco Digital
Jonathan Gray Photo

Jonathan Gray

Capco Partner,
Banking Team

Connected Consumers Driving Digital Industrialization

When we talk about industrialization, we refer to a combination of profound changes that coincide to trigger rapid modernization of an activity. In banking, we’ve witnessed three profound changes – a protracted period of subdued economic growth, a tougher regulatory environment and rising customer expectations about being digitally connected. In the wake of these changes, banks are facing challenges of transforming their operations to eliminate inefficiencies, to compete with a growing cast of alternative financial services providers and to serve the increasingly “connected consumer.” Banks need to go through an industrialization process – rethinking why activities exist, gaining a deep understanding of all their component elements, simplifying operations and reducing costs – to provide a solid foundation to meet the needs and expectations of today’s digital customers.

Challenges in an Omnichannel World

In the past, customers’ perceptions of their banking relationships were largely shaped by interactions that took place in a physical facility – the branch. Now, digital is changing the way people interact with all institutions including banks. Customers expect to be able to access services and relevant content whenever and wherever they want.

You want to design the service model to consider the opportunities that all of your channels present – digital and branches. If you don’t, you lose opportunities to be more connected with customers.

As their customers move from channel to channel, financial institutions struggle to provide consistency in delivering products and services through an increasing number of touchpoints. Figuring out how to execute digital sales and servicing in this omnichannel banking environment – and still make a profit – has become this year’s Holy Grail.

Simplify for Success

Delivering a consistent digital experience can drive sales, increase revenue, provide customer insight and improve customer advocacy. However, in our experience, programs designed to improve the digital experience should be viewed as revenue building, not solely as a way to produce significant cost savings. Making it easier for customers to seamlessly conduct business with the bank leads to more transactions, which tend to offset gains in migrating some transactions to lower-cost channels.

Instead, cost savings come from the industrialization process, beginning with reducing the complexity and variability of operational support processes and simplifying and shrinking the back office and making those operations as lean as possible to deliver digital services at a lower cost.

Industrialization generates savings, which can then be used to fund additional digital initiatives that further improve the customer experience and stimulate revenue generation possibilities.

These operational activities must be guided by the goal of leveraging digital to simplify and reduce the number of processes that the end consumer has to deal with. Reducing complexity and variability makes the customer experience much more intuitive and improves perceptions of transparency. Getting the customer experience, operational and technology layers to work together creates a much more efficient operating model.

Fig. 1 - Industrialization generates savings, which can then be used to fund additional digital initiatives that further improve the customer experience and stimulate revenue generation possibilities

Invest in Optimizing ‘Key Moment’ Customer Experiences

The days of undertaking large transformation projects and waiting for years for results have passed. What we are observing in our practice are projects focused on impacting “key moments” – those interactions strongly linked to revenue creation or attrition – when customers have high expectations and when impressing customers can differentiate the institution. Examples of potential key moments include opening new accounts, providing complex advice and handling complaints.

If you leverage digital to deliver on key customer moments, you then have a springboard to implement additional differentiated capabilities based on in-market customer testing.

A worthwhile exercise is to consider how a key moment should be rethought for digital presentation and how various delivery channels should interact to optimize the customer experience. For example, mortgages are very complex and paper driven. Think about how this process could be simplified digitally. How could you connect the various parties at key times digitally? How could you take paper-driven errors out of the process? Could you do your authentication checks and your credit scoring electronically? Could you make the entire mortgage process electronic?

Fig. 2 - Digital Customer Experience Design

First, Test

When introducing programs that simplify processes and improve customer experiences around key moments, both large and small institutions should:

  • Start with manageable goals
  • Focus on the customer segments targeted for expansion, especially from a digital perspective
  • Include the customer early in the design process and integrate customer thinking throughout
  • Determine ways to support the desired customer experience with better content that aids the customer’s decision-making process and makes the institution feel smarter
  • Consider all points of potential contact with customers – digital and physical
  • Map out the architecture of the operations and technology necessary to deliver the required customer experiences
  • Do a proof of concept to show that investment is cost defensible and determine where your firm will gain the most traction from its investment
  • Measure the impact of change on the customer experience (e.g., customer advocacy, customer satisfaction metrics) as well as “hard dollar” returns
  • Use proof of concept results to obtain the required project funding and to get your operational partners comfortable with a broader organizational rollout

Moving toward Banking for the Future

Looking to the future, meeting the expectations of digital consumers will require industrialization to simplify and reduce the cost of fulfilling basic customer needs. Trimming costs can provide necessary resources to invest in digital innovations that drive growth. The second step in the journey is fulfilling customer demand for digital banking services that provide them with convenience, choice and control around key moments. Achieving digital connections with customers, the institution can then focus on providing superior customer experiences and differentiation on that basis. Over time, the financial institution earns the right to engage customers for more sophisticated services and become a partner that helps people realize their ambitions.

