Optimize data management for smarter banking and …...10 The IBM Banking Industry Framework builds on the capabilities of DB2 with a structured approach that combines best-in-class

Optimize data management for smarter banking and financial markets

2Contents

32

514Introduction

Flexibility, transparency, quick response times: Are you ready for the new financial environment?

Drive growth and profitability

Meeting customer demands for high-touch service and product variety iskey to success

Operational efficiency

Fierce competition makes rapid response to marketplace changes all themore important

Manage risk and compliance

Understanding and reducing risk can help you cut losses and improve portfolio quality

Information driven

Design an information agenda that puts you on the path to efficient,intelligent operations

Contents Introduction Drive growth and profitability



Information driven Resources

31Introduction

As banks and financial service providers move toward recovery from the global financial

crisis, the concept of “business as usual” is being turned on its head. Old business models no

longer apply. Client trust must be rebuilt, and risk management is more important than ever.

At the same time, new and proposed regulations are driving higher capital requirements. Even as

financial organizations renew their focus on raising capital, improving asset quality and increasing

profits, the weaknesses in banks’ loan portfolios and the overall decline in public wealth continue to

limit access to capital markets.

Banks clearly need a smart approach to conducting business in this new environment. Smarter

banks can anticipate customer needs and deliver innovative products faster, more consistently and

more nimbly than the competition. They have full visibility—in real time—of their risk position and

customer needs. And they respond quickly to both challenges and opportunities.





4

Current and emerging technologies have tremendous potential to help financial services

organizations achieve three key goals:

•Drive growth and profitability

• Improve operational efficiency

•Support effective risk and compliance management

This e-book will examine the challenges financial services organizations face today—and how

data management techniques can help them prepare for the battle ahead.





1Introduction

5

Drive growth and profitability

Today, customers expect far more from their banks than a friendly face at the teller window and

good interest rates. They want greater diversity in product offerings, and they are demanding new

levels of convenience, personalized service and transparency. In addition, the average consumer is

now using multiple channels to interact with their bank—so meeting their heightened expectations

while maintaining a consistent customer care and branding experience is more critical (and complex)

than ever.

To thrive in this emerging business climate, financial institutions must renew their focus on growth

and profitability, rather than just cut costs. By offering customized products and individualized

marketing programs, banks can expand their market share through improved customer care and

reduced attrition. Analytics help financial institutions gain insight into their customers’ behavior and

preferences to optimize product bundling and pricing, resulting in more products sold per customer

and better profit margins. Stronger growth and profitability also helps drive new product innovation

and development—which helps attract even more new customers.





2Drive growth andprofitability

6

Financial services organizations must leverage technology in new

ways to achieve these goals. Creating improved processes and giving

employees access to better tools for relevant, skillful and targeted cross-

selling and up-selling can help boost sales effectiveness. Performing

sophisticated analytics on customer data enables you to match

products and services with customer needs, providing more relevant

and effective marketing. And with an enterprise-wide customer view

across a range of channels, you can offer a more compelling customer

experience across all touch points—whether in a branch office, at self-

service kiosks, on the web or through a contact center.

But don’t stop there. Capitalize on cross-channel customer activity by

linking detailed rules-based intelligence to process and data models.

Use these customer insights to put more information into the hands of

Smarter banking in actionA leading American provider of financial electronic commerce services

and products carved out a competitive advantage by creating a bill

payments data warehouse based on IBM® DB2®. This warehouse

enables financial institution customers to utilize information from

across the enterprise to improve its services and enhance customer

satisfaction, while better managing risk and reducing fraud.

“Our database size has more than doubled since 2005,” says a

manager and database engineer for the company. “By upgrading to

DB2 9, we recovered 2.3 terabytes of storage and deferred more than

US$1 million in storage expenditures during the fiscal year.”






7

customer-service representatives to drive sales and service. With a better profile of each customer,

you can offer more personalized service, resolve issues quickly and improve efficiency. The end

result: better client care and satisfied customers, along with improved staff productivity.

