Strategic Marketing Analysis
GIS (Geographic Information Systems) is a set of tools that can help Visualize, Analyze and Understand market factors and their relationship to the bank.
GIS works on the “layering” information, as shown, and it allows for the integration of information from different sources based on the spatial connection of the data.
Information about: competition, locations, lending patterns prospects, HMDA LAR and CRA Small Business LAR, customer locations and account information and much more can be integrated in to the GIS analysis.
The use of GIS can play an important role in various practical areas of helping to achieve business objectives such as: Expansion of Customer base, Improvement in Quality and Delivery of the Services, Increased Customer Satisfaction, Consistent Business Growth and Increase in Profitability. GIS helps by providing support in decision-making and strategic planning. Some of the major areas are discussed below.
Customer Analytics - GIS can help answer questions like: Where are our customers located, by account type? What are their characteristics (market segmentation, classification of residential areas)? Business cluster analysis and hot-Sport analysis to target specific areas with desirable business clusters.
Competitive Analysis - using FDIC branch data and LAR data, GIS can help visualize and understand the competitive environment for your bank. It can help answer questions like: Where is your competition located? What is the deposit base of that specific location? Using LAR data, what is the banks loan distribution within your market.
Defining GAPs in the delivery of services based on areas which are not being served.
Branch Performance Monitoring - GIS can add depth to the analysis of a branch performance. By adding the spatial components of: demographic, business composition, competition within a defined trade area will have a greater advantage. Potential customer “hot-spot” areas, by customer or account types, can be based on the spatial distribution of the customers. The GIS component of a branch review involves defining a trade area around the branch, measuring the market potential within that trade area, and identifying the nearby competitors. The banks can determine the products that are being purchased by particular socio demographic groups or business clusters. Based on this type of performance analysis, banks can determine other areas with similar influences to target specific advertising and branch expansion.
Define Service Areas or Trade Areas - GIS allows bankers to understand and define an “effective” service area for a branch, based on a variety of factors including: distance to an office for any customer and drive time – To calculate the effective drive time, GIS looks at traffic patterns, traffic counts and speed limits for a location to calculate drive times. Location analytics provides information about issues of convenience for different market segments. For example, loan customers may be willing to drive farther then deposit customers. It also can produce a wide variety of information about the demographics, business characteristics, target market segments and more.
These are just few examples of the application of GIS in banking.
The following 2 minute video describe the process for Credit Unions.
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