International Bank Gets Insight Into Profitability
- Improve decision-making by expanding and refining a customer profitability solution and gaining better insights
- Translate the requirements of commercial business lines into a data architecture and workflow, and integrate data sources
- Gained insight into income and costs related to banking products and services
- Fueled highly-targeted commercial campaigns
- Boosted profits through cross-selling initiatives
To hit your target, you need to see it.
For Fortis, a top-20 European financial institution, that meant figuring out its customers’ needs and habits — and matching them with exactly the right banking products. But with so many products and business lines in so many sectors and countries, Fortis couldn’t tell which services to focus on and which customers to market to.
Fortis chose to expand a customer profitability solution it had previously launched in Belgium to include 14 other European countries and the United States. With the help of CSC's data integration expertise, the Cross Border Customer Profitability program (XBCP) soon delivered the insights Fortis was looking for.
"Not only was CSC able to field a team of consultants with deep know-how of the banking business; the team leader was a very senior person with extensive experience in the finance sector and — more importantly — was familiar with Fortis itself," says Ingrid Van Dijcke, Fortis’ head of cross border application services. "These are essential aspects for building a long-term relationship based on cooperation and trust."
Linking management accounting and operational reality
The complexity of the program becomes apparent when considering the four factors that drive customer profitability:
- Gross income (such as interest margin on balance sheet products, commissions and fees on transactions and profit from foreign exchange transactions)
- Costs (the number of transactions and the actual cost attributable to the execution of each one)
- Cost on capital (compliance with the Basel II capital adequacy rules for banking institutions)
- Expected losses
Data related to all these aspects has to be processed to enable the XBCP to generate profitability data that yields meaningful business insights.
The scope of this project meant that Fortis needed to bolster its own resources with external expertise — in this case, a team of business analysts to translate the requirements of Fortis’ commercial business lines (retail and merchant banking) into a data architecture and workflow for the XBCP.
CSC's role went far beyond database integration. The team coordinated information exchange between all parties involved. CSC interviewed the users, including all the teams representing the interests of the retail and merchant banking business lines at headquarters in Brussels and at other national level operations.
Fortis’ internal IT division took on the enormous volume of programming and development work, while the Fortis Customer Profitability team handled system architecture, methodology, functional analysis and testing of the solution itself.
The CSC team focused on the integration of three main data sources, including connections to customer reference data (such as VAT number, customer segment and NACE code) and financial information in the Midas accounting package (loans, account balances, time deposits, etc.).
The CSC team was also largely involved in the analysis of the connection to Fortis’ Global Markets Economic Profit Reporting system to enable the delivery of data on profits generated from all structured finance products, including foreign exchange, commodities trading and derivatives.
The team also played a key role in coordinating information exchange among the parties involved. CSC interviewed the users themselves, including all the teams representing the interests of the retail and merchant banking business lines at headquarters in Brussels and at other national level operations.
Profitability data: key to decision-making
The initial implementation phase required 18 months of integration work. Fortis has now gained insight into income and costs related to banking products and services, down to the finest level of detail: a breakdown for every product, for every customer. This information is in turn used for performance management. It enables customer evaluation, and allows bank branches and account managers to set objectives and monitor achievements. Product and service profitability provides key decision-support information when designing commercial campaigns and determining which products are suitable for cross-selling.