IBM data management solutions and technologies are designed to help financial services

organizations drive growth and profitability. For example:

•DB2 supports enhanced productivity by automating many tasks, which can help

free database administrators from having to perform the routine tasks that are required with

other databases.

• The IBM Banking Industry Framework builds on the foundation provided by DB2 with banking-

specific software, solution accelerators and best practices to help financial institutions reduce

costs and effectively manage risk while delivering an outstanding customer experience.

• IBM Banking Data Warehouse enables the consolidation of clean, meaningful financial data

across multiple channels and products.






83Operationalefficiency

Competition in the banking industry is fierce, with virtually no room for error—which is why the ability

to bring new products and services to market quickly is a significant advantage. However, paper-

centric processes can slow key projects, prevent information from being shared easily and ultimately

drive down margins.

Financial services organizations can improve operational efficiency by eliminating those inefficient,

paper-based and labor-intensive processes. By consolidating and optimizing front- and back-office

processes, delivery systems and associated costs, banks can reduce cycle times and customer wait

times. They can optimize customer-facing lending processes for speed and accuracy, and improve

core systems information management, as well as manage information more effectively throughout

its life cycle.

Multidimensional analysis of performance metrics and advanced predictive analytics can help banks

respond rapidly to customer demands and marketplace changes. Managing unstructured data and

automating key processes helps to boost visibility into customer behavior, reduce costs and cut





9

time-to-market for new products. In addition, smart archiving strategies

and tiered storage solutions can help control database growth—allowing

banks to reduce costs, improve performance, mitigate risks and address

compliance issues associated with information access and archiving.

With IBM data management solutions and technologies, financial

services organizations can move swiftly and surely to improve

operational efficiency. DB2 offers industry-leading performance across

multiple workloads, which means that your company may need less

powerful servers to run its databases. DB2 also provides support

for native XML, helping organizations consolidate data repositories

to minimize cost. These savings can contribute to reduced database

software licensing, support and maintenance costs.

Smarter banking in actionSunTrust Bank migrated its IBM System p5™ servers from DB2 8 to

DB2 9 to improve infrastructure ROI, manage risk and compliance

and increase DBA productivity. DB2 compression features played a

main part in reaching those goals, as well as reducing costs. “With

DB2 9, we’re seeing compression rates up to 83 percent on the

data warehouse tables. The projected cost savings are more than

US$2 million initially with ongoing savings of US$500,000 a year,”

says Michael Henson, DB2 UNIX team lead, Database Delivery

Services at SunTrust Bank.






10

The IBM Banking Industry Framework builds on the capabilities of DB2 with a structured approach

that combines best-in-class industry assets, repeatable software patterns and IBM Business

Partner offerings to create a single view of customers, drive effective multi-channel delivery and

enable outstanding sales, marketing and service. IBM Cognos® software helps banks further

leverage their existing data investment to identify, report on and analyze the costs of trade, staff

performance, risk management, branch profitability, loan performance and customer profitability.

IBM InfoSphere™ Optim™ solutions can help financial institutions manage data growth by archiving

historical transaction records and storing them securely and cost-effectively. With less data to

sift through, banks can complete mission-critical business processes rapidly and speed reporting.

InfoSphere Optim solutions also help protect customer data through privatization in less-secure

non-production environments.






11

Support effective risk and compliance management

Because liquidity issues can create problems even faster than P&L

issues, managing liquidity and capital ratios has become a top priority for

financial services institutions. At the same time, banks need to maintain

transparent business processes so they can quickly understand and

accurately report business results.

Understanding and reducing risk can help you cut losses and improve

focus on overall portfolio quality. However, a constantly changing

landscape of regulations and guidelines can make this a difficult job.

That’s why banks need accurate, consistent and transparent risk

information across business units: to help eliminate unexpected losses,

reduce the need for higher capital requirements and prevent civil or

criminal penalties.

