Replay: Webinar with Zachery Anderson

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Zachery Anderson, Chief Data and Analytics Officer at NatWest Group, takes us on an exploration of the cutting-edge of data and analytics in the banking sector.

With a rich background in customer-centric data-driven insights, including pivotal roles at Electronic Arts and leading NatWest’s data revolution since 2020, Zachery is a respected voice in the industry. His innovative work has been recognized by the Harvard Business Review, MIT Sloan Management Review, and he’s been honored as one of the 2022 Global Top 100 Innovators in Data and Analytics.

In this webinar, he shares his insights, experience and convictions about creating value through data and leveraging CLV in the banking sector. From his groundbreaking work in developing a proprietary first-party fraud detection system at NatWest to his leadership in building graph capabilities that redefine the understanding of risk and dependencies in the financial sector, Zachery’s expertise is invaluable for any professional in the field.

His approach to the rapid transformation of data and analytics at NatWest, and his vision of the future of data-driven decision-making in banking, supported by Generative AI and personalization, offers an unmatched learning opportunity.

Keep reading to discover our key takeaways from this session below!

1. Challenging misconceptions about
Customer Lifetime Value (CLV)

Customer Heterogeneity matters!
In line with Peter Fader, Zachery recognizes that there is no average customer. Behavioral differences are intrinsic to a customer base, and it is important to differentiate individuals based on their potential, or future profitability, CLV.
The impact of the industry dynamics
Understanding how customer behaviors and industry dynamics affect CLV applications is key. Zachery Anderson was also a top executive at the gaming company Electronic Arts (EA), bringing a unique perspective on CLV nuances across industries.
For example, video games are easy to download and start playing. You can establish a tight loop between marketing and CLV practices. EA runs CLV models for 500 million customers a day, optimizing marketing efforts and impact. In the banking industry, the process for each operation is more complex. There will be more friction when switching accounts, which makes it more difficult to run marketing strategies as tightly.
Zachery says that “having good marketing connections with your CLV is important, but it should also be used for data analysis“.
Earning customer consideration with personalization
Personalized engagement is a valuable mechanism to exchange long-term value between the bank and its customers. It provides a way to earn the right to offer them the next financial product. Zachery Anderson, echoing Fred Reichheld’s concept of “earning the right to sell somebody a product”, emphasizes the importance of personalized service. Since customers don’t often buy financial services, like mortgages or credit cards, personalizing our approach helps us provide excellent service and become their top choice for future needs.
Progress in CLV models
CLV models have seen significant advancements with the advent of cloud and tech capabilities. Modern CLV models are now more sophisticated and encompass a wider range of indicators. We can create models that not only predict CLV but also provide insights and guidance for action. This was not possible years ago.
Dispelling beliefs: “In banking, the first purchase or the first interaction is hardly all of the value”.
The reality is we build long-term relationships with people, whether they buy frequently or not. “Anyone who’s just doing a lifetime value without looking at what happens in the next week, month, or year is missing a trick”. To get to a long-term prediction, you must do short-term predictions too, starting with a two-year vision is a great step. And by being focused on churn, we miss the opportunity to understand what makes a great customer and how to attract more of them.

2. Unexpected evolutions in the banking industry

The banking industry needs to change people’s relationship with money and help them manage it better. This involves tackling time consistency issues by shortening intervals, enabling daily decision-making, gathering fast feedback on customer behavior, and guiding them toward achieving their goals.
There has been an industry shift with banks reducing their branch networks. It leads to considering how digital services might support the branches, and how they should share feedback with each other. To give customers a great experience, banks have to bring all channels together. Heterogeneity matters. Some customers might not be mass affluent customers but they are still valuable.
GenAI is still in its early days. Most banks are using it for operational efficiency when they should reinvent and use it for marketing and content personalization. Zachery notes: “Generating content is a special power of AI that people often aren’t looking at.”

3. Untapped opportunities beyond FinTechs

In the UK, banks have unique sharing opportunities because of the PSD (Payment Services Directive) and PSD2 opportunities (Revised Payment Services Directive) and the sharing rules around the CMA9 (the nine largest banks in the UK as determined by the Competition and Markets Authority) that allow us to share data with customer consent. For the first time, a bank is moving to data collaboration and data valorization in the media space. Many will most likely follow, in a similar way as it happened in the grocery business. Retailers now have ad tech platforms and are allowing partners to target customers using their CRM and loyalty data.
Unlocking the hidden value: Cleanrooms are very valuable if you are trying to work better or produce better advertising. Moreover, when it comes to tasks like fraud detection and account whitelisting or blacklisting, clean rooms are indispensable, albeit necessitating additional resources.
Some exciting opportunities are coming where big players bring data together and build better customer propositions to help customers in their daily lives. Especially when collaborations extend beyond sectors, such as between banks and groceries, banks and telcos, or non-profits that unite various financial service providers to help local authorities understand their economy better.

The webinar highlights the potential of CLV as a strategic tool to deeply target and understand the value of customers. Businesses can leverage CLV models to build meaningful relationships thanks to more relevant messaging, anticipate customer-changing needs, and stay ahead in an ever-evolving market landscape.

If you liked this topic, discover our previous webinars featuring CLV champions such as Peter Fader and Neil Hoyne.

For more information about CLV, feel free to reach out to Nicolas Filatieff, Managing Director, Numberly.