Herke Douw, left, is vice president of Strategic Marketing, and Robbert Kok is team leader of database analysts for SNS Bank.
Features
Case Study
Accountability Matters
Daily data updates keep SNS Bank competitive and informed.
by Patricia Keefe
Financial institutions trying to navigate the choppy waters of the recent global economic downturn are finding that survival is measured not only in liquidity but also in timeliness. Fast access to accurate data has never been more critical, both in terms of treading water today and bolstering risk-management practices for tomorrow. Fortunately for SNS Bank, part of SNS Reaal Group, the fifth-largest financial group in the Netherlands, the recent expansion of its enterprise data warehouse (EDW) from Teradata into a multi-department, single-source data repository has equipped it with the necessary foundation to stay on top of market trends, maintain compliance and remain competitive.
“There are so many questions going on now as a result of the economic crisis, and without the integration of the data from the different disciplines, we would not be able to answer these questions in a timely manner,” says Robbert Kok, team leader of database analysts for SNS. “For example, this is the first time we’ve gotten questions directly from the board of directors and been able to answer them.”
Answering such questions is especially important because regulators worldwide are pushing banks to improve risk-management practices, create better analytical models, ensure consistent and common data views, and beef up data transparency. In addition, many financial institutions are accepting government assistance. This means banks can expect more in-depth questions from a new group of stakeholders.
Timely data is crucial
The company’s upgraded EDW has meant a giant leap in the Risk Department’s capability to react to daily swings in a volatile market. “Daily refreshment of data on the Teradata system has enabled us to see much more detailed information, such as: ‘What is our financial situation? How much money is new and how much is coming in? Are people switching from our bank to another bank?’ It lets us use this data to be more on top of the market,” Kok adds.
The Marketing Department is using the data warehouse to bolster competitive outreach efforts. It has launched a huge campaign to encourage customers to continue saving with SNS. By linking the EDW to the customer relationship management (CRM) system, the bank can run daily marketing campaigns and make quick decisions on whether to run, stop or rearrange them, according to Vice President of Strategic Marketing Herke Douw.
“If you have to wait until the end of the campaign, and then a month later to see how effective it was—as much as six weeks in all—you can’t be on the ball,” he notes. But now SNS can craft appropriate responses on the fly—a very important capability for a bank that prides itself on being smarter than the competition.
"What’s the ROI of management information? How do you calculate what would be the opportunity lost from not having that information?"
-Robbert Kok, SNS Bank
No longer isolated
This was not always the case. Like many of its competitors, SNS once labored under a stovepipe situation—each department had its own process of collecting data into a source system used only by that specific division. Little data was distributed among the departments, which resulted in different answers to the same questions. Consequently, the bank had three disciplines—Marketing, Finance and Risk—sometimes doing three times the work on the same question, recalls Kok. The departments were forced to find ways to put their needs together and achieve greater efficiencies.
In addition, the rest of the company was using a Sybase solution that was distributing certain data to different departments. Every time a change was made in one division to meet its specific needs, the changes had to be distributed to the others.
Cost was also an issue. The parallel operations were creating a time sink, providing conflicting answers, and making it harder to respond to new opportunities and trends, notes Douw.
The tremendous growth in requests for management information led to an epiphany. “We realized that individually we could not face up to the expectations of that demand by doing the things that we did technologically,” Douw says. “We also did not have the funds, the capacity or the time in each of the disciplines to do what we were being asked to do, so we had to do it differently.”
Business leadership drives vision
Based on past CRM successes, Marketing knew it had to expand its blueprint to the rest of the bank. As a result, Marketing, Finance and Risk set out to create an enterprise-wide corporate data warehouse that would store information in one repository—“store once, use many”—in an application-neutral fashion. The goal was to provide each department, and each request, with the same view of the business, using the same data across the company.
Marketing, in particular, was eager to get more and different data into its model and enable more cross-functional exchanges among the disciplines. It also wanted daily data.
“Only Marketing said we need today’s information daily. At first, the others did not need it. It was, ‘Just give it to us once a month and we’ll make our models,’ ” says Douw. But now the Finance Department has gone from running monthly reports to using daily data as well.
Because Douw felt the company could not wait, Marketing took ownership of the project, becoming the driving force and leader of the bank’s first cross-departmental business intelligence (BI) IT project. Getting there would take several years.
A steering committee, consisting of representatives from Marketing, Finance, Risk and IT, considered technologies from Oracle, IBM and Sybase. In the end, the team decided to expand homegrown solutions, such as the Customer Information System and the data warehouse, developing the new project on the Teradata platform, now utilizing a SUSE Linux operating system (OS).
As the work seemed to drag on, Marketing stepped in again. A quick analysis determined that project members were too separated and distracted by their own departments, Douw says. To jump-start the project, team members moved out of their normal business units and into a common area in the office.
They also prioritized applications that would benefit most from the new data warehouse and divided the project into four pieces—one to be completed each quarter—in order to present regular releases to the system users.
One thing the team didn’t worry about was the venture’s return on investment (ROI). “What’s the ROI of management information? How do you calculate what would be the opportunity lost from not having that information?” asks Kok. However, Kok and Douw estimate that having the departments work together is about 40% cheaper than having them tackle the same problems separately. Also, they point to an improved capability to comply with Europe’s accounting regulations. “If we are not compliant, then it costs money,” adds Kok.
"If you have to wait until the end of the campaign, and then a month later to see how effective it was … you can’t be on the ball."
-Herke Douw, SNS Bank
The power of change
SNS has no shortage of ideas for taking advantage of the expanded EDW; however, bringing those ideas to fruition won’t be easy. The bank expects to face budget constraints this year. But again, the expansion is paying off, creating cost-savings and profit-making opportunities by enabling new initiatives. These include:
- Promoting cross-departmental fertilization of data, which can be used to enhance existing products or create new ones. For example, the bank’s Mortgage Customer Retention project lets Marketing use information from Risk to get special offers to mortgage clients
- Providing the capability to offer individualized offers at ATMs
Down the road, Douw and Kok expect the EDW to enable them to:
- Get more data from different sources and functions
- Initiate real, interactive communications with customers
- Use the Internet to communicate with customers and track their movements. Knowing what a customer does before completing a transaction should provide the data to build better risk models
SNS is confident it will reach its goals, in part because of the changes already brought about by the expansion. One of the biggest differences is that departments are now talking to one another. “Because of this project, and the way the groups worked together, they are now starting off new projects in a cooperative way,” Douw notes.
The decisions being made cooperatively are cutting costs, improving efficiencies and standardizing the answers to data queries across the board. They are also enabling the bank to not only take advantage of market opportunities as they arise but also create its own opportunities. By harnessing technology in new ways, SNS seeks to ensure its solvency and keep pace with customer and market trends.
A 30-year veteran of high-tech publishing, Patricia Keefe specializes in writing about the impact of technology on business and the business of high technology.
Photography by Ton Hendriks
