Innovative Success Story: Standard Bank of South Africa

Standard Bank of South Africa Reaps the Business Benefits of Data Warehousing South Africa's Leading Bank

The Standard Bank of South Africa Limited is the second largest banking group in the Republic, but has the reputation of being the most technologically advanced. It was the first to use automated teller machines, and has experimented with technologies such as fingerprint identification, and virtual banking with touch-screen terminals.

Established in 1862, The Standard Bank now has over 1,000 branches or affiliated offices and 33,000 employees worldwide, and is expanding rapidly because of its attention to good customer service.

The Challenge
When competition from new banks and some 50 international banks that had moved into the country challenged their position, Standard Bank began a review of its customer base and product offerings. "We found that too few customers and a relatively limited number of products accounted for the major proportion of profit," says Ken Rogers, senior manager of business support in retail banking at Standard Bank. The challenge was to identify which customers were profitable and which were not, and then apply to each the appropriate service.

The bank decided to restructure itself into four specialised units: Retail Banking, Regional Banking, Commercial Banking, and Standard Corporate and Merchant Bank. This moved away from the 'one-size-fits-all' approach to one which concentrated on giving customers what they needed and could afford. This progressive change meant that managers needed to be more aware of their customers and required accurate, up to date information quickly. The challenge was that this information resided in at least 18 different source systems.

Making the Decision
It was clear that Standard Bank needed to move to a central repository of customer information. This was the only way that the correct information could be accessed and delivered rapidly and accurately to end users. To achieve this, Standard Bank created an Enterprise Data Warehouse taking the basic information from its operational systems. The data warehouse was made available to a select number of end users to test the acceptance level of the customer profiles.

Extending the Concept
The bank set up the data warehouse initially on a test basis with a small group of users. It proved so successful that it was quickly extended to the whole marketing and customer service departments. However, the initial linking of records from the warehouse to overcome duplicate records had been done using the bank's own de-duplication tools which were found to be too rigid.

Having used Innovative Systems' standardizing process to good advantage for some years, Standard Bank decided to use their advanced individual linking capability for personal customers and corporate linking capability for corporate accounts. These products provide a true picture of client relationships by eliminating duplicate records, and would be a vital preparatory step to loading the enterprise-wide data warehouse.

The first time these tools were run on Standard Bank's data warehouse, the systems automatically brought together 80,000 previously unmatched duplicate records. Based on ISI's experience, this rate of duplication match is better than other banks' benchmarks, which is indicative of Standard Bank's good data management policies, procedures, and standards.

Feedback from the many projects that ISI has been involved in shows that the number of customers a company serves can be as much as 20 percent fewer than their systems indicate. This significantly undermines a company's ability to accurately assess profitability and risk, and has a negative impact on service and sales activities.

To maintain accuracy of the data warehouse, Rogers now runs ISI's individual and corporate linking capabilities on a monthly basis on the bank's Operational Customer Information File, thereafter transferring to the Enterprise Data Warehouse. Discussions are under way about increasing the frequency of updating records.

Benefits
As Rogers says, "The data warehouse has become fundamental to the bank, and because accurate and complete client information is critical to the data warehouse, data management is also critical to our success. Budgets, targets, and forecasts, supported by a five-year strategic plan, have been finalized and approved based on the segmentation undertaken in the Enterprise Data Warehouse."

Now that the system has been running for a while, Standard Bank has begun to realize many significant benefits by providing a true picture of the bank's customers. Some of the key ones are dramatic changes in the way the bank sells and services customers, supported by technology. It enables a much more informed, personal and focused approach to working with customers.

The new system enables multiple views of customers to be displayed in order to determine true profitability and to improve staff performance and satisfaction, as it is now possible to use the system as a basis for measurement and reward.

The combination of technology and accurate customer information greatly assists credit scoring, so that risk is much more manageable. The bank expects that this capability by itself will save them millions over the next two years, and is already saving money in many ways, not the least of which is by allowing the bank to dispense with a number of systems which have been made obsolete by the new one.

Future Plans
Now that Standard Bank has proved the value of the data warehouse, it is moving towards building household profiles of its customers. This will enable end-user staff to provide even more appropriate product solutions and service to customers.

In addition, it is working on a move to new delivery platforms to ensure even faster delivery of key information to all staff. As Rogers says, "We now know our top performing customers thanks to technology and have customer information of the quality we can rely on."

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