 Live from Las Vegas, extracting the signal from the noise. It's the Cube, covering IBM Insight 2015, brought to you by IBM. Paul Gillan here at IBM Insight 2015 in Las Vegas. Welcome back. We're speaking right now. We're going to talk financial issues and all the changes that are roiling the financial market. Of course, the critical role of the big data plays in all that. We have with us Guillermo Guemmas. I hope I pronounced that correctly. Guillermo Guemmas, the CTO of Benorte Bank, a big bank out of Mexico, and also Shankar Ramamurthy, who is the global managing partner for business analytics and strategy at IBM, works extensively with C-suite executives and issues relating to the financial industries. We're going to talk about some changes that are going on there and how analytics is changing that business. And Guillermo, I want to start with you because there's a very interesting article on IBM's Smarter Planet blog that ran back in middle of the year about a major overhaul you were doing with big data analytics at Benorte in an effort to make the relationship with the customers more personal. Where are you in that evolution right now? It's a large process. We are trying to close the circle from information into cash, if you will. So we have various initiatives that start picking up the information that the bank currently has about all its customers. And then going from that to an expert's action or offer to the customer and then be able to execute that real time. We have most of these initiatives, let's say, in their initial phases in production, but they're beginning to roll out. So let's say we've presented a couple of hundred thousand offers to a few customers in the last two months. We're in production. How is this manifested for the customer? What changes are the customers seeing as a result of your efforts? There are two major changes that they're going to start to see in the short term. One is they're going to get interactions from the bank in real time in all their channels. And those are synchronized interactions. So if we ask them if they want a credit card and they say no, we know they said no. And we'll stop. Which for Mexico is a big change, at least for the major banks in Mexico. I'm sure there are many people in the US who would be delighted to hear that as well. And the second one is we hope that these interactions are going to be more targeted as we get more data from the systems about them. There was an element of this interview which your former CEO actually talked about the importance of personalizing the experience with the client in the branch. But what we're seeing, in fact, with the millennial generation is they don't use bank branches. They want to do everything remotely and digitally. In fact, are you thinking that you might be able to reverse that trend and bring people back into the branch? No, no, no, no, no. No, one of the initiatives is focused on delivering the same content or the same interaction in every channel. So that it's, when he mentioned the branch, he was thinking about the branch, but the same offer will be available on mobile, on the web, at the ATMs, at the call center. It's the same experience, if you will, delivered across all channels consistently. Shankar, we're seeing a lot of disruption happening in the financial services industries right now with the emergence of crowd sourcing, crowdfunding, Bitcoin, digital currencies. Certainly could collectively put a lot of pressure on these on banks over time. Is the type of work minority is doing what banks need to do? No, absolutely. And by the way, the issue that we're dealing with, what we call digital reinvention or digital disruption is making its way through every industry. Used to be historically that only digital industries and banking is the most extreme example of a digital industry, whether ones that were being impacted by all the technological changes. But it turns out that the real economy is being impacted by digitization as well. In fact, we just finished a very large CXO study talking to over 4,000 executives around the world. And three big issues popped up. Number one, and by the way, this is a big issue in banking as well, increasingly industry value chains are blurring. So non-traditional competitors are getting into the value chains of established enterprises and challenging their profit polls. Number two, for the first time we've been running this study for the last 12 years, for the first time technology became the most important factor for CXOs to worry about. So it's not something that the CTO or the CIO worries about, but the entire enterprise is worried about the disruptive power of technology. And number three was very interesting when we looked at the analysis. What we call the torch bearers, the top 5% of the leaders in the global economy are actually leveraging analytics and big data and cognitive in a profound and fundamental way. Bernorte, in terms of all the work we're doing with them, is very much at the cutting edge of positioning themselves to actually stay ahead of the market and not be disrupted by the non-traditional competitors. I think General Electric recently announced that they expect to do $6 billion in revenue this year from digital services alone. Is that the kind of, I mean, is this an example of how companies can reinvent themselves by taking the data that they collect about what their customers are doing and actually delivering it back as a service? Is that a major opportunity? That is one of the opportunities. It turns out that almost every company that's selling a product is able to now move into the services economy. So an automobile manufacturer today and in the future will not be just selling an automobile. They'll be selling a whole bunch of services on the back of the automobile, whether