Retail Banks Put Geographic BI to Work

This is the toughest time for banks since the 1920s. That's the bad news. The good news is that retail banks have always been ahead of the curve when it comes to tackling problems with technology. Other location-based businesses can learn from what banks are doing to battle their way out of today's recession.

As perennial early adopters, banks have a history of aggressive IT investments. But with the pressures of today's environment, the return-on-investment requirements have never been higher. Any new costs or initiatives must be held accountable to measurable results. Banks are scrutinizing all technologies and tools within the context of significantly reducing expenses, doing more with less, and providing easier access and wider use across the enterprise. This strategic IT imperative can be seen today as bankers broaden their view of GIS from "dots on a map" to spatial modeling, and integrate geographic business intelligence into overall business workflow.

The large commercial banks have traditionally used multiple software platforms and desktop GIS point solutions that are difficult, if not impossible, to integrate with disparate data sources. These solutions are typically kludged together to develop large-scale distribution and network strategies. But with today's resistance to island technologies, there's a movement toward best-of-breed integration of geospatial and business intelligence (BI) analytics to reduce infrastructure and achieve lower cost of ownership.

Even small community banks, mid-sized regional banks and credit unions are now integrating spatial data and intelligence into sales planning, database management and analytics processes. Under pressure at the enterprise level, banking's power users - the analysts and planners - are developing geographic business intelligence (GBI) solutions and placing a wider variety of these tool sets and functionality into the hands of more people within their organizations.

Working together with my banking clients, and with the Alteryx software platform as our foundation for strategic mapping, consumer and business demographics and database manipulation, my company has developed a series of modules designed to address the classic business problems that retail banks are facing today. From an emergency response planning module to location-based competitive analysis tools, we've been able to achieve a broader integration of geospatial business logic into the banks' mainstream business processes than ever before. Some of the most effective modules we've put together are in the areas of sales goal planning and trade area development, which are common to most businesses where geography is a common element.

Sales Goal Planning
Banks, like a lot of industries, have drastically cut costs and eliminated expenses, and there are simply smaller staffs and fewer qualified people out in the field generating new business. But the job requirements are still there for the people who are responsible for sales growth. The analysts and planners, in particular, have to be more efficient, and must do more with less.

Since Alteryx can be delivered at the desktop level, the banks we're working with don't have to allocate nearly as many code-level IT professionals and resources to move projects as they have historically at the enterprise IT level. Marketing and planning teams are able to build some very sophisticated apps and get their arms around the various spatial and non-spatial data repositories with speeds and throughputs that have never been achieved before.

Retail banks take in so much data right at the transaction level with billions of transactions taking place every day. Each contact provides the opportunity to tie to a specific customer, examine the location of the customer, understand where the transaction takes place, track these details over time, go back and get a profile of the customer, and look at how that specific customer behaves, how he uses the bank, etc. Then we can start analyzing and modeling that behavior in terms of groups of customers.

Banks can use this information to predict what their customers are going to do, and thus plan to offer new products and services, determine how and where to market them, be able to establish sales metrics, and map how that will play out in the future.

Our location intelligence solution gives the analysts and planners the ability to integrate disparate data sets, working within the data warehouse to retrieve information, and tying into the various secondary intelligence sources such as D&B, Hoover's, U.S. Census data and more. This makes the analytics actionable for sales planning and execution, which is a huge productivity gain and a key business imperative that can be done more efficiently with less staff.

This kind of high-speed, integrated computing and reporting power allows banks, as well as other businesses (particularly in areas like retail, food service and real estate), to extract those very small units of data intelligence. Sales success lies in the details, and yet many businesses have shied away from this level of performance, just because of the massive volume. It has always been difficult to get a handle on these details at the desktop level, interpret the data, and have the speed and throughput necessary to deal with all the bits and bytes of transactions and then ultimately tie them all together.

It's a daunting, but necessary, task. For banks, and now for many other businesses, putting GBI to work is no longer an option, but a real requirement in estimating the direction of customers and predicting, measuring and modeling their behaviors. The more information you have about your customers, the more success you'll have, and a data-driven, geospatial model makes the most sense for this kind of revenue generation at varying locations.

Trade Area Development
Our software solutions help define long-term overall distribution strategy and planning for entire bank networks, down to individual markets. For larger banks, it's usually about distribution planning for the branch and ATM network. But even for small banks with as few as a dozen or so branches, they are still thinking about their network as a franchise to be carefully managed. Though it may be small when compared to a super-regional with 1,000+ branches, this is their business and their strength. No matter their size, every bank has to ask: "Where do we go next?" and "How do we manage what we have?"

Our trade development, competitive node analysis and site selection modules take into account that no decision can be taken lightly. They take all the following questions into consideration: How do we manage our branches? How do we manage and measure the performance of a single site? How do we design and measure a single product or service by location? Where do we consolidate? Where do we expand? What's the value of our physical distribution network? How can we determine that quickly? How does an acquisition fill our needs? How will a new location enhance our physical position? How do we assess the competitive intensity within a given market or branch location? The modules we've developed can rapidly generate the "what if" scenarios and reports needed to aid in making these kinds of decisions.

Our modules have been refined to assist in retail site evaluation modeling, which determines the optimal branch network and ATM placement by market, the best sites per sub-market, and generates the financial analysis and impact reports for each site.

With the recession forcing economies of scale and the demand for increased speeds, these are just a few examples of how we're working with banks to integrate GBI into their business. From accounting systems and back-office technology in the ‘80s and ‘90s, to the sophisticated online customer service solutions of the last decade, retail banks have been setting the pace as innovative IT problem solvers. Even with tremendous pressure to cut costs and increase ROI on every dollar spent, these progressive users are creating productivity gains by connecting electronically not only with customers, but now geographically between branches, regions and with more users within their own sales planning, distribution and service infrastructures.

Early adopters in other industries can learn from this approach and apply many of the same tools to develop their own competitive advantages. Location technology, integrated into mainstream business logic and workflow, is becoming a critical IT opportunity and leverage point as multiple industries gear up for the next economic cycle.