Please refer to these white papers for additional insights on industrialization in banking.

“The Industrialization Realization” white paper

“Change, at What Cost?” white paper

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Strategic Perspectives – Q1 2014

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Enabling Digital Commerce

Bruce Lowthers photo

Bruce Lowthers

Executive Vice President,
North American Card Solutions, FIS

Transforming the Payment Experience

The payments industry is undergoing unprecedented change. A new payments paradigm is emerging as traditional revenue streams dry up, new players appear and disrupt the landscape, and consumers gain more latitude in defining their commerce experiences. Consumers are gaining power through digital technology, which enables them to choose where, when and how they shop. The customer journey is no longer a predictable path through a single channel of distribution. Eighty-eight percent of consumers research a purchase in a different channel from the one in which they ultimately buy.1

Fig 1 - Traditional customer journey model depicted a straight forward process of funneling choices from awareness through post purchase

A multitude of research studies point out that an omnichannel customer journey is becoming the norm and consumers are demanding a seamless experience across all channels, especially in terms of pricing. Long used in retailing to extract the highest margins possible, channel-specific pricing and zone pricing – pricing that varies by physical location – are falling away to omnichannel pricing. Consumers also are utilizing digital technology to put downward pressure on pricing by engaging in showrooming – looking at goods in physical stores but purchasing online at lower prices – often from a competitor.

The upshot of these changes is that old business models are giving way to new ones based on enabling commerce. During the next several years, the competitive environment and economics of the payments industry will change dramatically as a result.

Core Competencies of Banks vs. Merchants

When vying for control over today’s customer journey, financial institutions need to find profitable ways to enable consumers’ digital commerce regardless of where their journey begins and ends. Access to mobile is increasingly influencing the decision-making part of the customer journey and will become an integral part of the payment part of the journey. As institutions rely less upon the card-based interchange model for revenue, they will look for ways to play in the mobile payments arena.

Foremost, financial institutions need to look to their core competencies to determine where they can credibly take the lead – specifically:

  • Holding money securely
  • Moving money and settling transactions securely
  • Extending credit
  • Making payment vehicles available to customers to enable purchases

Many financial institutions are currently disadvantaged as the focus of payments shifts to enabling commerce and the form of payments shifts to digital. Many lack presence at the point of sale because a lot of consumers are making payments with instruments that have nothing to do with the financial institution providing their main source of funds. From 2006 – 2012, the number of commercial banks with credit card assets declined by 34 percent and the number of credit unions with credit card assets declined by 12 percent.2 The unintended consequence is that nonissuing banks have allowed competitors to build relationships with their most affluent customers who tend to use credit cards most frequently, who tend to spend the most and who are among the segments most likely to adopt digital technologies.

Controlling the digital wallet would enable the financial institutions to get back into the game, but they are competing for this space with a wide range of players that also want control over the customer data (e.g., Google™), the customer experience (e.g., merchants) or both (e.g., PayPal®, Amazon Payments®).

Merchants’ core competencies in the customer journey reside in:

  • Controlling the in-store purchasing experience
  • Defining the merchandise assortment (for each channel)
  • Targeting and attracting customers
  • Maintaining inventory
  • Moving goods
  • Presenting goods
  • Enabling purchases and building loyalty through programs – largely card-based
Fig 2 - Customers are actively transacting with smartphones and some are  engaging in mobile promotional offers and shopping apps

The obvious point of cooperation between financial institutions and merchants is at the point of sale – regardless of where the sale takes place. It’s also the point where disintermediaries – some with mobile payments solutions, some with virtual prepaid card solutions – are swarming to grab control as the popularity of digital payments expands. The “enemy mine” principle (“the enemy of my enemy is my friend”) suggests that both financial institutions and merchants have a powerful incentive to cooperate, particularly around enabling payment and extending credit, building customer relationships through loyalty programs tied to payments and controlling payment data.