it be maintenance, whether it be insurance-related product, whether it be other kind of subscription services. Virtually every industry, and you heard over the last day or so, Whirlpool, how Whirlpool is now moving into providing subscription-style services, selling the ancillary services on the back of the washing machine. We think industry after industry move from just selling product to selling services and leveraging the information and insights they gather about their customers and then converting that into high-value products and services that they're able to offer. And certainly banking and financial services lend itself to that model particularly well. Guillermo, are your efforts aimed primarily at your consumer customers or do you have a large commercial business as well? We have both, but the current efforts are aimed primarily at the consumer, just for the simplicity of the transactions, right? I understand that culture is a big shift that you have to make here. Of course, banks, being very analytic-oriented, being very transaction-oriented, that shift to customer care is not necessarily a natural change. What have you done within the bank to help your employees make that change? I would love to say we've done something we're doing who we are gently and slowly focusing each of the channels on how to provide a better service. It's going to be a long road. It's not going to be easy, as you say. Banks are focused on a very transactional process and taking it to a new level is going to be very difficult. It's something we're doing at this point. And do you believe that this personal touch is actually an important differentiator for banks? As competition emerges in the digital sector, such as crowdfunding and Bitcoin, where there is a disconnect between the customer and the lender, do banks have an opportunity to use their branches to their advantage again? I think we do. Banks have trust, or at least in general, they have the trust of the customer. And it's something we need to leverage very, very carefully. As new competitors come in, they need to gain that trust from the customer. And we have a lot of information to counter those offers. The offer that most of the other, let's say competitors and FinTech companies are providing tend to be ancillary services. Most of these people need an account. You need a basic banking account to do most of the stuff other services or other service companies are providing. So banks still have a role in whatever turns out. When you look at financial customers, are they seeing opportunities to actually create new services out of data, for fee services out of data? Yeah, absolutely. But let me just pick up on the point that Guillermo was making. Banks have an extraordinary advantage. I mean, it's two sides of the coin. The advantage that they have is only banks can take deposits because they're highly regulated. Every government, every country is really keen to ensure that any deposit taking institution is actually around to ensure it can make good on the deposit that it takes. So from a regulatory standpoint, there is a range of things that only a financial institution can do. Of course, the flip side of that and the challenge that many financial institutions have now is potentially the threat of over-regulation, particularly in the Americas, the number of regulations that a financial institution has to contend with has exploded. So it's kind of two sides of the same coin. A fintech organization cannot get into the core aspects of banking, but what they do is they go after the most profitable parts of the value chain which are not regulated. So on the lending side, they go after the lending aspects. They look at payments and they try and figure out how to go after aspects of payment. They look at any other fee for service style capability and then they go after that. Whether it be micro payments, micro lending, micro finance, you see the non-traditional players coming into it. They're creating marketplaces where they bring buyers and sellers of money together. So those are all the things that the non-traditional players are doing for the traditional banks. It's about taking advantage of the power of data that they have and the relationship that they have and the trust that they have, connecting the dots across the multiple product systems and channels to provide compelling value and actually not just bringing internal data but external data as well and taking all that and converting that into insights that provide superior service and superior value. That's a good one. Jeremy, unfortunately, we're out of time but just one last question for you about how, given what Oashankar just said, you are creating this unified view of the customer and really a 360 degree customer experience. How are you going to measure the payback or the results of this big data initiative you have in terms of customer satisfaction? It's measured in sales. It's very clearly measurable in sales. It indicators for how much more we sell per customer interaction are very, very clearly defined. It's actually fairly simple in that respect. I guess I don't think of banks in terms of sales perspective. Are you talking about deposits or are you talking about loans? You're talking about deposits, loans, any transaction that's positive credit, a new loan balance increases. And without divulging numbers, how confident are you that the payoff is there? We are doing fairly well. Well, thank you very much. Pleasure to have you both. Very stimulating discussion. Big changes going on in the financial services sector and big data underlying a lot of that. So, Shankar Ramamurthy and Guillermo Glammez. My Spanish is not so good. Thanks for being with us. This is Paul Gillan, IBM Insight 2015. We'll be right back with our next guest in a few minutes.