Banco Itau Argentina

Situation
Banco Itau Argentina is the Argentinean branch of Itau Unibanco Group, one of the 15 largest financial institutions in the world. Itau – Unibanco has combined assets more than $356.5 billion, 39 million customers, 4,900 branches and 32,000 ATMs. The Group has a strong regional presence in South America as well as offices in the main financial centers: Frankfurt, Luxemburg, London, New York, Miami, Tokyo and Shanghai.

The Argentinean retail financial market is highly competitive, with several banks competing for the “minds and wallets” of target customers. In this competitive landscape, Banco Itau Argentina needed to increase response rate to sales campaigns in order to increase revenue flow to fund market share growth efforts.

Challenge
In mid 2007, the bank launched an effort aiming at accelerating its organic commercial growth through the implementation of a superior business intelligence solution that would allow it to define and execute optimal customer cross-selling and acquisition strategies. The underlying purpose was to increase customer satisfaction and life-time value while maximizing the bank’s profitability.

In order to optimize marketing campaigns, the bank needed to answer critical questions: who to contact, what to offer, when to make the offer and how to make the offer.

Solution
The bank chose IBM SPSS technology to meet the challenge, and decided to implement it in four consecutive phases:
1) Predictive models, in order to select clients with a high probability of accepting an offer
2) A “Cross-Selling Machine”, in order to anticipate the next best offer for each customer in the stream
3) “Sales System Optimization”, in order to maximize the profitability of the sales system
4) Customer-guided offers, in order to deliver personalized offers

Using IBM® SPSS® Modeler*, Banco Itau Argentina implemented predictive models to identify target clients with the highest purchase probabilities.

Banco Itau Argentina implemented a “Commercial Campaign Factory” in order to quickly test and roll-out successful campaigns through the “Cross-Selling Machine.” Based on this concept, the bank now has 20-30 rolling sales campaigns.

IBM SPSS Event Builder was introduced to run the monthly optimization of the bank sales system, to allocate finite marketing resources, multiple channels with different costs, customer contact restriction, campaign objectives and other business constraints, in order to target the right customer with the right product, through the right channel, at the right time, all while maximizing the customer’s financial return to the business. Now before launching marketing campaigns, the bank reviews the projected size number of targeted customers, expected costs as well as the expected response rate and revenue for each campaign.

Through the use of IBM® SPSS® Data Collection, the bank developed a direct “dialog” with the customers in order to get a better understanding of customer needs and to be able to deliver personalized offers.

Results
Predictive analytics improved customer understanding and, in turn, campaign targeting. The implementation of between 20 and 30 rolling sales campaigns allowed the bank to increase revenue from existing clients by 40 percent in 2008.

Predictive optimization capabilities leverage predictive analytics to provide an unprecedented level of targeting and coordination across all campaigns and outbound channels. This unique campaign optimization approach allowed the bank to simultaneously decrease costs and increase revenue. With this approach, Banco Itau Argentina increased its total retail customer contribution margin by close to 60 percent in 2008.