One powerful unifying force is the opportunity to share data for the purposes of increasing marketing efficiency for merchants and generating new sources of revenue for bankers. Merchants have a micro view of what their customers buy from them and the payment method they use in their stores. They would like to know what their customers buy elsewhere and how much share of their customers’ wallet they own – information that financial institutions know. The macro views of where and what consumers are spending represent a goldmine for financial institutions to bring to the table.

Fig 3 - In the new customer jouney model, financial institutions and merchants can collaborate to add value in all stages from the trigger to post-purchase experience

A Natural Partnership

Despite past challenges associated with collaboration between financial institutions and merchants, there are now strong incentives for both parties to collaborate. As the business of payments transforms into the business of enabling digital commerce, mobile banking and payment apps become the principal conduit between financial institutions and their customers. By actively incentivizing mobile banking and mobile payments usage, financial institutions help habituate mobile usage. In turn, they can regain the visibility they need to be top of mind when their increasingly mobile customers want or need to finance purchases on the spot.

Cooperation means enabling the merchant to get a fair margin for goods sold, enabling the banker to get a fair margin on payment processing and extend credit for the goods sold, and enabling the consumer to get to a fair price and rate of interest on the purchase. In many respects, banks and merchants are primed for a natural partnership – given common customers, geographic overlaps and historically beneficial financial relationships. The opportunity exists to leverage data to improve marketing outreach and results, as well as to leverage consumer trust to fashion real services that work securely in the interest of the three key parties to any transaction – consumers, merchants and banks.

  1. Accenture, “Accenture Seamless Retail Study,” February 2013
  2. Mercator Advisory Group, “Update on the U.S. Small Issuer Marketplace,” February 2013

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Risk Spotlight – Q1 2014

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Boost Your Innovation Odds

Greg Montana Photo

Greg Montana

Corporate Executive Vice President
and Chief Risk Officer, FIS

Innovation Is Key to Survival

In today’s active environment, stagnation ultimately leads to business failure. Companies must pioneer products and processes to survive and thrive. Think about 3M Company where innovation is embedded into its DNA and its tagline – “3M: Innovative Technology for a Changing World.” Innovation should be everybody’s job within an organization.

If innovation is not championed at the top of the house, you’re saying that it’s something you don’t really value.

In general, financial institutions are inherently trailblazers. But with a myriad of challenges from emerging competitors, bankers also need to consider how they approach innovation as part of their strategy. While risks associated with innovation can be daunting, consider the risks inherent in following the market consistently rather than leading it.

Financial institutions face critical investment decisions and stiff competition regarding digital delivery channels, emerging payments, legacy system updates and other areas of their business. They also face a range of new regulatory requirements for managing risk, and these requirements are not going to fade in a few years. Greater discipline around risk management has become the “new normal” in financial services, and this is the way banking will work for the rest of our careers. All of these factors underscore the need for heightened awareness of risk and the importance of having a comprehensive risk management process that is tightly integrated with the innovation process.

Fig. 1 - Innovation and risk management should be integrated processes

An orderly risk management process that partners with and fully integrates risk management with innovation development greatly boosts the odds of successful innovation and, ultimately, profits. It also can ease regulators’ potential concerns. Think of risk management as designing an automobile with brakes to provide the control needed to arrive at one’s destination safely. The brakes slow down the process at appropriate times to prevent the car from careening off the highway and contribute greatly to the goal of arriving in one piece in a timely manner. Embedding risk in decision-making uses the brake pedal judiciously to realize more profitable outcomes. Having confidence that brakes are in place to provide control when needed can facilitate, rather than impede, speed to market.

The Risk Management Process for Innovation

Components of a financial institution’s approach to risk management of innovation can be organized into four basic steps:

Fig. 2 - The Risk Management Process for Innovation- Steps to integrating risk management in to the innovation process

1. Define the trigger points when risk management needs to have a seat at the table. Common examples of trigger points include:

  • Introducing new products or services
  • Entering new markets
  • Making a significant investment
  • Making any decision that potentially falls outside of the firm’s risk appetite

The financial institution should flip its thinking when evaluating innovations and consider its risk appetite rather than only considering risk avoidance. This involves putting a dollar figure on its risk appetite – how much the financial institution is willing to lose. It also should answer: Are the risks associated with the innovation within the scope of the company’s risk appetite?

