Analytics Blueprint from a Global Financial Company

To improve how we apply machine learning models, it’s beneficial to read about how other teams have successfully implemented analytics in their organizations. Gaining a better understanding of what worked and what didn’t from other analytics teams within your own or other industries will make you a better data scientist. In this post we will go over a recent success story of an analytics team at a financial company as was reported by Harvard Business Review (HBR) in this article.

Analytics At Banorte

The Analytics Team

Grupo Financiero Banorte (GFNorte) is a Mexican banking and financial services holding company. Founded in 1899, became Mexico’s third largest bank in 2011 after merging with IXE Financial Group. With revenues of 3.2 billion dollars, total assets of 71.7 billion and 25,000 employees this is a large operation which tapped into the power of analytics to further improve its business.

Analytics would be used to gain a deep understanding of their customers. Infusing this knowledge into the core business processes leading to better customer connections that would translate to the bottom line.

The Central Analytics Business unit was created for this task with a well defined objective, convert data into profits at 10x the cost.

"I think the biggest challenge facing the analytics/big data industry is to prove value to the firms which embrace them. There is a very large share of failed analytic projects, which take too long to generate profits (if they do it at all)." Jose Antonio Murillo, Chief Analytics Officer.

Analytics Results

In short, the investment in analytics paid off immensely. In their first year the analytics team generated profits at 46x their costs. In their second year, the achievement was even greater, profits at 106x their costs. $275 million additional net income. The increasing trend continued to the third year, 200x!

The analytics group was widely successful. This approach and results allowed to company to increase market share and achieve the number 2 spot in their industry.

Lessons Learned

The analytics team at Grupo Financiero Banorte led by their Chief Analytics Office, Jose A. Murillo, did the following 6 things right in order to achieve the promise of analytics.

Clear Targets and Accountability - From the very beginning, the goal of the analytics group was well defined. Generate value from data. The whole analytics team was held responsible to achieving this task.

Executive Support - When the executive team gives its push for a task, others will listen. This helped the analytics team break down barriers and silos between department making the collaboration with other departments much easier. Analytics doesn’t work in a silo. It is a company transformational effort.

Alignment with Incentives- also known as the principal-agent problem, without the right incentives you cannot expect a group to act in the best interest of the company. GFNorte intelligently addressed this problem by aligning incentives. Departments would accrue the benefits generated by the analytics department creating the incentive for departments to collaborate with the analytics group.

The analytics team themselves were paid using variable compensation according to the analytical projects that were implemented among others. Aligning the team with a monetary incentive to achieve the group’s goal.

Result Assessment- all the above won’t work without showing good results and you can’t leave this to hose of which you are expecting the results. A neutral agent was put in place to validate and approve of the results. The Accounting department at GFNorte was in charge of approving the results from the analytics team. This provided credibility into their performance.

Communication- alignment cannot occur without communication. Strategic communication with various stakeholders was needed in order for the analytics team to have buy in and understanding of the multiple stakeholders. Building consensus for projects as well as communicating results needed to be done with strategic communication. External communication is also important in order to provide visibility to the team which improves talent acquisition.

Talent- last but not least, you need to right people to achieve the goals. Analytics departments require various technical, analytical and project management skills that need to be blended together to be successful.

Conclusion

Analytics is a powerful tool that can bring organizations great benefits but there is a wide gap between talk and action and not every analytics organization has been successful. Having clear well defined targets, executive support, strategic communication, talent, incentives and results assessments serve as a valuable blueprint for an analytics organization to achieve the promise of analytics.

MJ

Advanced analytics professional currently practicing in the healthcare sector. Passionate about Machine Learning, Operations Research and Programming. Enjoys the outdoors and extreme sports.

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