Juan-Carlos Martínez, Founder & President
It was Marathon Monday—the day that Boston Marathon would finally roll, testing the endurance of participants over the course of 26 miles. As Juan-Carlos Martínez made his way to the starting line, amidst the unrelenting rain and the gusty winds, he knew that it wouldn't be an easy race. But that didn't deter Martínez, who has been preparing for it for many months. At 53, many men of his age would deem this task impossible. But as spectators watched from the sidelines, this steely competitor successfully made his way toward the finishing line.
"I am a marathon runner, and I see the match in the long run," says Martínez. "I never give up, even when facing bad moments. There are always ways to change or move things until you can see the real value," he adds. It's not just in the marathon; as the founder and president of Altair Management Consultants Corp, Martínez shows the same passion for taking up complex and challenging business problems and resolving them in the long run. "And at Altair, we have the privilege to do this every single day," he says.
Visit: Altair Management Consultants
Headquartered in Boston, Altair is a consulting boutique that masters in assembling strategic vision, analytical skills, and business transformation experience to deliver Banking Analytical Management (BAM) to financial institutions, helping them become an "analytical bank."
But what is an "analytical bank"? It is a bank that has captured all value at stake by fully implementing BAM, an analytical bank integrates analytics strategy, business cases, organization, governance, people, processes, tools, and control based on measuring Return on Banking Analytics Investment (ROBAI). Altair helps banks to achieve these capabilities seamlessly.
BAM and Beyond
Today, most of the banks have set up fragmented analytical functions in their organizations. Different functions and departments have developed their data-marts and analytical tools, and surprisingly, they do not share the data or mathematical models among them. It is what Altair calls "data and analytics by silos". "Sometimes, it is surprising how credit risks, marketing, channels, product innovation or operations do not share data, information, models, and findings to better improve their decision-making process," mentions Martínez. This creates a fragmented analytical intelligence that moves the bank away from its optimal analytical operating point where profit and return are maximized. "BAM has an integrated view of the business top-down that avoids such things from happening," he adds.
"I compare BAM with other managerial and business transformation revolutions," says Martínez. For instance, in the mid-50s, the Japanese car manufacturing industry achieved a complete transformation when they embedded quality functions along the entire car business value chain—what they called Total Quality Management (TQM). Quality was completely transformed from an isolated, reactive, and control function into one as a dorsal spine of the entire business. BAM will bring a transformation of that similar level to the banking institutions. "BAM has the target to identify and get all the value at stake by embedding analytics along the bank value chain or by creating new business," says Martínez.
"We do not represent any specific banking analytical solution, we start from analytical strategy then prioritize use cases and develop them—either from scratch or by applying an existing market tool"
Altair initiates BAM by analyzing the decision-making process of the bank. "Very often, we see that some banks are putting data management, cleaning, curation, and so on at the center of the analytics world. For us, this is sometimes a strategic mistake," says Martínez. Not all data has the same value, and hence, it must be managed according to their relative value creation for a bank. "What really matters is that the decision-making process is the center of the analytics universe," he adds.
One of the objectives of BAM is to improve the banking decision-making process along the value chain—pricing, client segmentation, innovation in services and channels, credit risk, and market risk— while helping explore new business models
One of the objectives of BAM is to improve the banking decision-making process along the value chain— pricing, client segmentation, innovation in services and channels, credit risk, and market risk—while helping explore new business models.
The company segments and groups all types of decisions taken according to nature, volume, frequency, information required, governance model, and rules. Then, they define the "areas of decision making" where they can employ a set of analytical tools for improvement. Further, a business case is developed to help prioritize its implementation. Once the decisions to be improved are identified, Altair starts defining what set of data the client will need. "We believe more in a data pull-process rather than a data push-process while selecting data needs and data structure," states Martínez. Sometimes data required is not available, so it has to be purchased or manufactured via IoT, or in collaboration with other business partners. Market trends and analytical tools are incorporated as needed, but Altair's first and foremost approach is to develop tailor-made analytical models based on open platforms and languages. As a result, getting and cleaning data and developing mathematical model becomes easier.
Boosting Short- and Long-Term Success
Altair draws on its deep experience to help financial services institutions to find innovative ways to optimize processes, manage risks, capture the economic benefits of building loyal customers, and plan for evolving competitive and regulatory landscapes. The company works with clients as partners to develop clear, practical action plans, and implement those plans to ensure sustainable performance improvement. Altair's BAM suite is implemented by an outstanding consulting team with four different profiles and capabilities—Business Translator, Data Science Strategist, Data Science Analyst, and Data Engineer.