A best practice is to involve risk at key trigger points when investment decisions are being reviewed and approved. Although risk needs to have a vote at these trigger points, the chance of getting funding for innovations rises if risk is included early to help build the business case that’s presented for a decision.

2. If the innovation falls within the firm’s risk appetite, the next step is to conduct a detailed assessment to determine the specific risks associated with the investment in innovation. The assessment should draw upon internal and, if appropriate, external expertise to identify potential risks for various types of exposure – credit, financial, data security, regulatory, compliance, operational, reputational, human capital and patent infringement.

Some firms go through a scenario process to determine the ramifications of worst-case scenarios, assign probabilities to their occurrence and calculate the costs of putting contingencies in place to mitigate potential damage. Other firms use a Failure Mode and Effects Analysis (FMEA) that identifies potential failure modes based on experience with similar products and processes. In the late 1970s, its Pinto recall led Ford to introduce FMEA to the auto industry for safety and regulatory consideration. FMEA has since gained widespread use in multiple industries.

3. Ensure the appropriate business leaders “own” the decision. It’s critical for all scenarios and contingencies to be discussed during the decision-making process among three parties:

  • The owner of the decision, whose duty it is to ensure necessary controls are in place
  • The sponsor or innovator of the new product or service
  • Risk management, which helps design controls around the innovation and measures performance

Just as it’s finance’s job to point out when a business case cannot provide an internal rate of return that meets the business’s hurdle rate, it’s risk management’s duty to call attention to worst-case scenarios that fall outside the firm’s risk appetite boundaries.

4. Conduct the “look back.” It’s important to evaluate actual results against the originally presented business case. This ensures that success is measured by the performance of the innovation, not the presentation of the business case. The “look back” also considers the contingencies that were originally put in place as part of the “go” decision. If the “look back” is conducted in a timely manner – for example, as the innovation is rolled out – adjustments can be made to improve performance and limit losses.

Innovation and Risk Are Entwined

Risk-taking is a natural part of success and innovation. What’s needed is a method for quantifying and mitigating the risks. The framework outlined in this article can enable a financial institution to go farther, faster and ultimately avoid potential missteps that consume time and money.

You cannot get to the risk process unless you’re innovating.

Its use increases the odds of success since stakeholders will be aligned to monitoring and managing an innovation’s risk profile as it’s created, piloted and launched. And it can help stakeholders evolve from a mindset of risk avoidance to the practice of proactively incorporating risk appetite into the innovation process.

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Solution Profile – Q1 2014

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Innovate to Improve Profits

Fred Brothers Photo

Fred Brothers

Executive Vice President and
Chief Innovation Officer, FIS

The Problem with Stand-alone Deposit Relationships

I was speaking with a banker friend recently when an interesting and somewhat counterintuitive topic came up. She told me that her bank’s success at acquiring new customers and growing deposits has become a financial headwind. She said, “Our CFO recently told me to stop pursuing more deposits and try not to enroll new stand-alone deposit customers, because our lendable capital already exceeds what we’re deploying as loans. Since we don’t see the situation changing anytime soon, we’re ramping down our marketing efforts and branch staff incentives.”

Still confused, I asked, “But aren’t you paying record-low interest on deposit accounts?” She replied, “Yes, but our FDIC insurance costs us 22 basis points. Even if we pay zero interest on deposits, we still lose 22 basis points if we can’t lend the money effectively.”1

Fig. 1 - Loan-to-deposit ratios at record lows place tremendous pressure on bank earnings

That conversation made me think about how the ongoing transformation of the banking landscape has affected the profitability of customer relationships. Take “free checking” as an example. With the old banking model prior to regulatory reform, nobody worried much about the cost of servicing all of those checking customers because enough incurred insufficient funds and overdraft fees and others used profitable debit cards for the majority of their spending. In today’s environment, we can’t afford to give away deposit services to people who have a monoline deposit relationship with their primary checking account provider but hold all of their lending relationships at other financial institutions.

