IBM’s Customer Insight solutions target financial industry pain points

Unlike in healthcare, where IBM created the Watson Health unit to make a new market for cognitive enabled healthcare IT solutions, IBM evolved its Industry Analytics Solutions portfolio for financial services incrementally, listening carefully to its existing customers’ needs down to the individual line-of business (LOB) user level.

This approach will improve IBM’s opportunity to cross-sell and upsell analytics and cognitive solutions and services to financial services organizations as they become increasingly concerned with optimizing customer relationships to drive revenue growth and improve operational efficiency.

Deep financial services industry expertise, combined with cognitive, cloud and analytics IP, and design and professional services capabilities, make IBM a compelling partner for financial services organizations looking to transform their customer engagement processes.

Event overview

At the IBM Forum for Financial Services on September 20 in New York, IBM provided updates on its Customer Insight solutions for the banking, wealth management and insurance industries. The enhanced solutions build upon IBM’s Industry Analytics Solutions portfolio, introduced in May 2015 as a set of prebuilt, industry-tailored analytics offerings leveraging IBM’s core analytics software capabilities.

The portfolio also includes Risk and Compliance solutions for regulatory compliance, surveillance and financial risk, but the forum focused primarily on the Customer Insight offerings. During the event, IBM held keynote sessions from executives leading each of the three subindustry offerings, as well as client presentations and solutions demonstrations. TBR also interacted one-on-one with IBM executives throughout the event.

What’s new

The updates to IBM’s Customer Insight solutions align with the company’s overall strategic objectives while leveraging the company’s deep expertise in the banking, wealth management and insurance industries.

The overarching theme of the announcements was enabling financial services organizations to improve customer engagement and selling opportunities by better pinpointing customer preferences, predicting major life events and personalizing customer experiences.

Cognitive insights

In line with IBM’s corporate agenda to integrate Watson capabilities across its portfolio, the Customer Insight solutions leverage Watson services such as tone analysis, personality insights and sentiment analysis to help financial services identify customers’ propensities toward certain products and prioritize cross-selling or upselling opportunities.

Dynamic segmentation

In his opening keynote, IBM Industry Analytics Solutions VP Marc Andrews said IBM was “attempting to kill traditional ways of segmenting customers,” which involve sets of standard triggers and reports as well as groupings of customers by broad categories such as likeliness to churn or wealth tier. With dynamic segmentation, the Customer Insight solutions enable financial services organizations to create ad hoc segments within those broad categories based on more actionable attributes such as life stage (e.g., millennials versus retirees).

New models

IBM expanded its number of prebuilt advanced analytical models for financial services-specific insights, covering areas such as life event prediction, policy renewal and customer action recommendation. Though clients will likely want to customize the models, starting with a prebuilt model and refining results by adding new data sources accelerates time to insight compared to purely custom-built versions. IBM’s Signature Design Customer program has been instrumental in providing client feedback and live data to train and refine the models, improving IBM’s ability to meet industry-specific analytics demands.

More data sources

IBM’s acquisition of The Weather Company and alliances with data-rich companies such as Twitter, Facebook and Acxiom provide financial services organizations with access to additional data sources that can improve the quality of analytic insights and enable deeper understanding of customers. However, as most of the presenting executives indicated, financial services clients already have troves of data on transactions, interactions and account funding behaviors in existing systems that can be better leveraged for customer insights. We expect working through existing enterprise data issues will occupy most clients’ time as they start using the Customer Insight solutions, though cognitive tools can accelerate that process. As clients become more comfortable using the solutions and want to add more data sources to refine customer segments, IBM will be prepared to meet that need through its partnerships and weather data assets.

Cloud delivery

IBM has been transitioning its software portfolio to cloud delivery models for the past couple of years, but Andrews noted financial services clients only started asking for dedicated cloud delivery this year. IBM addresses data privacy concerns by setting up containers for each client, with access by IBM only available to employees the client authorizes. After less than a year on the market, IBM has deployed, in varying stages, the updated Customer Insights solutions to more than a dozen clients, many of which are already seeing tangible business results. This highlights IBM’s success adapting its analytics portfolio for the specific needs of the financial services industry.

Insights and opportunities Flexible insight delivery methods enhance value for LOB users

The Customer Insight offerings include role-based interfaces and dashboards, created with assistance from IBM Design, to satisfy differing data insight needs among chief marketing officers, chief data officers, LOB executives, financial advisers and customer-facing agents. IBM also offers APIs designed for consumers and small business owners that enable mobile alerts and messages triggered by analytics insights, as well as customer lists and propensity scores for marketing professionals that can be used for targeted campaigns. By delivering insight however users prefer to consume it, IBM increases the likelihood that users will integrate the Customer Insight solutions into their workflows and become more reliant upon them, creating stickier relationships between IBM and its financial services clients.

Prebuilt analytics solutions will drive new opportunities for IBM’s services Preintegrated analytics solutions would appear to reduce prospects for IBM Global Business Services, in that there is less integration and customization work required to get solutions up and running. However, even with the depth of industry expertise applied to create the Customer Insight data models, each client will likely want to adjust the models to fit their data, add different combinations of new data sources to pursue competitive advantage and configure the interfaces to suit their particular business needs.

For cost-conscious financial services clients, a solution that is 70 percent to 80 percent complete and requires 20 percent to 30 percent customization is a much easier purchase decision than a 100 percent customized solution, enabling IBM to accelerate time to implementation, time to value and, possibly, the next phase of digital transformation.

Inclusion of Watson capabilities in Customer Insight solutions may encourage financial services clients to explore additional ways to leverage cognitive within the enterprise, driving Cognitive Business Solutions consulting opportunities. Greater availability of cloud delivery options for Customer Insight solutions could increase demand for cloud consulting, integration and orchestration services.

Deeper insight into customer engagement preferences may drive interest in mobile customer experience solutions from the IBM Interactive Experience practice. As IBM continues to evolve its services organization away from traditional IT services and toward consulting-led industry solutions, Industry Analytics solutions such as the Customer Insight portfolio provide a compelling starting point for innovation and higher-value engagement.

Jennifer Hamel, senior analyst at TBR