Background to Enterprise Event Management
The concept of using event data for banking purposes has a long heritage. In the days before automation, a branch manager would often begin his day reviewing his customers' statements that were due to be posted out that day, looking for evidence of financial difficulties or business opportunities.
As early as 1885, George Rae wrote in "The Country Banker", "In the case of people who bank with you, you have in your ledgers a record which will enable you, in many cases, to check and rectify the estimate of their means and position which is current out of doors.
A man's bank account will not necessarily disclose what he is worth: but its entries, debtor and creditor, will serve as tracks to indicate with some degree of clearness the line of progress along which he is moving towards either failure or success. Your customers are unconscious diarists of a portion of their lives. Every account in your books is a record, more or less graphic, of the financial history and progress of the customer, contributed by himself."
In the automation of banking processes in the 1960s and 70s, some basic event management was often included. For example, standard branch reporting often included a list of large credits paid into customers' accounts. This information could then be used for limit management or marketing purposes.
However, it was the introduction of large decision support databases and data warehouses in the 1980s and '90s and the development of sophisticated marketing solutions that exploited this technology that led to a massive increase in the extent and complexity of event management in the banking industry.
The traditional approach to database marketing involves the creation of campaigns that generate a large number of solicitations to customers or prospects. The expectation is that a small but significant portion will respond positively and eventually take-up the product offered. Most of the development in this area has revolved around the use of statistical analysis to identify segments of prospective buyers who have a higher propensity to respond and to buy the product concerned. This push-based approach was considered effective and economical to undertake and continues to be the main mass marketing technique in use in most large banks today.
However, with increasing customer expectation and ongoing competitive pressure, banks are starting to recognize that the traditional approach to marketing is becoming less and less effective at meeting their organization's objectives. Increasingly banks are considering whether a more customercentric, needs-based approach is possible to enhance product sales and customer satisfaction. At the same time, banks are looking to gain greater efficiency from their marketing investment and avoid the huge volume of unsuccessful solicitations which consumers consider as junk mail and which have tended to desensitize them to other, more relevant marketing offers.
Shift to Event-Based Marketing
Thoughts turned to the large volumes of data held in the banks' data warehouses. Investigations were undertaken into whether this vast data store could be used to gain greater insights into customer needs. It has been acknowledged that identifying certain customers' circumstances, such as marriage, change of job, retirement, or birth of a child were often associated with a need for particular financial products. Therefore, these significant events could be used to create specific solicitations that reflected the customers' precise needs at that time. Such solicitations would, by their customer-centric nature, have a much higher chance of success than the more usual scatter-gun approach. They may indeed be welcomed by the customer thus increasing their satisfaction with the service they receive from the bank.
Event-based marketing (EBM) was pioneered by banks such as the National Australia Bank (NAB) and the Union Bank of Norway (now part of the DnB NOR Group). These early-adopters of EBM achieved very substantial increases in marketing effectiveness as a result. For example, NAB has reported that the "benefits of our investment in CRM are evidenced by the $10 billion of new business generated by our National Leads system".
Event management for millions of customers who have different needs at different times, can become extremely complex. It's no longer simply a case of developing some business rules and producing lists of prospects. Sophisticated knowledge management tools are needed for the process of defining increasingly complex, significant events and turning them into customer interaction opportunities that will produce tangible benefits to the bank.
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