REDMOND, Wash. — Feb. 14, 2013 — Remember 2008? It was the year the Great Recession descended, bringing the global economy to a near-standstill. The financial meltdown on Wall Street flowed through main streets around the globe, destroying many community banks in its path. In fact, according to the IMF, through 2010 the recession had already drained a whopping $3.4 trillion from financial institutions around the world.
Which makes Great Western Bank’s story truly amazing. As some institutions shuttered and shrank, Great Western reinvested – in its people, customers and in how it uses technology to make its business better.
And it grew. Great Western Bank is now one of the largest banks in the United States, with 200 branches and over 400,000 customers. The bank has expanded by more than 300 percent since 2008 and continues to have ambitious growth plans.
To support these plans, Great Western Bank needed a technology solution that would enable increased profitability and better insight into customer relationships.
MNC: How will big data enable Great Western Bank to achieve your growth plans in the coming years?
Van Zanten: Big data gives us a 360 degree view of our customers. It allows us to understand customer activity, such as clicks through our webpages or ads. We can also compare that activity with the products those customers use – such checking or savings accounts or loans – and whether they are happy with, if they want a new product offered what it could be. So we can start to predict what types of engagements or services they are looking for. It also allows us to understand the behaviors of potential customers: what are they looking for when they go to our website, which products do they examine.
We are able to analyze employee actions and customer interactions and measure against results, to see which activities increase the bottom line. And we can see which activities are not adding value. For example, a customer that just opened a checking may get a call within a couple days asking how her experience was, and to talk about additional products or services. This is a legacy process that provided an opportunity for the bank to offer whatever products were currently being sold (such as credit cards and a new promotion). But that might not be the best product for everybody. So now, we can build these relationships more effectively – bringing opportunities forward that our customers want to hear about.
MNC: How are executives at your banks embracing big data?
Van Zanten: Our executives are under the same pressure to perform and do more with less. This data is the best way to move the dial and prove the dial is moved. If they don’t have the analytics to defend what they spent money on, they can be in a tough spot. So out of necessity, our executives are in. Some people are interested in it because of their background – the risk department has seen how trends and analytics really changed the financial industry. Business bankers are the guys who shake customers’ hands; they can come back and prove a customer is profitable, and that the return on equity is where the bank wants to be – because that’s what they’re measured on.
Having data that can quickly and easily be analyzed by our bankers turns out to be a corporate asset. It becomes a way for bankers to pilot programs they were unable to justify before.
MNC: What tools are you using to manage all of this data?
Van Zanten: We use the Microsoft stack – SQL Server 2012 and Windows Server 2008 R2 – as the core engine to bring all our internal and external data sources together to classifying it and get it standardized. We are able to relate all systems together through the concept of time, which is really linear. Then we can build a cause and effect diagram and relate data back customer. This is where we start to see some important trends, because we can link to customer accounts, their demographic data, biographical data, and activities related to that customer or like customers.
As for reporting, PowerPivot allows us to get information in front of users that is consistently valuable. In my previous life we had a huge data warehouse and thousands of reports. There were 7,000 reports in and 1,500 weren’t being used anymore. With PowerView, people can interact with the data, and either get to the quick answer or manipulate the data to a point where it is a useful, productive report. – Then they have the option of publishing via Microsoft SharePoint in order to share with their teams, or request an analyst to make a formal report that is a supported production item.
MNC: Why did you choose Microsoft?
Van Zanten: I had used the Microsoft stack before and I knew it would scale well beyond our size. I previously had a 30 terabyte database and it served thousands of people and about 20,000 report executions a day. I knew we could scale, and I knew it would be flexible enough to connect with all of our different data sources. SQL Server always allows us to build a schema and model that fit our bank, with our naming convention, and present it in a manner that our bankers are comfortable with (via pivot tables in Microsoft Excel).
Bankers have been living in the Microsoft Office environment for 20 years, so I didn’t have to retrain people on the tool. They felt comfortable with the data, and the tools they were using were familiar to them. It’s a lot easier to get them to trust what’s going on and get them to interact with the data warehouse.
MNC: What is the bottom line impact on your business?
Van Zanten: We get cost savings from eliminating activities that are not adding value to the bank. With a data warehouse, we can look at the effectiveness of mailing or calling campaigns or follow-up visits, and relate back to the performance of that customer after the fact. We can even figure out if the activity in a branch is justifying enough value for the branch’s existence.
This is the billion dollar question in banking. Does a bank need 4,000 branches? All banks are afraid to give them up, because this was their homestead. Traditionally a branch location allowed a bank to own that neighborhood, and they would have coverage to interact with customers. But now, people are doing banking on mobile phones, on the internet, on the phone, etc.
At Great Western Bank, less and less of our customers go into a branch each year. What is the new value proposition for that? What kind of infrastructure do we need to ensure we can support those customers, to ensure we still have that connection, that our customers feel engaged? Connections are so lightweight, there is no sense of loyalty. So, we can now understand if there is a lift from TV commercials or mailers. Those measurements were historically done by feel (from branch managers, etc.), but banks no longer have the margins to make these decisions ad hoc. There has to be a justifiable return on investment, and the data warehouse can make that happen.
It’s almost a necessity for banks to measure their customers and measure their activities. Banks that take this step will talk to customers in increasingly effective ways and customers will eventually feel a bond with this bank. For examples, mailers aren’t the best way to engage a 20-year-old kid that only wants to interact via mobile phones. But if you can build these touch points these people will be customers for 50 years. If you can establish a strong product suite with a customer (such as bill pay, online banking, checking accounts or loans), you’re in a much better spot than trying to talk them into coming in their 40s.