Data Fusion, Data Mining, and Decision Support System: Bank Marketing in The 21st Century

Data Fusion, Data Mining, and Decision Support System: Bank Marketing in the 21st Century
Prof. Chan Chi Fai, Department of Marketing Prof. Lai Siu King, Department of Decision Science and Economics Prof. Lau Kin Nam, Department of Marketing Prof. Leung Kwong Sak, Department of Computer Science and Engineering Prof. Leung Pui Lam, Department of Statistics Prof. Leung Yee, Department of Geography
The Chinese University of Hong Kong 11 June 2001
The Introduction
by Prof. Chan Chi Fai
The Chinese University of Hong Kong
Introduction:
CUHK research project supported by : 0.7M 3.5M Strategic Research Fund, CUHK Innovation and Technology Fund from Industry Department of SAR
Hong Kongs first prominent academic/business cooperation on design and implementation of Customer Relationship Management system for financial institutions A major Bank in Hong Kong participated as industry partner to provide data for pilot system implementation since Jan 99
Page I1
The Study
by Prof. Lau Kin Nam
Contents:
Bank Marketing Objectives Marketing Technology in the Information Era CRM fundamentals Major types of Selling CRM Roadmaps
Phase 1 : Data Capturing Phase 2 : Data Cleansing Phase 3 : Data Mining Applications
CRM System Future CRM Directions
Page S1
Bank Marketing Objectives

New customer acquisition
Cross-selling / up-selling
Increase utilization
Customer retention Win-back
Page S2
Marketing Technology in Information Era

Technology Data Farming Data Warehouse Data Cleansing and Fusion Data Mining Database Marketing Sales Automation Description Design data capturing sytem Enhance data retrieval Convert data into meaningful information Recover hidden knowledge from the database Apply data mining results to improve sales/efficiency e.g. Siebel
Page S3
CRM Fundamentals
Customer Focus
Speed Technology
Selling by Information Selling by Relationship Selling by Automation
Page S4
Major Types of Selling

Active Selling Event Triggered Selling
Mortgage, Personal Loan
Product Based Selling

Campaign Management
Passive Selling Customer Based Selling

By Branch By Phone By Internet
Page S5
Phase 1: Internal Data Capturing Process
CRM Roadmap
Autopay
Employers
Salary
Banks Internet Mall
Purchases
Retail Customers
Purchases
Merchants
Card data
Browsing data
Demographics, banking transaction
Banks Raw Database
Phase 2 Phase 2 The Chinese University of Hong Kong Page S6
In-house data
A. Types:
Product Usage Data Demographics Socio-economics Transactional Data
Credit Card EPS PPS Autopay/payroll MPF
BACK
B. Problems:
Outdated Incomplete Isolated
Channel Data
Page S7
Phase 2: Data Cleansing
Phase 1
Standardization of data and format Identification of household relationship
Various classification schemes to convert data to useful information
update
Customer Survey
Enriched Database
fusion
External databases
Validation
Solving missing value problems
Analytical and statistical models
Phase 3
Page S8
Example:
Address standardization:
Unformatted: 4/F., K.K. Leung Bldg., ShaTin, N.T. Formatted: Room no.
Floor
Building Street
District
Page S9
Example:
Name standardization:
Unformatted: Andrew C.F. Chan
BACK
Formatted:
Last Name First Name Christian Name
Page S10
Example:
Mr. Chan Tai Man
Sex :M Age : 32 Tel. : 26096000 Address : 25, 5/F., CRM building, Sha Tin, NT.
BACK
Miss Lee Mei Lai

Sex :F Age : 28 Tel. : 26096000 Address : 25, 5/F., CRM building, Sha Tin, NT.
Couple
The Chinese University of Hong Kong Page S11
Example:
Job Classification
Address Classification Life-stage Classification Credit Card Merchant Classification SME Classification
BACK
Page S12
Example:
Census
Property transaction database
BACK
CRE (Central Registration Establishment) TDC (Trade Development Council)
Page S13
Survey:
Contact information
Phone, Business address, Email, Website
BACK
Updated demographics
Marital Status, Number of dependants, Spouses information
Socio-economics
Job, Income, Property ownership, Car ownership
Product Interests
UT Insurance Deposit Yes Yes Yes No No No
Page S14
BACK
Enrichment Examples:
Signal ATM withdrawal from race-course ISP payment from credit card School payment Change of address Enrichment variables: Gambling Internet user Age and number of kids Buy/sell property
Page S15
Example:
Age MS Edu level Industry Address Income
: 30 : Married : College : Banking : 3A, Blk. 5, Island Harborview : $35,000
Age MS Edu level Industry Address
: 29 : Married : College : Banking : 6B, Blk. 2, Island Harborview

Page S16
Income(?) : $35,000 2000
BACK
Integrated Database
Category Variables
Contact Information e.g. Address, phone (Business/home), E-mail, website Demographics Socio-economics Household Information Relationship Variables e.g. Age, sex, marital status, Life stage e.g. Income, job, education, property ownership, car ownership, social class e.g. Household Income, Numbers/Age of dependants, Spouse information e.g. Overall tenure, product tenure, past profitability, No. of product
Product Ownership/ e.g. RFM (card), Deposit, Loan, UT, Insurance Usage
Channel e.g. Branch, ATM, Phone, Internet
Behavioral variables e.g. Gambling, Travel, Degree of Luxury, Life-style, Risk attitude
Page S17
Phase 3: Data Mining