Inspired by the shop floor assembly line U-cell manufacturing work at Toyota under Just-in-Time (JIT) principles, Altair's analytical team is organized around Analytical U-cell. (Shown in Picture 1. below) When developing mathematical models to improve the decision-making process, the company follows a classic scientific method based on a circular scheme: problem, hypothesis & assumptions, model development & adjustments, extract value, and new problem. The team applies Scrum Master approach and projects are rolled out in phases called Sprints (stages that can be fully tested). They work on common platforms like Microsoft Azure, AWS, IBM and Oracle, and use tools such as GitHub (code repository), Databricks (development platform), Serverless and Docker (analytical apps development platform), Hadoop (DB management), and languages like SQL, PowerBI, SAS, Python, R, Matlab, VBA, and SPSS to deliver the BAM suite. "We apply specific methodologies to lead the transformation like employee journey, customer journey, peer teach peer, objectives and incentives programs, game theory competition, plan & control, project management tools and so on," mentions Martínez.
What really differentiates Altair is its integrated vision and the understanding of the clients' agenda. "We do not represent any specific banking analytical solution, we start from analytical strategy then prioritize use cases and develop them—either from scratch or by applying an existing market tool," says Martínez.
Further, Altair ensures that they discuss the BAM roadmap with the CEO and executive team because it's a complete transformation of the banking business that should be approved and managed across the board.
Exemplary Customer Success to Fuel the Journey
Altair mainly works with companies across four industries: financial institutions, oil & gas, automobile, and retail. Martínez elaborates an example where Altair helped a leading global banking group to understand the ATM disloyalty patterns, reduce the annual fees paid to third-party institutions, and improve customer services. Supported by its advanced analytics team, Altair gathered insights and provided the analytical muscle to help the client develop a more precise and robust prediction model, which resulted in significant savings.
The banking group was paying extremely high fees to third-party ATM networks. They understood that a small number of customers accounted for a disproportionate amount of usage, and the existing disloyalty prediction system had much room for improvement. The leadership believed that an advanced prediction model would improve their customer service level and optimize operating expenses. The key challenge for Altair was to design machine learning algorithms effective enough to obtain faster and more accurate insights than traditional methods. Altair assembled a customized dataset from multiple sources, performed data-driven analyses, and developed a test and learn capability for a robust prediction model. The methodological approach focused on features and transactions at the customer and ATM level. Various analytical techniques were utilized to gain a comprehensive understanding of ATM customer behavior to generate a prediction model. Other data points such as ATM locations, average balance account, ATM usage, online banking activities, and UX at third party ATMs were incorporated into the analyses, and several correlation patterns were identified.
Further, Altair carried out segmentation analysis to find out if different patterns of expenditure are related to ATM disloyalty and arrived at eight groups of customers with different characteristics of usage. This framework allowed for a more robust prediction model to determine disloyal behavior by reducing data noise, and label customer for specific actions. Based on customer grouping, Altair also recommended actionable measures to optimize ATM footprint and minimize costs.
Continually Driven by Innovation
Over the years, Altair has identified that to effectively and analytically transform a bank using BAM, they need a catalyst. Analytical Lab is one of the key value propositions that the company is developing toward this. The Lab is an external analytical factory run by Altair in collaboration with the bank where Altair allocates all resources needed to fuel and accelerate the bank's analytical transformation. Analytical Lab will deploy all the content inside the company's BAM value proposition: analytical strategy, decision-making analysis, used cases development, implementation of tools, banking transformation, analytical governance and control based on return on banking analytical investment. "Additionally, we are screening analytical market to find partners, analytical start-ups, and talented professionals to reinforce our delivery to clients," adds Martínez.
Having a carved unique niche in the banking analytics space, Altair aims to revolutionize the entire banking sector through its BAM suite in the near future. "From 2019 and on, we will see some banks with differentiated performance in terms of growing market share, increasing loyalty of high-value customers, optimized cost-to-income, and a better return on capital. Probably, this select group of the finest competitors will be the ones with a more advanced implementation of the principles that we have identified to be the Analytical Bank," informs Martínez.
So what's next for Martínez and his company? "For me, I am going to participate in the London Marathon 2020," he quips while sounding determined about his company's bright future. "The journey for Altair is clear: Eat. Sleep. Deliver competent BAM. Repeat."