In the Loop: An Interview with Scotiabank’s Steve Mackey
You think you have a lot of variables in your database? Try trading places with Steve Mackey, director of database marketing, international banking, for Canada’s Scotiabank.
He is in charge of the bank’s Caribbean and Central American regions, encompassing 24 countries, 14 currencies and 2 million customers. That means coping with cultural and regulatory differences and limited infrastructures.
But the bank has several strengths in the region, one being strong customer loyalty. Another is the Epiphany database platform that it implemented a few years ago.
Thanks to that improvement, Scotiabank is building predictive models to identify candidates for upselling.
How does it get the message out? Mostly through direct mail—it sends 130,000 pieces a year through the region—and at the branch level. But it is planning to build call centers and expand its other capabilities.
Recently, we talked with Steve to go over the challenges he faces in running an international database operation.
The CRM Loop: How long have you been active in the Caribbean?
Mackey: In some of these markets, we’ve been in there for well over 100 years, and it reflects historical trading patterns. We had a branch in Jamaica before we had one in Toronto.
The CRM Loop: What kinds of products do you offer?
Mackey: Traditional banking products like savings accounts, loans, time deposits and credit cards. There’s about seven countries where we don’t offer credit cards or revolving lines of credit, and that’s largely due to the size of the countries, or in some cases to operational challenges. And on an island like Anguilla, which has only about 7,000 people, it’s tough to introduce something like mutual funds because of the limited penetration and the additional cost required to support the product.
The CRM Loop:What are some of the operational difficulties?
Mackey: There’s lots of infrastructural challenges. For example, there’s only two countries we deal with that have postal codes—the U.S. Virgin Islands and Puerto Rico. And the postal systems aren’t as sophisticated as they are in the U.S. and Canada, although they definitely work based on the response rates we get.
The CRM Loop: What’s your biggest obstacle from the database perspective?
MACKEY: It’s probably the fact that upwards of 70% of our customers only hold a day-to-day banking account. The challenge is trying to find the people in that large pool who have the capacity to either save or borrow.
The CRM Loop: What are you doing about it?
Mackey: We’ve been actively using an Epiphany database for about 2 1/2 years, and we’re starting to doing life-event modeling. But we’re still at the early stages of a lot of stuff. Going back ten years ago, there was no kind of central head office structure supporting these countries. It was only when we built the Epiphany database, that we even knew how many customers we had in the region.
The CRM Loop: Is your database tied to the domestic one in Canada?
Mackey: Our domestic operations use a series of different platforms, and that’s just a function of the fact that international and domestic are unique divisions. But conceptually, we’re doing the same thing in terms of segmenting the database, building predictive models to identify purchasing profiles of prospective cross-sell candidates.
The CRM Loop:Can you describe the process?
MACKEY: An Epiphany model had been deployed when I got there, but we spent the first year and a half rebuilding it. The people who originally built the model just did not understand database marketing, so they did not take advantage of the architecture offered by the system. We had one master tape to forever update. One of the things that makes us successful now is that we have built new, more meaningful data elements from the data that we were extracting from our source system.
The CRM Loop: What kinds of elements?
Mackey: Some of them are really simple—for example, summing up the total number of accounts that a customer has with us. That’s not something that a source system will typically give to you, but it’s a relatively easy piece of information to build. And once you start profiling your customer base by that, you can start to see where the opportunity exists to further upsell.
The CRM Loop: For example?
Mackey: The Epiphany tool allowed us to generate a big win in last year with a former borrower mailing. Using the historical database, we were able to identify customers that had paid off a loan and still didn’t have a loan with us as well customers that at one time had a loan but at the time we created the mail file had absolutely no relationship with us and had closed down all their accounts. And we were able to segment our target audience into a series of different direct mail offers based on historical credit risk performance. It was a tremendously successful program.
The CRM Loop: Do you have one big database for all 24 countries?
Mackey: We have eight data centers throughout the region. Every month, those data centers produce a hard tape drive that they courier to Toronto, and we then load all of that information into our existing model.
The CRM Loop: That sounds complicated.
Mackey: There’s all kinds of complexities. For example, we operate in five privacy countries, including the Bahamas, the Caymans and the British Virgin Islands, where we’re prohibited form bringing the customer information file out of the country. It’s because they’re offshore financial tax havens. That means we can’t send things like name, address, phone number.
The CRM Loop: So you don’t ship that data to Toronto.
Mackey: We ship the data, but not the name and address. We do all the analysis and segmentation up in Toronto and ship the file back. The data center of that country has the name and address, has to pick up the execution of the particular marketing program.
The CRM Loop: Can you get good credit data in the Caribbean area?
Mackey: Not like you can in North America. We have credit bureaus in USVI and Puerto Rico, and people are fairly comfortable in using them. They’re both affiliated with Trans Union. And Trans Union recently established something in Trinidad. But generally, it’s not available, and even where it is, it’s not sophisticated as it is with a Trans Union or an Equifax in North America.
The CRM Loop: Can you get overlay data?
Mackey: Very little. Some of the Microvision type stuff, like socio-demographic geo coding, might exist in Puerto Rico, but that’s about it. There’s little we can do to augment our database with third-party data. The same is true for acquisition marketing. There’s very few consumer-type lists available that one that one can purchase to do acquisition mailings.
The CRM Loop: What have you done to compensate for these limitations?
Mackey: We spend a fair amount of time monitoring the payment behavior of our existing customers. For example, we offered pre-approved loans based on analysis of that data. We can also use our system to track the performance of a loan to make sure that we’re not being foolish when we send out these offers. And broadly, we build a fair amount of derived data like total number of accounts and simple things like that that allow us to understand the customer a little better.
The CRM Loop: What are some of the other challenges?
Mackey: Creative is one. We did a credit card cross-sell campaign across 15 countries a couple of years back, and I think we had three different offers, and something like 76 different cells. Even across our side Spanish-speaking countries, the language is sometimes slightly altered. And we have to be careful about the images that we use across the Caribbean. The imagery we would use in Trinidad is often very different from the kind that we would use in Barbados.
The CRM Loop: Can Epiphany help you with this?
Mackey: It could. We haven’t made use of it, but potentially you could cater the image to the name you’re extracting so you could give different images to different socio-economic groups.
The CRM Loop:Can your call center reps get cross-sell recommendations in real time?
Mackey: That’s still a few years off. The timelines are indeterminate, but at some point we’re looking to build call center capabilities to support the region. We may centralize it in Jamaica or Toronto to support the English-speaking countries, and possibly in Mexico to support the Latin-speaking countries. Those are fairly large projects, and at that point we plan to investigate the opportunity for Epiphany’s real-time data.
The CRM Loop: Data aside, what’s your biggest strength in the region?
Mackey:The length of time we’ve been there. Some of the Canadian banks have pulled out of places like Grenada and Haiti when there’s been political turmoil. But we’ve never pulled out of anywhere.
