Competition in the Financial Services industry is marked by a constant need to differentiate and identify profitable niche customer segments and aligns services with them. A key advantage enjoyed by the Financial Services is the ease of availability of accurate account and transactional data for the purpose of analysis. Using cutting-edge analytics and advanced mathematical modeling techniques, we can provide a foundation for you to identify winning business propositions and develop a strong profitability-driven approach to business.

Two key areas for using Analytics in Financial Services are for the purposes of:

1. Customer acquisition and
2. Portfolio Analysis

Customer Acquisition

Under customer acquisition, analytics can impact your top-line by answering the following questions:

1. What type of leads have higher propensity to become customers?
• This can help improve the quality of leads and the lead generation process
2. How can the lead-to-customer conversion process be improved?
• By analyzing the behavior of leads that are responsible for purchases across different sales channels – Internet, call center, direct sales –insights can be provided on the lead-to-customer conversion process
3. How to measure the effectiveness of a marketing channel? Which marketing channels are more effective than others?
• By analyzing the sales data from each of these channels, it would be possible to first design an appropriate measure of effectiveness and find the channels that are more effective than others
4. How to measure the effectiveness of promotions / campaigns?
5. How to allocate marketing budget across channels and media vehicles?

Portfolio Analysis

Portfolio analysis in the Financial Services domain can be applied along different dimensions:

1. Product profitability
• What is the profitability of different products? (Based on NPV, expected loss, redemptions, net interest income, economic capital, commissions, fees and economic factors such as interest rates, property prices, inflation etc.)
2. What is the profitability of different brokers / agents? (Commissions, fees, type of products sold, type of customers they serve)
3. Which brokers/agents are better positioned to give more business and more likely to be profitable? (Share of wallet, types of products sold, regions which they serve, customer profiles)
4. What broker/agent segments exist based on profitability and other attributes?
5. Customer profitability
   1. What are the different customer segments based on their profitability and other attributes (demographic & behavioral such as age, gender, income, loan amount, region, ethnicity, marital status, default payment history, types of products owned, redemption profiles)?
   2. Can rules be developed to classify a new account into one of the customer segments?
   3. How to predict customer churn (switching to another company or account closure)?
   4. How to predict defaults?

In the recent past, DecisionCraft has worked with leading mortgage lenders in the UK to analyze the profitability of their portfolio and identify focus product and customer segments. Recently, we have also completed an assignment for UK's largest debt collection agency to analyze collector performance.