Analytics Adds Up for Community Bank


If we were to place community banks along a spectrum of analytics sophistication, we'd likely cluster them around the "primarily uses spreadsheets" entry point. But not the Bank of North Carolina (BNC).

A couple of years ago, CIO Michael Bryan attended an IT financial services conference, learned about analytics software from SAS, and came away thinking, "This is what I have to have."

Michael Bryan,
Bank of North Carolina
Michael Bryan,
Bank of North Carolina

Many months of due diligence followed, Bryan told me during an in-person interview at last month's SAS Global Forum Executive Conference in Washington, D.C. One of the first proof-of-concept (PoC) projects focused on a major pain point -- quarterly loan reporting to the US Securities and Exchange Commission (SEC), he said. "Because of the variety of loan types we have, just to do a loan footnote on a 10-Q report was taking three weeks, manually."

As an analytics starting point, BNC built dashboards that give commercial lending personnel access to information like loan growth and profitability growth, as well as risk metrics such as past-due loans and critical-loan exceptions. In the process, the bank has cut the time for that 10-Q report preparation down to four days, Bryan said.

In addition, BNC is defining goals and incentives for the 400 or so people in the production group. Next quarter, these will be added into the dashboards so everybody can track their progress and compare against peers.

BNC is going to start doing what it calls "totem-pole analysis," ranking branches from best-performing to minimum-performing. "We think, if branch managers can see their numbers and where they are on risk metrics, then they'll be more aware of what they're doing on a daily basis and be more customer-centric," Bryan said.

This is a new level of access not just for BNC but for community banks in general, which typically rely on spreadsheets, he added. "This access to data gives us a way to roll out goals and incentives at the community-bank level, and do all the trending and acquisition reporting we have to do for the SEC."

Later this year, BNC will add operational dashboards to its analytics portfolio. These are expected to be particularly useful for the operations managers involved in the bank's merger-and-acquisition business, which is quite active. BNC, which as of this month operates in four regions, does about three acquisitions a year, Bryan said.

As operations have grown more complex, managers haven't been able to do all of the account-level validations they'd been used to doing previously, Bryan said. Availability of the operations dashboard will help. At a glance, they'll be able to see when an account of loan has been set up in error, for example.

Awareness of the analytics capabilities is starting to grow among line-of-business owners, Bryan said. "They look at a dashboard and say, 'Oh wow! I didn't know I could have that data.' This is making their lives so much easier -- and now they're starting to ask, 'Could SAS do that?' "

Bryan hopes to simplify the data reporting even more using data visualization software. Toward that end, this week BNC launched a proof-of-concept test of SAS Visual Analytics, Bryan said.

The expectation, he explained, is that the "plain English and drag-and-drop capabilities" within the software will make running "what-if" scenarios quick and easy. Today, business owners are constrained in the number of ad hoc reports they can run; keeping track of all the appropriate codes to enter is quite challenging, for example. "To us, an 'acquired loan' means 'X,' but in the background, there might be 14 codes that describe that loan type. With the drag and drop, people won't have to know all those codes and we know our data will be accurate."

Visual analytics should prove useful as the bank brings in its acquisitions, too, Bryan said. "With all these acquisitions, we don't always have a lot of time to do a lot of data cleansing. Visual Analytics will help us look for errors and do more cleansing."

As BNC continues its analytics evolution, Bryan said he feels it's become a preferred employer -- not only for future hires but also existing personnel. "If you're in banking, and enjoy analytics and digging around in the numbers, going anywhere else would be a backwards step."

And the C-suite is among the biggest fans. "Everybody in the C-suite saw the potential value in analytics, but were apprehensive that we could pull it off. And now all they can talk about is SAS, SAS, SAS."

Do you think the community banks in your area would do well to think about using analytics, as BNC has? Share below.

— Beth Schultz, Circle me on Google+ Follow me on TwitterVisit my LinkedIn pageFriend me on Facebook, Editor in Chief, AllAnalytics.com

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Beth Schultz, Editor in Chief

Beth Schultz has more than two decades of experience as an IT writer and editor.  Most recently, she brought her expertise to bear writing thought-provoking editorial and marketing materials on a variety of technology topics for leading IT publications and industry players.  Previously, she oversaw multimedia content development, writing and editing for special feature packages at Network World. In particular, she focused on advanced IT technology and its impact on business users and in so doing became a thought leader on the revolutionary changes remaking the corporate datacenter and enterprise IT architecture. Beth has a keen ability to identify business and technology trends, developing expertise through in-depth analysis and early adopter case studies. Over the years, she has earned more than a dozen national and regional editorial excellence awards for special issues from American Business Media, American Society of Business Press Editors, Folio.net, and others.

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Re: Community banking
  • 4/9/2014 11:38:52 AM
NO RATINGS

I'm not sure if our local community banks are using analytics but I suspect not. At least from the customer end, I've not seen any advertising, mailings, or email that would indicate they are collecting data and using it in any meaningful way. It's still the standard shotgun approach to selling their general line of financial products. But I see evidence from the huge banks in the way of mailing and email that surely indicate they're up to speed with predictive analytic systems.

Re: Community banking
  • 4/9/2014 8:18:36 AM
NO RATINGS

It probably made sense to start on the back end, but I agree that moving alaytics to the customer front end could have real impact for their business. It would certainly give them a footing for providing better services than the big guys.

Re: Community banking
  • 4/8/2014 4:35:34 PM
NO RATINGS

That's a great start!

Re: Community banking
  • 4/8/2014 4:27:16 PM
NO RATINGS

It sounds as though BNC's analytics focus is primarily on back-end activities, but it could use the SAS suite for customer-facing improvements, too. 

I don't know to what, if any, extent my community bank's new owners use analytics, but I will credit them for making the transition seamless, from the customer perspective. 

Re: Community banking
  • 4/8/2014 3:44:52 PM
NO RATINGS

One thing I realized I didn't really talk to Bryan about was whether the analytics is more customer-focused or product-focused. Maybe you can find which perspective your community bank has with its analytics, if it has any at all, when you do your poking around. 

Community banking
  • 4/8/2014 3:27:01 PM
NO RATINGS

This is a great question, Beth, and I'm not even sure whether my local banking chain uses analytics, or needs to. I've found that smaller banks tend to be acquired often -- as you pointed out in the blog. In our case, Sterling National just bought Provident a few months ago and rebranded all the locations -- it's possible Sterling has better-practices in place. I'll poke around and find out!

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