Also flawed is the notion that, because some customers are very vocal and emotional about deposit service fees, all other customers are equally as fee sensitive. Imagine we have two customers – John and James – with identical account relationships and balances, but John accesses foreign ATMs eight times per month to withdraw $50 each visit and gets charged $3.00 per withdrawal, while James withdraws $400 only once per month using his own bank’s ATM. We don’t really know if James is fee sensitive, but we can assume with a high degree of certainty that John isn’t. Why would we give John a free checking account if “free” is not important to him?

Granted, this example is extreme to illustrate my point, but it demonstrates an opportunity to leverage data already available within the institution’s systems and databases to segment customers based on their behaviors and preferences and then use this information to improve profitability without taking away a benefit that a particular customer segment values.

Solutions for the New World of Banking

In this new world of banking, institutions will employ data analytics solutions to solve this dilemma and grow their bottom lines by making better decisions that improve relationships with customers, by better tailoring products and marketing offers, and by pricing those products and offers in an optimal manner.

In order of priority, these analytics solutions will include:

  1. Smarter and more sophisticated pricing
  2. More precise and sophisticated targeting
  3. Cross-selling new services and producing new revenue streams

By analyzing channel usage, payment and deposit activity, bill payment data, payroll information, and other information, we can develop appropriate packages to reward desirable behaviors that drive revenue and improve efficiency for the financial institution. The packages must be dynamic – automatically evaluating the relationship on an ongoing basis to incentivize desirable behaviors such as consolidating business with the institution.

Let’s explore four solutions that can help banks and credit unions begin to monetize the valuable data that already resides on their systems. FIS Relationship Value Management is a dynamic solution that helps financial institutions tailor services to individual, profitable segments. FIS Pinpoint Pricing optimizes deposit and lending interest rate and fee pricing based on either the total relationship or individual products or packages and provides support for executing the pricing strategy by showing the effects of pricing changes on profitability and sales commissions.

FIS Pinpoint Marketing utilizes data analytics and precise targeting of customers to proactively win back their held-away lending relationships. I believe this is a crucial issue facing many banks and credit unions as vertical specialization in lending, including credit cards, has left many on the sidelines of consumer lending. An institution that holds the primary checking relationship has the opportunity for meaningful competitive advantage because it sits on a goldmine of data – checking data, payroll data and bill payment and e-bill data, for example – that can be turned into actionable information to target win-back lending campaigns to specific customers.

Fig. 2 - FIS pin Point Marketing

FIS Pinpoint Marketing anonymously and securely aggregates transaction data for all of the institution’s customers and uses algorithms to find patterns of behavior that are the strongest predictors of consumers taking out certain types of loans. These patterns are called Key Lifestyle Indicators (KLIs). KLIs for auto lending, for example, could include multiple trips to auto repair shops in a short time frame or the conclusion of monthly payments to an auto leasing company. Then it matches those predictors to customers who are currently exhibiting similar behaviors and delivers a targeted campaign to win their lending business.

FIS Pinpoint Merchant Offers save the consumer money and provide the financial institution with new streams of revenue. In contrast to a scattershot approach to merchant-funded rewards, the solution analyzes purchasing behaviors of the institution’s customers and identifies individuals who match retailers’ specific criteria – e.g., frequent shoppers of a competitive store residing within the retailer’s designated trading area. Only relevant offers are presented to customers, who, in turn, can load them onto their credit or debit cards and receive their rewards automatically when they make purchases. Statement summaries reinforce the savings message.

Succeeding in the “new normal” of banking will require personalizing the customer experience while simultaneously driving better efficiency and greater profitability. Technology will allow high-touch services to be delivered at lower costs, provide customers with better value, and optimize marketing resources to win customers and expand relationships. As always, FISTM will be your innovation partner helping you and your team to achieve success in this rapidly changing banking market.

Learn more about the FIS Active Analytics Suite.

  1. According to the FDIC website, initial assessment rates (prior to adjustments) range from five to 35 basis points depending upon risk category (based on a combination of financial ratios and CAMELS component ratings); large and highly complex institutions are assessed using a large bank scorecard method.

Copyright © 2014 FIS and/or its subsidiaries. All Rights Reserved.

Market Insights – Q1 2014

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FIS InMotion Archives

View IssueQ4 2013 – Banking Everywhere