OLAP (query)
Next part
Phase 2
Customer and product segmentation
Marketing campaigns
Prediction model
Integrated Database ready for mining

Customer based selling 1. Cross selling opportunity 2. Channel 3. CLV and ROI
Extract internal and external signals
New customers analysis
Attrition Analysis
Customer retention
Cross selling by branch, phone, internet
SWOT on each customer segment and product
1.Acquisition criterion 2.Increase utilization
Attrition pattern and signals
Event driven selling
Targeting, positions, pricing, bundling
Cross Selling Plan
Strategic Marketing Plan

Page S18
Segmentations:
1. By occupation 2. Prizm scheme =
Lifestage Address class
Single Married Married with kids Retired
Public
Private Luxury housing
Page S19
Segmentations:
3. by shareholders variables
Profitability
Low Medium High
BACK
New
Tenure
13
3+
Page S20
Current Basket
Name Age Sex Edu
: Liu Wai Chuen : 24 : Male : College
Future Basket
Credit Card Deposit
Mortgage UT
Current and Past Value
Future Value
Page S21
BACK
Future Value
Low High Let go/stay High Retention / Loyalty Program
Past Value
Low De-marketing Aggressive selling
Page S22
Campaign Management:
Potential Customers in the Database
BACK
Past Campaign Results Adopters
Selected
Selected
Non-Adopters
Page S23
CRM System:
Data Capturing
Data Retrieval
Data Analysis Data Application Sales Execution and Automation
The Chinese University of Hong Kong Page S24
A Comparison:
Before CRM:
Selling a good product by Advertising Personal Selling
After CRM:
Selling a good product by Information Relationship Automation Customer Based Selling
Product Based Selling
Page S25
Future CRM Direction
1. Customer Driven Organization

Customer Segment 1 Customer manager Segment 2 Segment 3
Value Equity Officer (Price, Convenience, Quality)
Retention Officer (Loyalty Program, Building Relationship)
Brand Equity Officer
(Brand Awareness)
Modified from: Driving Customer Equity, (Rust Zeithaml Lemon), 2001
Page S26
Future CRM Direction
2. Product and Service Diversification
Banking Products
Page S27
End of Presentation
*There would be a Q & A session after the coffee break.
Page S28
Coffee Break
Venue Time : 1/F Foyer : 10:45 a.m. 11:15 a.m.

Data Fusion, Data Mining, and Decision Support System: Bank Marketing in The 21st Century

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Formate disponibile

Data Fusion, Data Mining, and Decision Support System: Bank Marketing in the 21st Century

The Chinese University of Hong Kong 11 June 2001

The Chinese University of Hong Kong

The Chinese University of Hong Kong

The Chinese University of Hong Kong

CRM System Future CRM Directions

The Chinese University of Hong Kong

Bank Marketing Objectives

The Chinese University of Hong Kong

Marketing Technology in Information Era

The Chinese University of Hong Kong

The Chinese University of Hong Kong

Major Types of Selling

Product Based Selling

Passive Selling Customer Based Selling

The Chinese University of Hong Kong

Phase 1: Internal Data Capturing Process

Banks Internet Mall

Demographics, banking transaction

Banks Raw Database

Phase 2 Phase 2 The Chinese University of Hong Kong Page S6

The Chinese University of Hong Kong

Phase 2: Data Cleansing

Various classification schemes to convert data to useful information

Solving missing value problems

Analytical and statistical models

The Chinese University of Hong Kong

The Chinese University of Hong Kong

Miss Lee Mei Lai

The Chinese University of Hong Kong

CRE (Central Registration Establishment) TDC (Trade Development Council)

The Chinese University of Hong Kong

The Chinese University of Hong Kong

The Chinese University of Hong Kong

Age MS Edu level Industry Address Income

: 30 : Married : College : Banking : 3A, Blk. 5, Island Harborview : $35,000

Age MS Edu level Industry Address

: 29 : Married : College : Banking : 6B, Blk. 2, Island Harborview

Income(?) : $35,000 2000

Phase 3: Data Mining

Integrated Database ready for mining

New customers analysis

Cross selling by branch, phone, internet

SWOT on each customer segment and product

1.Acquisition criterion 2.Increase utilization

Attrition pattern and signals

Event driven selling

Targeting, positions, pricing, bundling

Cross Selling Plan

Strategic Marketing Plan

Private Luxury housing

The Chinese University of Hong Kong

The Chinese University of Hong Kong

Name Age Sex Edu

: Liu Wai Chuen : 24 : Male : College

Credit Card Deposit

Current and Past Value

The Chinese University of Hong Kong

Past Campaign Results Adopters

Product Based Selling

The Chinese University of Hong Kong

Future CRM Direction

1. Customer Driven Organization