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May 25th, 2015
Location Analytics Stakes its Place in Malaysia’s Banking Industry

Advanced analytics technology isn’t new to Malaysia’s banking sector. Nor is analysing customer data to gain a competitive edge. What is new and truly remarkable however, is the use of a new breed of analytics – location analytics – which enables banks to explore smart maps of information to learn more about their businesses and customers than ever before.

The onset of location analytics comes at a time when Malaysia’s banking sector is being constantly challenged to meet growing consumer’s expectations while warding off competitors – all in an environment of tight regulation. That said, the challenge for banks to be competitive remains as strong as ever, with Asian consumers becoming more sophisticated in their expectations. In a 2013 report, McKinsey noted that more than half of consumers in emerging Asia are more likely to remain with their bank if it offered a seamless experience and easy accessibility to its assets, from bank branches, to ATMs, to online.

To address this changing consumer behaviour, Mr Lai Chee Siew, CEO of Esri Malaysia, said location analytics – delivered through smart mapping technology – is fast becoming the latest weapon for banks looking to meet consumer demands and future-proof their business models.  

“Essentially, smart mapping technology – also known as Geographic Information System technology – enables local banks to create a dynamic and incredibly detailed visual representation of their operations,” said Mr Lai. “These smart maps allow them to quickly ascertain various information and statistics, from the location of each bank branches and ATM to granular details about each outlet, including total annual sales and revenues and operating costs. In addition, the maps also provide insights on the locations and transacting habits of their customers, as well as information on competitive banks. Essentially, these smart maps afford banks a view of their business that is unattainable through any other tool.”

“Already, Malaysia’s financial services sector is investigating how this technology can be used to transform how customer engagement platforms are modelled, the way branch and ATM networks are managed, where marketing investment is directed, and the way business system vulnerabilities are identified,” Mr Lai added.

To cite an example, for long-term users such as the Bank of America (BoA), smart mapping technology has completely transformed the way they model their network and manage their business.

Scarred by the global financial crisis and under pressure to streamline its complex network, BoA found itself at a major economic and technological crossroad.

To become a leaner – but not meaner – operation, BoA had to decide which of its physical outlets should be maintained, closed, remodelled or relocated.

By using smart mapping technology, BoA’s Retail Distribution team reduced the bank’s annual expenses by an astounding $800 million – adding an estimated US$1 to the share price.

BoA tracks every transaction a customer makes – stripped of identifying details for privacy – by location, time and method, and then layers it on smart maps which also contain salient information on each branch or ATM, including costs, revenues and any changed planned for the outlet.

The bank also used smart mapping technology to develop predictive models that, among other strategic measures, chart each individual site’s value to the network.

“Our strategy pre-recession was growth. The recession hit, revenue dropped significantly – by $20 billion – so we had to flip our strategy to simplify the organisation to better serve the customers we have,” said BoA Senior Vice President Jon Voorhees during a recent interview.

 “What used to take me a week could take me five minutes nowadays and it’s all because the tools we have developed, with the underlying data, simply enables me to have better information packaged in a way that I can easily digest to make the call.

 “This year we will make 2,000 to 3,000 site decisions and every single one involves Esri’s smart maps.”

Mr Lai noted that smart maps had become a critical tool for ensuring commercial enterprises remain competitive now and into the future.

“Location analytics adds the ‘where’ component to business information and systems – to provide a powerful new context for commercial decision-making,” Mr Lai said.

“BoA has demonstrated how significantly the approach can impact an organisation’s bottom-line – by providing a unique insight into the relationship between a business’ location and its customer demographics.

 “Whether it’s a bank analysing customer loyalty information to provide more targeted products, or a retailer maximising returns by mapping customer’s in-store behaviour – location analytics is positioning entire sectors to be more competitive through increased insight.”