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Previous Next COVER STORY CUSTOMER ANALYTICS Table of Contents ity to easily extract data from its proprietary core system, helped the bank deliver better data for analysis when it started its partnership with Nomis. "They had really good, clean data, and that isn't always the case with everyone," Nomis CEO Frank Rohde says. "A lot of other banks really struggle to get that data out of their core." Fifth Third is working on a new pricing initiative with Nomis across its auto finance, consumer deposit, and home equity product lines. Using Nomis' pricing engine, the bank can run scenarios on how different price points will impact its customer acquisition and deposit levels, Erhardt says. "If we want to get to a specific deposit level, Nomis can help us run a scenario to find the right price points for that growth. We can run an optimization for interest costs and look for opportunities to reduce expenses in certain products or in certain tiers or geographies," Erhardt explains. Ready For Rate Hikes Fifth Third is running scenarios with Nomis' technology to help it prepare for the rise in interest rates that everyone expects the Federal Reserve will enact at some point in the next few years. The bank can do assumptions based on where rates are headed and run a scenario in terms of where it wants to be with rates in the market to be aggressive in attracting customers, Erhardt says. "Deposit pricing has been a back-burner issue, … but with changes in rates, plus new liquidity regulations, and also consumers' ability to shop for products online, it's going to be a front-burner issue again," Erhardt predicts. As rates rise and customers start to move their money for a better rate, banks will struggle to predict how their portfolios will be affected. Banks simply don't have relevant data to analyze and understand how money will move, says Nomis' Rohde. Data from the past few years doesn't show any rise in interest rates. And data from 2004 to 2007, the last time interest rose, isn't usable because customers didn't have modern digital tools such as mobile banking back then, Rohde explains. Nomis Solutions has developed a way to circumvent this lack of data for those institutions looking to take advantage of interest rate increases to improve acquisition. "We got a patent on a recalibrating methodology that can change based on how consumers are behaving right now. It allows us to quickly recalibrate models to take into account what's happening in the market. When the data starts to indicate a trend, the institution can then forecast and react quickly," Rohde explains. With this ability to quickly react to the market, Fifth Third will be able to leverage interest rate changes to both drive growth and deepen customer relationships through better and more targeted pricing, Erhardt comments. While Fifth Third and Great Western are using their improved data management and quality to target new customers, the framework they've built through centralizing and organizing their data will be applicable in other areas throughout their organizations. "I think this ability to manage data effectively will be one of the most important differentiators in the industry," Verizon's Sharma says. The same principles around data management and infrastructure that apply in customer acquisition also apply in other areas like retention, risk management, and compliance, he explains. p February 2014 10

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