Smarter banking in actionThe global foreign exchange (FX) market trades several trillion U.S.

dollars each day in multiple currencies, involving a worldwide,

interconnected network of central banks. To manage settlement risk,

the global financial system needed to enable simultaneous settlement

of both legs of these FX transactions.

CLS Group created a groundbreaking process for FX settlement,

then partnered with IBM to design, develop and manage the global

IT infrastructure required to support it. This unique system settles FX

transactions concurrently across time zones, eliminating the failure of

one side to pay its sold currency after receiving its purchased currency

and/or the failure of intermediary institutions.

“The fact that we were able to handle the unheard-of surge in volume

and volatility with no service disruptions and no loss of capital is

enormously significant. This is why CLS was created,” says Rob

Close, CEO of CLS Group and president and CEO of CLS Bank.

4Manage risk andcompliance





12

Effective risk and compliance management measures can help banks reduce all classes of risk—

financial and non-financial—including credit, theft, fraud, identity, operational, IT and compliance. By

managing enterprise information effectively, financial institutions can better protect customer privacy,

meet security control guidelines and enable legal and regulatory compliance with records retention

and management requirements. Plus, they can address demands for financial transparency and

reporting (including liquidity monitoring and assessment). And by optimizing application development

and delivery, banks can help internal and external auditors verify that compliance requirements have

been implemented properly in key applications.

IBM offers a range of data management solutions and technologies designed to help financial

services organizations support those goals. For example, InfoSphere Optim solutions are designed

to manage data from requirements to retirement—helping financial institutions boost performance

and improve governance across applications, databases and platforms.

Société Générale, a leading French bank, uses InfoSphere Optim solutions software to maintain

a consistent test data management methodology. The platform allows the organization to deliver

reliable business applications and support its expanding retail, banking and insurance operations

across international boundaries.





4Manage risk andcompliance

13

Become an information-driven financial services organization

IBM has developed an approach to enterprise information management called an information

agenda—and data management forms the foundation for the technologies that underpin the IBM

Information Agenda® approach.

The Information Agenda program offers a methodology that helps financial institutions respond

quickly to today’s unprecedented demands for more accurate, complete and actionable

information—whether on a global level or in the next cube over.

The Information Agenda approach merges four key starting points from which financial organizations

can start addressing their information challenges and get to smarter business outcomes faster:

•Strategy: Establish an information-driven strategy and objectives to enable business priorities

•Road maps: Accelerate information intensive projects aligned with the strategy to speed both

short- and long-term return on investment

• Information infrastructure: Deploy open and agile technology and leverage existing

information assets for speed and flexibility

•Define and govern: Discover and design trusted information with unified tools and expertise

to sustain competitive advantage over time





5Informationdriven

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Banking for a smarter planet

As financial institutions transform their business models in response to the new economy, three

key imperatives will have an impact on their success. By driving growth and profitability, improving

operational efficiency and supporting effective risk and compliance management, banks can build

the competitive advantage they need to compete for the attention of today’s savvy customers.

A smarter approach to banking, supported by data management solutions and strategies, helps

financial organizations anticipate customer needs and deliver innovative products faster, more

consistently and more nimbly. It can provide real-time visibility into the company’s risk position and

offer insight into what customers want—empowering banks to respond quickly to both challenges

and opportunities.





5Informationdriven

156Resources

To learn more, please contact your IBM representative or visit:

IBM DB2

IBM InfoSphere Optim Integrated Data Management solutions

IBM banking industry solutions





http://www-01.ibm.com/software/data/db2

http://www.ibm.com/software/data/optim

http://www-01.ibm.com/software/data/information-agenda/catalog/banking.html?industry=banking

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Produced in the United States of AmericaNovember 2010All Rights Reserved

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Optimize data management for smarter banking and …...10 The IBM Banking Industry Framework builds on the capabilities of DB2 with a structured approach that combines best-in-class